GAO 

United States Government Accountability Office

Report to the Congress 

September 2009 RECOVERY ACT

Funds Continue to 

Provide Fiscal Relief 

to States and 

Localities, While 

Accountability and 

Reporting Challenges 

Need to Be Fully 

Addressed 

This report was revised on November 6, 2009, to more accurately reflect the 

efforts of one local area to gauge the work readiness of youth participating 

in Recovery Act-funded summer employment activities. 

On page 76, the description of North Central Texas Workforce Board’s 

methodology, including the use of pre- and post-assessments, was changed. 

On page 79, the phrase “or was not using required pre- and post-tests at all” 

was deleted. 

GAO-09-1016 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

September 2009

RECOVERY ACT

Funds Continue to Provide Fiscal Relief to States and 

Localities, While Accountability and Reporting

Highlights of GAO-09-1016, a report to the Challenges Need to Be Fully Addressed 

Congress

This report, the third in response to 

a mandate under the American 

Recovery and Reinvestment Act of 

2009 (Recovery Act), addresses the 

following objectives: (1) selected 

states’ and localities’ uses of 

Recovery Act funds, (2) the 

approaches taken by the selected 

states and localities to ensure 

accountability for Recovery Act 

funds, and (3) states’ plans to 

evaluate the impact of Recovery 

Act funds. GAO’s work for the 

report is focused on 16 states and 

certain localities in those 

jurisdictions as well as the District 

of Columbia (District)—

representing about 65 percent of 

the U.S. population and two-thirds 

of the intergovernmental federal 

assistance available. Under the 

Recovery Act, GAO collected and 

analyzed documents and 

interviewed state and local 

officials. GAO also analyzed federal 

agency guidance and spoke with 

Office of Management and Budget 

(OMB) officials and with program 

officials at the federal agencies 

overseeing Recovery Act programs. 

What GAO Recommends

GAO makes recommendations to 

federal agencies to address 

accountability and transparency 

issues. They are discussed on the 

next page and in the report. GAO 

also has recommendations to OMB 

(on pages 122 and 131-134) and a 

matter for congressional 

consideration (on page 123). The 

report draft was discussed with 

federal and state officials who 

generally agreed with its contents. 

Across the United States, as of September 11, 2009, the Department of the 

Treasury had outlayed about $48 billion of the estimated $49 billion in 

Recovery Act funds projected for use in states and localities in federal fiscal 

year 2009, as shown in the figure. More than three quarters of the federal 

outlays has been provided through the increased Medicaid Federal Medical 

Assistance Percentage (FMAP) and the State Fiscal Stabilization Fund (SFSF) 

administered by the Department of Education. 

Source: GAO analysis of CBO, Federal Funds Information for States, and Recovery.gov data.

0

20

40

60

80

100

120

2009 2010 2011 2012 2013 2014 2015 2016

Dollars (in billions)

Federal fiscal year (Oct. 1–Sept. 30)

Actual as of September 11, 2009

Original estimate

Increased Medicaid FMAP Funding 

All 16 states and the District have drawn down increased Medicaid FMAP 

grant awards of just over $20.3 billion for October 1, 2008, through September 

15, 2009, which amounted to over 87 percent of funds available. All states and 

the District experienced Medicaid enrollment growth. States and the District 

reported they are planning to use the increased federal funds to cover their 

increased Medicaid caseload and to maintain current benefits and eligibility 

levels. Most states also reported that they would use freed-up funds to finance 

general state budget needs. The increased FMAP continues to help states 

finance their growing Medicaid programs, but state and District officials 

expressed concern about the longer term sustainability of their Medicaid 

programs after the increased FMAP funds are no longer available, beginning in 

January 2011. 

Highway Infrastructure Investment and Transit Funding 

A substantial portion of the approximately $35 billion the Recovery Act 

appropriated for highway infrastructure projects and public transit has been 

obligated nationwide and in the states and the District that are the focus of 

GAO’s review. As of September 1, the Department of Transportation (DOT) 

had obligated approximately $11 billion for almost 3,800 highway 

infrastructure and other eligible projects in the 16 states and the District and 

had reimbursed these 17 jurisdictions about $604 million. Across the

View GAO-09-1016 or key components. For 

state summaries, see GAO-09-1017SP. For 

more information, contact J. Christopher 

Mihm at (202) 512-6806 or mihmj@gao.gov. 
United States Government Accountability Office

Highlights of GAO-09-1016 (continued) 

nation, almost half of the obligations have been for 

pavement improvement projects because they did not 

require extensive environmental clearances, were quick 

to design, obligate and bid on, and could employ people 

quickly. For transit funds, GAO focused on the Transit 

Capital Assistance Program, which received $6.9 

billion—or 82 percent—of the Recovery Act public 

transit funds. Recovery Act funds obligated under this 

program are primarily being used for upgrading transit 

facilities, improving bus fleets, and conducting 

preventive maintenance. Recipients of highway and 

transit Recovery Act funds, such as state departments of 

transportation and transit agencies, are subject to 

multiple reporting requirements. Although some 

guidance has been provided from OMB and DOT, state 

highway and transit officials expressed concerns and 

challenges about reporting requirements. GAO 

recommends that the Secretary of DOT continue to 

reach out to state transportation departments and transit 

agencies to identify common problems in accurately 

fulfilling reporting requirements and provide additional 

guidance, as appropriate. 

State Fiscal Stabilization Fund 

As of September 15, 2009, the District and 15 of the 16 

states covered by our review had received approval 

from Education for their initial SFSF funding 

applications. Pennsylvania had submitted an 

application to Education, but it had not yet been 

approved. As of August 28, 2009, Education had made 

$21 billion in SFSF grants for education available to 

the 15 states and the District—of which over $7.7 

billion had been drawn down. GAO has previously 

reported that school districts said they would use 

SFSF funds to maintain current levels of education 

funding, particularly for retaining teachers and staff 

and current education programs. They also told GAO 

that SFSF funds would help offset state budget cuts. 

Education has not completed monitoring plans for 

SFSF, and it is not clear that states have begun to put 

in place subrecipient monitoring systems that comply 

with Education’s requirements. GAO recommends 

that Education take further action to ensure states 

understand and carry out their responsibility to 

monitor subrecipients of SFSF funds and consider 

providing training and technical assistance to states to 

help them develop state monitoring plans for SFSF. 

Other Recovery Act Programs

GAO makes recommendations in this report on other 

Recovery Act programs, as well. While many program 

officials, employers, and participants believe the 

Workforce Investment Act summer youth program 

activities have been successful, measuring actual 

outcomes has proven challenging and may reveal little 

about what the program achieved. GAO recommends 

that the Secretary of Labor provide additional guidance 

on how to measure work readiness—Labor’s indicator to 

gauge the effect of the summer youth activities. Also, to 

build on the important steps the Department of Housing 

and Urban Development (HUD) has already taken to 

monitor housing agencies’ use of Recovery Act funds, 

GAO recommends that the Secretary of HUD expand 

criteria for selecting housing agencies for onsite reviews 

to include housing agencies with open Single Audit 

findings that may affect the use of and reporting on 

Recovery Act funds. In addition, the Recovery Act 

appropriated $5 billion over 3 years for the DOE 

Weatherization Assistance Program. However, most 

states have not begun to weatherize homes, partly 

because of concerns about prevailing wage rate 

requirements. Labor completed its determination of the 

wage rates on September 3, 2009. 

Accountability

States have implemented various internal control 

programs; however, federal Single Audit guidance and 

reporting does not fully address Recovery Act risk. The 

Single Audit reporting deadline is too late to provide 

audit results in time for the audited entity to take action 

on deficiencies. Moreover, current guidance does not 

achieve the level of accountability needed to effectively 

respond to risks. OMB is vetting a pilot program for early 

written communication of internal control deficiencies 

for Recovery Act programs that, if properly scoped to 

achieve sufficient coverage of Recovery Act programs, 

could address concerns about the timeliness of Single 

Audit reporting. Finally, state auditors need additional 

flexibility and funding to undertake the added Single 

Audit responsibilities under the Recovery Act. 

Impact 

States and localities as nonfederal recipients of 

Recovery Act funds are required to report quarterly on a 

number of measures, including the use of funds and 

estimates of the number of jobs created and retained. 

This unprecedented level of detailed information to be 

reported by a large number of recipients into a new 

centralized reporting system raises possible risk for the 

quality and reliability of these data. The first of these 

reports is due in October 2009. 

GAO’s Crosscutting Recommendations

GAO reports on progress in addressing its prior 

recommendations that OMB provide 

• clearer accountability for recipient financial 

data, 

• program-specific examples of recipient reports, 

outreach to nonfederal recipients, and further 

guidance on program performance measures; 

and 

• timely notification of funding provided within a 

state to key state officials and a master schedule 

for anticipated new or revised federal agency 

guidance. 
Page i GAO-09-1016 

Contents 

Letter 1

Background 3 

States Continue Use of Recovery Act Funds While Preparing for 

First Required Report Cycle 7 

A Growing Number of Housing Agencies Are Obligating and 

Beginning to Draw Down Recovery Act Formula Funds 79 

DOE’s Weatherization Assistance Program 100 

Most States Have Not Begun to Weatherize Homes Partly Because 

of Their Concerns about Prevailing Wage Rate Requirements 102 

Local Agencies Generally Have Responsibility for Procuring 

Weatherization Materials 107 

DOE Has Issued Guidance to Mitigate Risk in the Weatherization 

Program, and Some States Have Established Additional 

Measures 108 

States Are Beginning to Monitor Recovery Act Weatherization 

Impacts, and Most Plan to Meet Reporting Requirements 109 

Crosscutting Recommendations 130 

Appendix I Objectives, Scope, and Methodology 138 

Appendix II Comments from the Department of Labor 144 

Appendix III Local Entities Visited by GAO in Selected States 

and the District of Columbia 147 

Appendix IV GAO Contacts and Staff Acknowledgments 153 

Tables 

Table 1: Original and Increased Quarterly FMAPs for Fiscal Year 

2009 for 16 States and the District (Percentage Points) 8 

Table 2: FMAP Grant Awards and Funds Drawn Down, for 16 

States and the District, as of September 15, 2009 11 

Table 3: Recovery Act Highway Apportionments and Obligations 

Nationwide and in Selected States as of September 1, 2009 18 

Recovery Act
Table 4: Recovery Act Highway Reimbursements Nationwide and 

in Selected States as of September 1, 2009 21 

Table 5: Recovery Act Highway Apportionments and Obligations 

for Suballocated Areas Nationwide and in Selected States 

as of September 1, 2009 24 

Table 6: Percentage of Recovery Act Transit Capital Assistance 

Program Funds Obligated Nationwide and Selected States 

and Urbanized Areas as Reported by FTA 32 

Table 7: SFSF Education Stabilization Funds Made Available by the 

U.S. Department of Education and Funds Drawn Down by 

States 42 

Table 8: State Drawdowns of Education Stabilization Funds 

Compared to Reported Expenditures by LEAs and IHEs in 

States We Reviewed That Could Provide the Information 44 

Table 9: ESEA Title I, Part A Recovery Act Funds Made Available 

to and Drawn Down by States We Reviewed, and Funds 

Expended by LEAs in States That Could Provide the 

Information 46 

Table 10: IDEA, Part B Recovery Act Funds Made Available to and 

Drawn Down by States We Reviewed, and Funds 

Expended by LEAs in States That Could Provide the 

Information 47 

Table 11: Recovery Act-Funded WIA Youth Participation in 

Selected States, as of July 31, 2009 65 

Table 12: Selected States’ Drawdowns as of August 31, 2009 67 

Table 13: Comparison of the Average Percentage of Funds 

Obligated and Drawn Down among Housing Agencies 

Grouped by Size of Recovery Act Grant, as of September 5, 

2009 83 

Table 14: DOE’s Allocation of the Recovery Act’s Weatherization 

Funds for 16 States and the District of Columbia, as of 

August 31, 2009 102 

Table 15: Use of Recovery Act Weatherization Funds by 14 States, 

as of August 31, 2009 103 

Table 16: Prevailing Wage Rates for Weatherization Work 104 

Table 17: Selected states and the District implemented tracking 

mechanism to identify the state’s prime recipients and 

subrecipients for reporting purposes, in accordance with 

OMB guidance Section 1512 113 

Table 18: State Approaches to Recouping Recovery Act 

Administrative Costs 127 

Table 19: Location of Highway Projects Visited by GAO 147 

Page ii GAO-09-1016 Recovery Act
Table 20: Location of Transit Projects Visited by GAO 148 

Table 21: Educational Institutions Visited by GAO (to Review Use 

of State Fiscal Stabilization Fund) 149 

Table 22: School Districts Visited by GAO (Local School Districts: 

Title I-LEA, IDEA) 149 

Table 23: Workforce Investment Act Youth Programs Visited by 

GAO 150 

Table 24: Weatherization Programs Visited by GAO 151 

Table 25: Localities Visited by GAO to Assess Other Recovery Act 

Programs and Issues 152 

Figures 

Figure 1: Estimated versus Actual Federal Outlays to States and 

Localities under the Recovery Act 4 

Figure 2: Distribution of Federal Outlays to States and Localities by 

Function as of September 11, 2009 5 

Figure 3: Percentage Increase in Medicaid Enrollment from 

October 2007 to August 2009, for 16 States and the District 10 

Figure 4: National Recovery Act Highway Obligations by Project 

Improvement Type as of September 1, 2009 19 

Figure 5: Nationwide Transit Capital Assistance Program Recovery 

Act Obligations by Project Type as of September 1, 2009 36 

Figure 6: National Draw Down Rates for Recovery Act Funds for 

the WIA Youth Program, as of August 31, 2009 67 

Figure 7: Percentage of Public Housing Capital Fund Formula 

Grants Allocated by HUD That Have Been Obligated and 

Drawn Down Nationwide, as of September 5, 2009 80 

Figure 8: Percentage of Public Housing Capital Fund Formula 

Grants Allocated by HUD That Have Been Obligated and 

Drawn Down by 47 Public Housing Agencies Visited by 

GAO, as of September 5, 2009 81 

Figure 9: Comparison of Troubled Housing Agencies and 

Nontroubled Housing Agencies’ Obligation and 

Drawdown Rates 86 

Figure 10: Comparison of Obligation and Drawdown Rates for 

Nontroubled Agencies with No Audit Findings, Troubled 

Agencies, and Nontroubled Agencies with Audit Findings 91 

Page iii GAO-09-1016 Recovery Act
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Page iv GAO-09-1016 Recovery Act
Page 1 GAO-09-1016 

United States Government Accountability Office

Washington, DC 20548 

 

September 23, 2009 

Report to the Congress 

The Congressional Budget Office (CBO) has reported that various 

indicators suggest the recession is likely to end within the next few 

months; however, the budget outlook for the states continues to indicate 

signs of stress. The National Conference of State Legislatures reported 

that states are collectively facing $142.6 billion in budget gaps for fiscal 

year 2010 as they enacted their budgets. While the availability of increased 

Recovery Act funds will help, states will continue to be fiscally strained. In 

addition, states are building new or augmenting existing reporting systems 

to comply with the unprecedented and complex reporting requirements. 

The first reporting deadline for prime recipients is October 10, 2009. 

The Recovery Act specifies several roles for GAO, including conducting 

bimonthly reviews of selected states’ and localities’ use of funds made 

available under the act. This report, the third in response to the act’s 

mandate, addresses the following: (1) selected states’ and localities’ uses 

of Recovery Act funds, (2) the approaches taken by the selected states and 

localities to ensure accountability for Recovery Act funds, and (3) states’ 

plans to evaluate the impact of the Recovery Act funds they received. The 

report provides overall findings, makes recommendations, and discusses 

the status of actions in response to the recommendations we made in our 

earlier reports. 

As reported in our April and July 2009 reviews, to address these 

objectives, we selected a core group of 16 states and the District that we 

will follow over the next few years. Individual summaries for this core 

group are compiled into an electronic supplement, GAO-09-1017SP, and 

are also accessible through GAO’s Recovery Act page at 

www.gao.gov/recovery. Our reviews examine how Recovery Act funds are 

being used and whether they are achieving the stated purposes of the act. 

These purposes include 

• to preserve and create jobs and promote economic recovery; 

• to assist those most impacted by the recession; 

• to provide investments needed to increase economic efficiency by 

spurring technological advances in science and health; 

Recovery Act
 

• to invest in transportation, environmental protection, and other 

infrastructure that will provide long-term economic benefits; and 

• to stabilize state and local government budgets, in order to minimize and 

avoid reductions in essential services and counterproductive state and 

local tax increases. 

The states selected for our bimonthly reviews contain about 65 percent of 

the U.S. population and are estimated to receive collectively about twothirds of the intergovernmental federal assistance funds available through 

the Recovery Act. We selected these states and the District on the basis of 

federal outlay projections, percentage of the U.S. population represented, 

unemployment rates and changes, and a mix of states’ poverty levels, 

geographic coverage, and representation of both urban and rural areas. In 

addition, we visited a nonprobability sample of 168 local entities within 

the 16 states and the District. 

Our work for this report focused on nine federal programs primarily 

because they have begun disbursing funds to states or have known or 

potential risks. These risks can include existing programs receiving 

significant amounts of Recovery Act funds or new programs. We collected 

documents from and conducted semistructured interviews with executivelevel state and local officials and staff from state offices, including 

governors’ offices, recovery leads, state auditors, and controllers. In 

addition, our work focused on federal, state, and local agencies 

administering the selected programs receiving Recovery Act funds. We 

analyzed guidance and interviewed officials from the federal Office of 

Management and Budget (OMB). We also analyzed other federal agency 

guidance on programs selected for this review and spoke with relevant 

program officials at the Centers for Medicare and Medicaid Services 

(CMS), the U.S. Departments of Commerce, Education, Energy, Housing 

and Urban Development, Justice, Labor, and Transportation. 

Where attributed to state officials, we did not review state legal materials 

for this report but relied on state officials and other state sources for 

description and interpretation of relevant state constitutions, statutes, 

legislative proposals, and other state legal materials. The information 

obtained from this review cannot be generalized to all states and localities 

receiving Recovery Act funding. A detailed description of our scope and 

methodology can be found in appendix I. 

Page 2 GAO-09-1016 Recovery Act
 

We conducted this performance audit from July 3, to September 18, 2009, 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives. 

Our analysis of initial estimates of Recovery Act spending provided by the 

Congressional Budget Office (CBO) suggested that about $49 billion would 

be outlayed to states and localities by the federal government in fiscal year 

2009, which runs through September 30. As we reported in July, our 

analysis of actual federal outlays reported on www.recovery.gov suggests 

that Recovery Act spending is slightly ahead of the initial estimates. In 

fact, as of September 11, 2009, the federal Treasury has paid out 

approximately $48 billion to states and localities, which is about 98 

percent of payments estimated for fiscal year 2009. Figure 1 shows the 

original estimate of federal outlays to states and localities under the 

Recovery Act compared with actual federal outlays as reported by federal 

agencies on www.recovery.gov. 

Background 

Page 3 GAO-09-1016 Recovery Act
 

Figure 1: Estimated versus Actual Federal Outlays to States and Localities under 

the Recovery Act 

Source: GAO analysis of CBO, Federal Funds Information for States, and Recovery.gov data.

0

20

40

60

80

100

120

2009 2010 2011 2012 2013 2014 2015 2016

Dollars (in billions)

Federal fiscal year (Oct. 1–Sept. 30)

Actual as of September 11, 2009

Original estimate

As of September 11, 2009, 84 percent of the $48 billion in federal outlays 

has been provided through two programs: the increased Federal Medical 

Assistance Percentage (FMAP) grant awards and the State Fiscal 

Stabilization Fund administered by the Department of Education. Highway 

spending accounts for an additional 4 percent. The distribution of total 

federal outlays to states and localities is shown in figure 2. 

Page 4 GAO-09-1016 Recovery Act
 

Figure 2: Distribution of Federal Outlays to States and Localities by Function as of 

September 11, 2009 

Source: GAO analysis of data from CBO and Federal Funds Information for States.

26.7%

62.3%

Health

Energy and environment

Income security

Community development

Transportation

Education and training

0.5%

2.7%

2.7%

5.2%

As recipients of Recovery Act funds and as partners with the federal 

government in achieving Recovery Act goals, states and local units of 

government are expected to invest Recovery Act funds with a high level of 

transparency and to be held accountable for results under the Recovery 

Act. Under the Recovery Act, direct recipients of the funds are expected to 

report quarterly on a number of measures, including the use of funds and 

an estimate of the number of jobs created or the number of jobs retained 

by projects and activities. These measures are part of the recipient reports 

required under Section 1512(c) of the Recovery Act and will be submitted 

by recipients starting in October 2009. The Office of Management and 

Budget (OMB) issued its implementing guidance for recipient reporting on 

June 22, 2009. These reporting requirements apply only to nonfederal 

recipients of funding, including all entities receiving Recovery Act funds 

directly from the federal government such as state and local governments, 

private companies, educational institutions, nonprofits, and other private 

organizations. However, the recipient reporting requirement only covers a 

defined subset of the Recovery Act’s funding. OMB’s guidance, consistent 

with the statutory language in the Recovery Act, states that these reporting 

requirements apply to recipients who receive funding through 

discretionary appropriations, not recipients receiving funds through 

Page 5 GAO-09-1016 Recovery Act
 

entitlement programs, such as Medicaid, or tax programs. Recipient 

reporting also does not apply to individuals. 

Among other things, the guidance clarified that recipients of Recovery Act 

funds are required to report only on jobs directly created or retained by 

Recovery Act-funded projects, activities, and contracts. Recipients are not 

expected to report on the employment impact on materials suppliers 

(“indirect” jobs) or on the local community (“induced” jobs). The OMB 

guidance also provided additional instruction on calculating on a full-timeequivalent (FTE) basis the number of jobs created or retained by Recovery 

Act funding. 

The Recovery Act assigns us a range of responsibilities to help promote 

accountability and transparency. In addition to our bimonthly reviews, we 

are required to comment on the jobs created and retained as reported by 

recipients of Recovery Act funding. Section 1512 of the act requires each 

nonfederal entity that has received Recovery Act funds to report quarterly 

on the use of the funds, including jobs created and retained by projects 

and activities. To implement this requirement, which will be effective 

October 10, 2009, OMB is developing a central collection system. This first 

report will cover cumulative activity since the Recovery Act’s passage in 

February 2009. 

Recipients have 10 days after the end of each calendar quarter to report. 

OMB has laid out a reporting and quality review process that allows 

recipients and delegated subrecipients to prepare and enter their 

information 1 to 10 days following the end of the quarter. During days 11 

through 21, prime recipients will be able to review the data to ensure that 

complete and accurate reporting information is provided prior to a federal 

agency review and comment period beginning on the 22nd day. During 

days 22 to 29 following the end of the quarter, federal agencies will 

perform data quality reviews and will notify the recipients and delegated 

subrecipients of any data anomalies or questions. The original submitter 

must complete data corrections no later than the 29th day following the 

end of the quarter. Since this is a cumulative reporting process, additional 

corrections can take place on a quarterly basis. We are to comment on the 

jobs data no later than 45 days after recipients have reported. We expect to 

issue our report no later than November 24, 2009. 

Page 6 GAO-09-1016 Recovery Act
 

States Continue Use 

of Recovery Act 

Funds While 

Preparing for First 

Required Report 

Cycle 

Increased FMAP 

Continues to Help States 

Finance Their Growing 

Medicaid Programs, but 

States Expressed Concern 

about the Longer-Term 

Sustainability of Their 

Medicaid Programs 

Medicaid is a joint federal-state program that finances health care for 

certain categories of low-income individuals, including children, families, 

persons with disabilities, and persons who are elderly. The federal 

government matches state spending for Medicaid services according to a 

formula based on each state’s per capita income in relation to the national 

average per capita income. The rate at which states are reimbursed for 

Medicaid service expenditures is known as the Federal Medical Assistance 

Percentage (FMAP), which may range from 50 percent to no more than 83 

percent. The Recovery Act provides eligible states with an increased 

FMAP for 27 months between October 1, 2008, and December 31, 2010.1

On February 25, 2009, the Centers for Medicare & Medicaid Services 

(CMS) made increased FMAP grant awards to states, and states may 

retroactively claim reimbursement for expenditures that occurred prior to 

the effective date of the Recovery Act. Generally, for fiscal year 2009 

through the first quarter of fiscal year 2011, the increased FMAP, which is

calculated on a quarterly basis, provides for (1) the maintenance of sta

prior year FMAPs, (2) a general across-the-board increase of 6.2 

percentage points in states’ FMAPs, and (3) a further increase to the 

FMAPs for those states that have a qualifying increase in

tes’ 

 unemployment 

rates. 

ict 

l 

 

Under the Recovery Act, the FMAP rates in the 16 states and the Distr

were increased an average of 9.01 percentage points for the first two 

quarters of fiscal year 2009, with increases ranging from 6.2 percentage 

points in Iowa to 12.24 percentage points in Florida. Further, qualifying 

increases in unemployment rates in the third and fourth quarters of fisca

year 2009 contributed to additional increases in FMAP rates in 14 states 

and the District. The FMAP rates for the 2 remaining states—California

and Florida—have not changed since the second quarter of fiscal year 

1

Recovery Act, div. B, title V, § 5001. 

Page 7 GAO-09-1016 Recovery Act
 

2009. By the end of fiscal year 2009, FMAP rates in the sample states a

the District will have increased an average of 10.57 percentage points 

nd 

when compared to the original fiscal year 2009 FMAP rates. 

Table 1: Original and Increased Quarterly FMAPs for Fiscal Year 2009 for 16 States and the District (Percentage Points) 

State 

Original 

al year 

2009 

fisc

F

200

qua third qu fourth qu

b

2

quarter FM

in

MAP quarter F a

Increased 

fiscal year 

9 FMAP, 

first and 

second

rtersb

Increased 

fiscal year 

2009 FMAP,

arterc

Increased 

fiscal year 

2009 FMAP,

arterd

Difference 

etween original 

009 FMAP and 

increased first 

and second 

APs

Difference 

between original 

2009 FMAP and 

creased fourth

MAPP

d

Arizona 65.77 75.01 75.93 75.93 9.24 10.16

California 50.00 61.59 61.59 61.59 11.59 11.59

Colorado 50.00 58.78 61.59 61.59 8.78 11.59

District of Columbia 70.00 77.68 79.29 79.29 7.68 9.29

Florida 55.40 67.64 67.64 67.64 12.24 12.24

Georgia 64.49 73.44 74.42 74.42 8.95 9.93

Illinois 50.32 60.48 61.88 61.88 10.16 11.56

Iowa 62.62 68.82 68.82 70.71 6.20 8.09

Massachusetts 50.00 58.78 60.19 61.59 8.78 11.59

Michigan 60.27 69.58 70.68 70.68 9.31 10.41

Mississippi 75.84 83.62 84.24 84.24 7.78 8.40

New Jersey 50.00 58.78 61.59 61.59 8.78 11.59

New York 50.00 58.78 60.19 61.59 8.78 11.59

North Carolina 64.60 73.55 74.51 74.51 8.95 9.91

Ohio 62.14 70.25 72.34 72.34 8.11 10.20

Pennsylvania 54.52 63.05 64.32 65.59 8.53 11.07

Texas 59.44 68.76 68.76 69.85 9.32 10.41

Average FMAP 

increase 9.01 10.57

Source: GAO analysis of HHS data. 

a

The original fiscal year 2009 FMAP rates were published in the Federal Register on November 28, 

P rates for the first and second quarters were published in the 

ary 

ates and adjusts these FMAP rates once the final unemployment numbers 

creased FMAP rates listed for the fourth quarter were provided by CMS on September 16, 

2009. 

2007. A correction for the North Carolina FMAP rate was published on December 7, 2007. 

b

The increased fiscal year 2009 FMA

Federal Register on April 21, 2009. 

c

The increased fiscal year 2009 FMAP rates for the third quarter were published in the Federal 

Register on August 4, 2009. In this notice, the Department of Health and Human Services (HHS) 

changed the methodology it uses to calculate the increased FMAP rates. Specifically, HHS calculates

preliminary FMAP rates prior to the start of each quarter using Bureau of Labor Statistics prelimin

unemployment estim

become available. 

d

The in

Page 8 GAO-09-1016 Recovery Act
 

From October 2007 to August 2009, overall Medicaid enrollment in the 16 

states and the District increased by 10.4 percent,2

 with nearly two-thirds of 

the increase attributable to the population group of children—a group that 

is sensitive to economic downturns. In addition, just over one quarter of 

the overall enrollment increase was attributable to the population group of 

adults who are nonaged, nonblind, or nondisabled. Each of the states and 

the District experienced an enrollment increase during this period, with 

the highest number of programs experiencing an increase of 5 percent to 

10 percent. The percentage increase in enrollment, however, varied 

widely, ranging from just under 3 percent in New Jersey to about 27 

percent in Arizona. (See figure 3.) Comparing growth rates within this time 

period, enrollment grew most rapidly in early 2009, generally from January 

to April 2009. All states experienced an enrollment increase during this 

period, and growth was especially pronounced in five states that reported 

increases between 4 percent and 5 percent. Overall enrollment growth in 

recent months—from May to August 2009—was less rapid, though 

variation existed among states. For example, while enrollment in Illinois 

and Pennsylvania remained relatively stable, changing less than 1 percent 

from May to August 2009, Arizona experienced over 7 percent growth in 

Medicaid enrollment during that time. 

 

2

The percentage increase is based on state reported enrollment data for October 2007 to 

August 2009. Five states—Colorado, Florida, Georgia, Massachusetts, and Mississippi—did 

not provide Medicaid enrollment data for August 2009. In addition, two of these states—

Massachusetts and Georgia—did not provide enrollment data for July 2009. We estimated 

enrollment for these states for these months to determine the total change in enrollment 

for October 2007 to August 2009. 

Page 9 GAO-09-1016 Recovery Act
 

Figure 3: Percentage Increase in Medicaid Enrollment from October 2007 to August 2009, for 16 States and the District 

Percentage change

0% to

less

than 5%

Source: GAO analysis of state data.

Quintile category

0

5

10

15

20

25

30

MANJ CA PA S ILDCTXGANYM NCMI IA OHCO FL AZ

Overall Medicaid enrollment increased by 10.4%

5% to

less

than 10%

10% to

less

than 15%

15% to

less

than 20%

20% to

less

than 25%

25% to

less

than 30%

Note: The percentage increase is based on state reported Medicaid enrollment data for October 2007 

to August 2009. Five states—Colorado, Florida, Georgia, Massachusetts, and Mississippi—did not 

provide estimated Medicaid enrollment data for August 2009. In addition, two of these states—

Massachusetts and Georgia—did not provide enrollment data for July 2009. 

With regard to the states’ receipt of the increased FMAP, all 16 states and 

the District had drawn down increased FMAP grant awards totaling just 

over $20.3 billion for October 1, 2008, through September 15, 2009, which 

amounted to 87.37 percent of funds available. (See table 2.) In addition, 

except for the initial weeks that increased FMAP funds were available, the 

weekly rate at which the 16 states and the District have drawn down these 

funds has remained relatively constant. Nationally, the 50 states, the 

District, and several of the largest U.S. insular areas combined have drawn 

down nearly $30 billion as of September 15, 2009, which represents 87.83 

percent of the increased FMAP grants awarded for all four quarters of 

federal fiscal year 2009. 

Page 10 GAO-09-1016 Recovery Act
 

Table 2: FMAP Grant Awards and Funds Drawn Down, for 16 States and the District, 

as of September 15, 2009 

Dollars in thousands 

State 

FMAP grant 

awardsa

Funds 

drawn

Percentage of

 funds drawn

Arizona $796,917 $731,511 91.79

California 4,369,087 3,661,264 83.80

Colorado 347,181 248,562 71.59

District of Columbia 139,985 121,596 86.86

Florida 1,861,572 1,697,990 91.21

Georgia 706,961 659,852 93.34

Illinois 1,323,337 1,160,455 87.69

Iowa 197,601 162,266 82.12

Massachusetts 1,173,742 1,161,009 98.92

Michigan 1,007,280 933,982 92.72

Mississippi 312,932 277,914 88.81

New Jersey 858,931 798,119 92.92

New York 4,478,505 3,820,719 85.31

North Carolina 904,469 904,469 100.00

Ohio 1,228,943 1,062,898 86.49

Pennsylvania 1,569,221 1,058,644 67.46

Texas 1,985,036 1,862,379 93.82

Sample total $23,261,701 $20,323,630 87.37

National total $34,141,536 $29,988,161 87.83

Source: GAO analysis of HHS data as of September 15, 2009. 

a

The FMAP grant awards listed are for all four quarters of federal fiscal year 2009, through September 

15, 2009. 

While the increased FMAP available under the Recovery Act is for state 

expenditures for Medicaid services, the receipt of these funds may have 

reduced the funds that states would otherwise have to use for their 

Medicaid programs, and states have reported using funds that have 

become freed up as the result of increased FMAP for a variety of purposes. 

Most commonly, states reported using these funds in fiscal year 2009 to 

cover increased Medicaid caseloads, maintain Medicaid eligibility, benefits 

and services, and finance general state budget needs. In addition, more 

than half of the states reported using these funds to maintain payment 

rates for practitioners and institutional providers, and five states reported 

using these funds to meet prompt pay requirements. Three states and the 

District also reported using these funds to help finance their State 

Page 11 GAO-09-1016 Recovery Act
 

Children’s Health Insurance Program (CHIP) or other local or state public 

health insurance programs. Although virtually all the states and the 

District reported using these funds for multiple purposes, two states—

North Carolina and Ohio—reported using the freed-up funds exclusively to 

finance general state budget needs—a decrease from the five states that 

reported doing so in our July 2009 report. When asked about their planned 

uses of these funds in fiscal year 2010, the states and the District provided 

similar responses. 

For states to qualify for the increased FMAP available under the Recovery 

Act, they must meet a number of requirements, including the following: 

• States generally may not apply eligibility standards, methodologies, or 

procedures that are more restrictive than those in effect under their state 

Medicaid programs on July 1, 2008.3

• States must comply with prompt payment requirements.4

• States cannot deposit or credit amounts attributable (either directly or 

indirectly) to certain elements of the increased FMAP into any reserve or 

rainy-day fund of the state.5

• States with political subdivisions—such as cities and counties—that 

contribute to the nonfederal share of Medicaid spending cannot require 

 

3

In order to qualify for the increased FMAP, states generally may not apply eligibility 

standards, methodologies, or procedures that are more restrictive than those in effect 

under their state Medicaid plans or waivers on July 1, 2008. See Recovery Act, div. B, title 

V, §5001(f)(1)(A). 

4

Under the Recovery Act, states are not eligible to receive the increased FMAP for certain 

claims for days during any period in which that state has failed to meet the prompt 

payment requirement under the Medicaid statute as applied to those claims. See Recovery 

Act, div. B, title V, §5001(f)(2). Prompt payment requires states to pay 90 percent of clean 

claims from health care practitioners and certain other providers within 30 days of receipt 

and 99 percent of these claims within 90 days of receipt. See 42 U.S.C. §1396a(a)(37)(A). 

5

A state is not eligible for certain elements of increased FMAP if any amounts attributable 

directly or indirectly to them are deposited or credited into a state reserve or rainy day 

fund. Recovery Act, div. B, title V, §5001(f)(3). 

Page 12 GAO-09-1016 Recovery Act
 

the subdivisions to pay a greater percentage of the nonfederal share than 

would have been required on September 30, 2008.6

To comply with these requirements, 12 states reported making 

adjustments to their Medicaid programs, including rescinding prior 

program changes or canceling planned changes that conflicted with these 

requirements. For example, 10 states reported making changes to comply 

with the act’s prompt payment requirement, including modifying payment 

cycles, reporting processes, or information systems. In addition, 9 states 

reported making changes to comply with the act’s requirement that states 

may not implement more restrictive eligibility standards, methodologies, 

or procedures. Most commonly, these states rescinded or canceled 

programmatic changes that conflicted with this requirement. For example, 

Arizona had to rescind a programmatic adjustment, which had changed 

the frequency of Medicaid eligibility determinations for certain individuals 

from 12 to 6 months, and Ohio did not proceed with a proposal to reduce 

slots in a waiver program—CMS or the state determined that these 

changes constituted a more restrictive eligibility standard. In addition, 

three states—Arizona, Illinois, and New York—made adjustments to meet 

the requirement related to the contributions of political subdivisions to the 

nonfederal share. For example, according to New York officials, the local 

share of the nonfederal share of Medicaid expenditures is based on a 

statutory formula that provides for a percentage increase each year, 

subject to an existing cap. New York reported that it reduced the local 

contribution to the nonfederal share to ensure that the percentage of the 

local share will remain at the September 30, 2008, level over the course of 

the recession adjustment period. Regarding the Recovery Act requirement 

that prohibits states from depositing or crediting amounts attributable to 

increased FMAP into any reserve or rainy-day fund, none of the states 

reported making adjustments related to this requirement. 

When asked about the difficulty of complying with these requirements, 

Medicaid officials from over half of the states reported that compliance 

had been “somewhat difficult” or “difficult,” and most commonly cited the 

 

6

In some states, political subdivisions—such as cities and counties—may be required to 

help finance the state’s share of Medicaid spending. Under the Recovery Act, a state that 

has such financing arrangements is not eligible for certain elements of the increased FMAP 

if it requires subdivisions to pay during a quarter of the recession adjustment period a 

greater percentage of the nonfederal share than the percentage that would have otherwise 

been required under the state plan on September 30, 2008. See Recovery Act, div. B., title V, 

§ 5001(g)(2). The recession adjustment period is the period beginning October 1, 2008, and 

ending December 31, 2010. 

Page 13 GAO-09-1016 Recovery Act
 

act’s prompt payment requirement as the most problematic.7 In addition, 

several states cited the lack of timely agency guidance as a factor 

complicating their efforts to comply with Recovery Act requirements. To 

clarify the act’s requirements related to prompt payment, CMS issued a 

State Medicaid Director’s letter on July 30, 2009, that defined terms related 

to prompt payment and described the method states should use to 

calculate days during a quarter that they have met or not met the prompt 

payment requirement. CMS officials told us that, in developing the 

guidance, they sought comments from states and national organizations. In 

addition, CMS officials said that states will use existing electronic 

reporting processes to report on the extent to which they comply with this 

requirement and to adjust for prior period increased FMAP draw down 

amounts for days they were not in compliance.8

 In addition, CMS 

published another State Medicaid Director’s letter on August 19, 2009, that, 

among other things, specified programmatic changes that could affect 

states’ eligibility for the increased FMAP.9

When asked about whether the increased FMAP funds were sufficient to 

protect and maintain their Medicaid programs during the economic 

downturn, the 16 states and the District varied in their responses. Seven 

states and the District reported that the amount of increased FMAP funds 

they received in fiscal year 2009 was sufficient to maintain their Medicaid 

programs, including maintaining eligibility, services, and benefits. In 

contrast, two states—California and Massachusetts—reported that the 

amount of increased FMAP they received in fiscal year 2009 was not 

sufficient for this purpose. For example, Massachusetts reported that even 

with the increased FMAP, increased caseload and utilization had led the 

state to reduce its Medicaid expenditures by freezing many provider rates 

at prior year levels. The remaining seven states reported that the funds 

were only somewhat sufficient to maintain their Medicaid programs during 

fiscal year 2009. In looking forward, fewer states characterized the amount 

of increased FMAP they expect to receive in fiscal year 2010 as sufficient 

 

7

In contrast to Recovery Act requirements, most states and the District did not report 

difficulty meeting CMS’s requirements that increased FMAP funds must be drawn down, 

tracked, and reported to CMS separately. 

8

Although states can apply to CMS for a waiver from the act’s prompt payment 

requirement, Massachusetts is the only state in our sample that reported being in the 

process of applying for a waiver. 

9

As of September 4, 2009, these publications were available on the CMS Web site; see 

http://www.cms.hhs.gov/SMDL/SMD/list.asp?sortByDID=1a&submit=Go&filterType=none

&filterByDID=-99&sortOrder=ascending&intNumPerPage=10. 

Page 14 GAO-09-1016 Recovery Act
 

to maintain their Medicaid programs compared to fiscal year 2009. 

Specifically, some states indicated that budget conditions in their state are 

projected to worsen in state fiscal year 2010 and that the increased FMAP 

would not be sufficient to close Medicaid budget shortfalls or avoid 

provider rate cuts or other expenditure containment measures. 

As for the longer-term outlook for their Medicaid programs, the District 

and all but one of the sample states reported concerns about the 

sustainability of their Medicaid programs after the increased FMAP funds 

are no longer available, beginning in January 2011. When asked about the 

nature of their concerns, states generally reported doubt that their 

economies and revenues would fully recover before the increased FMAP 

funding ended and noted that Medicaid enrollment is continuing to 

increase. As a result, states were unsure that they could maintain eligibility 

levels, benefits and services, or provider rates without the increased 

FMAP. Specifically, several states referred to the loss of increased FMAP 

funds as a “cliff” over which the state would fall when funding was no 

longer available or similarly described their concern that the change in the 

state’s share of funds would be substantial. For example, New Jersey 

estimated that it would need $550 million in order to replace the increased 

FMAP funds in fiscal year 2011. Most states and the District reported that 

they did not have definitive plans to address their concerns about 

sustaining their programs without the increased FMAP. Four states, 

however, reported considering various Medicaid program reductions, such 

as reductions in benefits and eligibility, once the increased FMAP funds 

are no longer available. 

Over Half of All Highway 

and Transit Recovery Act 

Funding Has Been 

Obligated 

A substantial portion of the approximately $35 billion the Recovery Act 

provided for highway infrastructure projects and public transportation has 

been obligated nationwide and in the 16 states and the District of 

Columbia (District) that are the focus of our review. For example, $18 

billion of Recovery Act highway funds had been obligated for almost 7,000 

projects nationwide, and $10.6 billion had been obligated for nearly 3,800 

projects in each of the 16 states and the District, as of September 1, 2009.10

In addition, as of September 1, 2009, $5.95 billion of the Recovery Act 

 

10For the Federal Highway Program, the U.S. DOT has interpreted the term obligation of 

funds to mean the federal government’s commitment to pay for the federal share of the 

project. This commitment occurs at the time the federal government signs a project 

agreement. 

Page 15 GAO-09-1016 Recovery Act
 

Transit Capital Assistance Program funds had been obligated nationwide.11

The total distribution of project funds by improvement type among the 16 

selected states and the District closely mirrors the national distribution, 

with pavement improvement projects accounting for almost half of the 

obligated funds. However, we found wide differences among selected 

states in how funds were used, federal reimbursement rates to states for 

payments made for completed work, and in the rate of obligation of 

highway funds required by the Recovery Act to be suballocated for 

metropolitan, regional, and local use. 

For Recovery Act transit funds, we focused our review on the Transit 

Capital Assistance Program, which received approximately 82 percent of 

Recovery Act transit funds, and eight selected states and the District. 

Nationwide, Recovery Act funds obligated under this program are 

primarily being used for improving bus fleets, upgrading transit facilities, 

and conducting preventive maintenance. The Recovery Act required that 

50 percent of Transit Capital Assistance Program funds be obligated by 

September 1, 2009, and the Federal Transit Administration (FTA) has 

concluded that all states and urbanized areas met this requirement. Even 

though the Department of Transportation (DOT) and OMB have issued 

guidance for recipient reporting of job creation and retention, state 

highway and transit officials expressed some concern and challenges with 

meeting the act’s reporting requirements, including the calculation of 

direct jobs and full-time-employee equivalents from work hours. 

States Continuing to Dedicate Most Recovery Act Highway Funds 

for Pavement Projects, but Differences among States’ Approaches 

in Use of Funds Starting to Emerge 

The Recovery Act provides funding to states for restoration, repair, and 

construction of highways and other activities allowed under the FederalAid Highway Surface Transportation Program and for other eligible 

surface transportation projects. The Recovery Act requires that 30 percent 

of these funds be suballocated, primarily based on population, for 

metropolitan, regional, and local use. Highway funds are apportioned to 

states through federal-aid highway program mechanisms, and states must 

follow existing program requirements, which include ensuring the project 

 

11For the Transit Capital Assistance Program, the U.S. DOT has interpreted the term 

obligation of funds to mean the federal government’s commitment to pay for the federal 

share of the project. This commitment occurs at the time the federal government signs a 

grant agreement. 

Page 16 GAO-09-1016 Recovery Act
 

meets all environmental requirements associated with the National 

Environmental Policy Act (NEPA), paying a prevailing wage in accordance 

with federal Davis-Bacon Act requirements, complying with goals to 

ensure disadvantaged businesses are not discriminated against in the 

awarding of construction contracts, and using American-made iron and 

steel in accordance with Buy America program requirements. While the 

maximum federal fund share of highway infrastructure investment 

projects under the existing federal-aid highway program is generally 80 

percent, under the Recovery Act, it is 100 percent. 

In March 2009, $26.7 billion was apportioned to all 50 states and the 

District for highway infrastructure and other eligible projects. As of 

September 1, 2009, $18 billion of the funds had been obligated for almost 

7,000 projects nationwide, and $10.6 billion had been obligated for nearly 

3,800 projects in the 16 states and the District. (See table 3). 

Page 17 GAO-09-1016 Recovery Act
 

Table 3: Recovery Act Highway Apportionments and Obligations Nationwide and in 

Selected States as of September 1, 2009 

Dollars in millions 

Obligationsa

State Apportionment

Obligated 

amount 

Percentage of 

apportionment 

obligated

Arizona $522 $293 56

California 2,570 1,978 77

Colorado 404 290 72

District of 

Columbia 124 116 94

Florida 1,347 1,001 74

Georgia 932 546 59

Illinois 936 736 79

Iowa 358 319 89

Massachusetts 438 203 46

Michigan 847 575 68

Mississippi 355 289 82

New Jersey 652 473 73

New York 1,121 783 70

North Carolina 736 453 62

Ohio 936 429 46

Pennsylvania 1,026 875 85

Texas 2,250 1,195 53

Selected states 

total $15,551 $10,554 68

U.S. total $26,660 $17,964 67

Source: GAO analysis of FHWA data. 

Notes: All states have met the Recovery Act requirement that 50 percent of apportioned funds be 

obligated within 120 days of apportionment (before June 30, 2009). However, this requirement 

applies only to funds apportioned to the state and not to the 30 percent of funds required by the 

Recovery Act to be suballocated, primarily based on population, for metropolitan, regional, and local 

use. This table shows the percentage of all apportioned funds that have been obligated, which is why 

some states show an obligation rate of less than 50 percent. 

a

This does not include obligations associated with $288 million of apportioned funds that were 

transferred from FHWA to FTA for transit projects in Arizona, California, Colorado, Florida, Georgia, 

Iowa, Massachusetts, New York, and North Carolina. Generally, FHWA has authority pursuant to 23

U.S.C. § 104(k)(1) to transfer funds made available for transit projects to FTA. 

Almost half of Recovery Act highway obligations have been for pavement 

improvements. Specifically, $8.7 billion of the $18 billion obligated 

Page 18 GAO-09-1016 Recovery Act
 

nationwide as of September 1, 2009, is being used for projects such as 

reconstructing or rehabilitating deteriorated roads, including $4.1 billion 

for road resurfacing projects. As we reported in July 2009, many state 

officials told us they selected a large percentage of resurfacing and other 

pavement improvement projects because those projects did not require 

extensive environmental clearances, were quick to design, could be 

quickly obligated and bid, could employ people quickly, and could be 

completed within 3 years. Figure 4 shows obligations by the types of road 

and bridge improvements being made. 

Figure 4: National Recovery Act Highway Obligations by Project Improvement Type 

as of September 1, 2009 

Bridge improvement ($977 million)

Other ($3 billion)

Pavement widening ($2.95 billion)

Source: GAO analysis of FHWA data.

Pavement improvement ($8.71 billion)

Pavement projects total (71 percent, $12.78 billion)

Bridge projects total (12 percent, $2.19 billion)

Other (17 percent, $3 billion)

Bridge replacement ($821 million)

16%

5%

17%

2%

New bridge construction ($393 million)

6%

48%

New road construction ($1.12 billion)

5%

Note: Totals may not add due to rounding. “Other” includes safety projects, such as improving safety 

at railroad grade crossings, and transportation enhancement projects, such as pedestrian and bicycle 

facilities, engineering, and right-of-way purchases. 

In addition to pavement improvement, other projects that have significant 

funds obligated include pavement widening, with $3 billion obligated, and 

bridge replacement and improvements, with $1.8 billion obligated. The 

total distribution of project funds by improvement type among the 16 

states and the District closely mirrors the distribution nationally—

however, wide differences in how funds were used exist among states. For 

Page 19 GAO-09-1016 Recovery Act
 

example, 40 percent of Florida’s funds have been obligated for pavement 

widening projects (compared with 16 percent nationally) and 21 percent 

for construction of new roads and bridges (compared with 8 percent 

nationally), while 17 percent of funds have been obligated for pavement 

improvements (compared with 48 percent nationally). In Ohio, 37 percent 

of funds have been obligated for new road and bridge construction. In 

contrast, roughly 85 percent of funds in both Iowa and Massachusetts have 

been obligated for pavement improvements. While the states we visited for 

our July 2009 report had selected pavement improvement projects because 

they could be quickly implemented, during our recent interviews we found 

states are beginning to select projects entailing more complexity. For 

example, Massachusetts has begun selecting more complicated 

construction and reconstruction projects, including a new $36 million 

pedestrian bridge project. 

As of September 1, 2009, $1.4 billion had been reimbursed nationwide by 

the Federal Highway Administration (FHWA), including $604 million 

reimbursed to the 16 states and the District.12 These amounts represent 8 

percent of the $18 billion obligated nationwide and 6 percent of the $10.6 

billion obligated in the 16 states and the District. DOT officials told us that 

although funding has been obligated for almost 7,000 projects, it may be 

months before states request reimbursement from FHWA. In particular, 

FHWA told us that once funds are obligated for a project, it may take 2 or 

more months for a state to bid and award the work to a contractor and 

have work begin. Once the contract is awarded and contractors mobilize 

and begin work, states make payments to these contractors for completed 

work; states may request reimbursement from FHWA. FHWA, through the 

U.S. Treasury, is required to pay the state promptly after the state pays out 

of its own funds for project-related purposes. The funds reimbursed to the 

states as of September 1, 2009, increased over 500 percent in about 2 

months. As we reported in July 2009, FHWA had reimbursed $233 million 

nationwide, including $96.4 million to the 16 states and the District as of 

June 25, 2009. FHWA officials told us the increased level of 

reimbursements was expected as the number of contracts awarded and 

projects currently under construction continue to increase. Table 4 shows 

the level of reimbursements nationwide and in the 16 states and the 

District. 

 

12States request reimbursement from FHWA as the state makes payments to contractors 

working on approved projects. 

Page 20 GAO-09-1016 Recovery Act
 

Table 4: Recovery Act Highway Reimbursements Nationwide and in Selected States 

as of September 1, 2009 

Dollars in millions 

State Reimbursement

Percentage of 

obligations 

reimbursed 

Percentage of 

apportionment 

reimbursed

District of Columbia <$1 <1 <1

Florida <1 <1 <1

California 22 1 1

New Jersey 4 1 1

Georgia 10 2 1

Massachusetts 5 2 1

New York 23 3 2

Ohio 17 4 2

Texas 47 4 2

Arizona 18 6 3

Colorado 16 6 4

Pennsylvania 51 6 5

Michigan 41 7 5

Mississippi 21 7 6

North Carolina 38 8 5

Illinois 200 27 21

Iowa 91 28 25

Selected states 

total 

604 6 4

U.S. total $1,437 8 5

Source: GAO analysis of FHWA data. 

Note: This does not include reimbursements associated with $288 million of apportioned funds that 

were transferred from FHWA to FTA for transit projects. Generally, FHWA has authority pursuant to 

23 U.S.C. § 104(k)(1) to transfer funds made available for transit projects to FTA. 

As table 4 shows, wide differences exist in reimbursements across states. 

Among the 16 states and the District, 2 states—Illinois and Iowa—

accounted for nearly half of all reimbursements, while 8 states and the 

District had reimbursements totaling 5 percent or less of obligations, 

including 4 states with 1 percent or less. In Massachusetts, which had 2 

percent of obligations reimbursed, inclement weather delayed the start of 

construction on some projects, limiting the extent to which contractors 

were incurring costs, according to a Massachusetts highway official. We 

will continue to monitor the rate of reimbursements among the states in 

our future reviews. 

Page 21 GAO-09-1016 Recovery Act
 

According to state officials, because an increasing number of contractors 

are looking for work, bids for Recovery Act contracts have come in under 

estimates. For example, the bids for the two highway contracts we 

reviewed in Gwinnett County, Georgia, were 30 percent to 35 percent 

lower than the county’s original estimates. Similarly, the awarded bid on 

the Belleview Avenue project in Colorado, which we reviewed in our July 

2009, report, was 30 percent below Colorado Department of 

Transportation’s (CDOT) estimate, partially due to a downward trend in 

asphalt prices. These lower than anticipated bids are allowing states to 

redirect Recovery Act funds to other projects, including projects in 

economically distressed areas. This is consistent with a July 2009 letter 

from the Secretary of Transportation to the state governors encouraging 

them to use the “bid savings” for projects in distressed areas. Examples of 

bid savings from the 16 states and the District of Columbia include the 

following. 

• According to the Arizona Department of Transportation (ADOT), the state 

had advertised 51 highway projects as of August 30, 2009. The lower than 

anticipated bids on these projects have resulted in bid savings of $60 

million. ADOT is moving forward to use these savings on additional 

projects. 

• CDOT officials reported that bids for 32 of the 41 awarded Recovery Act 

projects had come in lower than the engineers’ estimates. As a result, 

Colorado had a total bid savings of over $39 million as of August 2009. 

CDOT plans to fund additional projects with bid savings, including 

projects in areas of the state that are economically distressed. 

• According to Pennsylvania Department of Transportation data, as of 

August 31, 2009, of 245 bids received, the total costs came in 12 percent 

(or about $104 million) less than original state estimates. 

Recovery Act highway funding is apportioned under the same rules 

governing the federal-aid highway program generally and its Surface 

Transportation Program in particular, and states have wide latitude and 

flexibility in which projects to select for federal funding. However the 

Recovery Act tempers that latitude with requirements that do not exist in 

the regular program, including the following requirements: 

• Ensure that 50 percent of apportioned Recovery Act funds are obligated 

within 120 days of apportionment (before June 30, 2009) and that the 

remaining apportioned funds are obligated within 1 year. The 50 percent 

rule applies only to funds apportioned to the state and not to the 30 

Page 22 GAO-09-1016 Recovery Act
 

percent of funds required by the Recovery Act to be suballocated, 

primarily based on population, for metropolitan, regional, and local use. 

The Secretary of Transportation is to withdraw and redistribute to other 

states any amount that is not obligated within these time frames.13

• Give priority to projects that can be completed within 3 years and to 

projects located in economically distressed areas. These areas are defined 

by the Public Works and Economic Development Act of 1965, as 

amended.14 According to the act, to qualify as economically distressed, an 

area must have (1) a per capita income that is 80 percent or less than the 

national average or (2) an unemployment rate that is, for the most recent 

24-month period for which data are available, at least 1 percent greater 

than the national average.15 For areas that do not meet one of these two 

criteria, the Secretary of Commerce has the authority to determine that an 

area has experienced or is about to experience a “special need” arising 

from actual or threatened severe unemployment or economic adjustment 

problems. 

• Certify that the state will maintain the level of spending for the types of 

transportation projects funded by the Recovery Act that it planned to 

spend the day the Recovery Act was enacted. As part of this certification, 

the governor of each state is required to identify the amount of funds the 

state plans to expend from state sources from February 17, 2009, through 

September 30, 2010.16

As we reported in July 2009, all states had met the first Recovery Act 

requirement that 50 percent of their apportioned funds were obligated 

within 120 days. As of September 1, 2009, 75 percent of funds covered by 

this requirement had been obligated. However, fewer funds have been 

obligated among those funds not covered by this requirement—those 

required by the Recovery Act to be suballocated for metropolitan, 

 

13Recovery Act, div. A, title XII, 123 Stat. 115, 206. 

14Id.

1542 U.S.C. § 3161(a). Eligibility must be supported using the most recent federal data 

available or, in the absence of recent federal data, by the most recent data available 

through the government of the state in which the area is located. Federal data that may be 

used include data reported by the Bureau of Economic Analysis, the Bureau of Labor 

Statistics, the Census Bureau, the Bureau of Indian Affairs, or any other federal source 

determined by the Secretary of Commerce to be appropriate (42 U.S.C. § 3161((c)). 

16Recovery Act, div. A, title XII, § 1201(a). 

Page 23 GAO-09-1016 Recovery Act
 

regional, and local use. As of September 1, 2009, 51 percent of those funds 

had been obligated nationwide. In addition, we found variations in the rate 

of obligations for the suballocated areas among the 16 states and the 

District of Columbia, ranging from 19 percent in New Jersey to 97 percent 

in Pennsylvania. (See table 5.) 

Table 5: Recovery Act Highway Apportionments and Obligations for Suballocated 

Areas Nationwide and in Selected States as of September 1, 2009 

Dollars in millions 

State 

Suballocated 30 

percent portion of 

apportionment 

Obligated amount 

in suballocated 

area 

Percentage of 

suballocated 

apportionment 

obligated

Arizona 157 34 22

California 771 563 73

Colorado 121 72 60

District of Columbia 37 32 85

Florida 404 270 67

Georgia 279 126 45

Illinois 281 119 42

Iowa 107 91 85

Massachusetts 131 31 24

Michigan 254 109 43

Mississippi 106 51 48

New Jersey 196 37 19

New York 336 166 50

North Carolina 221 117 53

Ohio 281 130 46

Pennsylvania 308 300 97

Texas 675 197 29

Selected states 

total $4,665 $2,445 52

U.S. total $7,998 $4,042 51

Source: GAO analysis of FHWA data. 

Officials in three states with the lowest levels of obligations in 

suballocated areas told us that the low obligation rates were primarily due 

to the initial shortage of “ready-to-go” projects eligible for federal 

Page 24 GAO-09-1016 Recovery Act
 

funding.17 Officials from these states attributed the lack of ready-to-go 

projects to a variety of factors, including the following: 

• Officials in Arizona and New Jersey cited the lack of familiarity with 

federal requirements for the federal-aid highway program as a major factor 

in the delay in identifying ready-to-go projects. In particular, Arizona 

Department of Transportation officials told us that suballocated funding is 

being used for projects that will be administered by local governments and 

that, in prior years, many of these types of projects were funded using 

state funds. As such, these local governments did not have to meet federalaid eligibility and procedural requirements in prior years, and delays in 

identifying ready-to-go projects resulted when these governments had to 

both develop projects that are eligible for federal funding and to acclimate 

themselves with unfamiliar federal procedural requirements. Similarly, 

New Jersey officials cited unfamiliarity with these same federal 

requirements as a cause for delay in identifying ready-to-go projects in 

suballocated areas. For example, officials stated that local staff working 

on many of the projects needed time to navigate federal requirements such 

as the National Environmental Policy Act (NEPA), which involves the 

environmental review process. As noted earlier, states are required to 

maintain the level of state spending for highway projects during the period 

of the Recovery Act. According to FHWA officials, Arizona and New Jersey 

may use Recovery Act funds for activities that were previously state 

funded, provided that state funds are used for other transportation 

projects and that the state’s overall level of effort is not decreased. 

• Officials in Massachusetts said that increased staff workload from the 

additional projects resulting from both the Recovery Act and the state’s 

new $3 billion program to reduce the growing backlog of structurally 

deficient bridges contributed to the state’s low obligation percentage. 

Furthermore, based on the advice of FHWA’s division office, 

Massachusetts focused on having funds obligated for the state portion of 

the apportioned funds before focusing on the suballocated funds to ensure 

that it met the 50 percent obligation requirement by June 30, 2009. 

Massachusetts met this requirement, with 59 percent of the state portion 

of the Recovery Act highway funds obligated as of June 25, 2009. 

 

17We interviewed officials from departments of transportation and metropolitan planning 

organizations in Arizona, New Jersey, and Massachusetts—the three states with the lowest 

levels of obligations in suballocated areas. 

Page 25 GAO-09-1016 Recovery Act
 

Officials in each of the three states told us that they have taken action to 

increase obligations in suballocated areas and that they expect to meet 1-

year March 2010 deadline for obligating all highway funds apportioned to 

the states; however, state and local officials in Arizona also said that 

meeting the deadline could pose significant challenges. 

The second Recovery Act requirement is to give priority to projects that 

can be completed within 3 years and to projects located in economically 

distressed areas. As we reported in July 2009, while officials from almost 

all of the states we reviewed said that they considered project readiness, 

including the 3-year completion requirement, when making project 

selections, there was substantial variation in the extent to which states 

prioritized projects in economically distressed areas and how they 

identified these areas. Many states based their project selections on other 

factors and only later identified whether these projects were in 

economically distressed areas. We also reported that DOT and FHWA had 

not provided clear guidance—while the guidance emphasized the 

importance of giving priority to these areas, it did not define what giving 

priority meant and, thus, did not ensure that the act’s priority provisions 

would be consistently applied. We also found instances of states 

developing their own eligibility requirements for economically distressed 

areas using data or criteria not specified in the Public Works and 

Economic Development Act. For example, one state identified these areas 

based in part on home foreclosure rates—data not specified in the Public 

Works Act. In each of the cases we identified, the states informed us that 

FHWA approved the state’s use of alternative criteria. However, FHWA did 

not consult with or seek the approval of the Department of Commerce, 

and it was not clear under what authority FHWA approved these criteria. 

As a result we recommended that the Secretary of Transportation, in 

consultation with the Secretary of Commerce, develop (1) clear guidance 

on identifying and giving priority to economically distressed areas and (2) 

more consistent procedures for FHWA to use in reviewing and approving 

states’ criteria for designating distressed areas. 

In response to our recommendation, FHWA, in consultation with the 

Department of Commerce, developed guidance that addresses our 

recommendation. In particular, FHWA’s August 2009 guidance defines 

“priority,” directing states to give priority to projects that are located in an 

economically distressed area and can be completed within the 3-year time 

frame over other projects. In addition, FHWA’s guidance sets out criteria 

that states may use to identify economically distressed areas based on 

“special need.” The criteria align closely with special need criteria used by 

the Department of Commerce’s Economic Development Administration 

Page 26 GAO-09-1016 Recovery Act
 

(EDA) 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. According to EDA officials, 

while the agency traditionally approves special need designations on a 

case-by-case basis for its own grant program, it does not have the 

resources to do so for the purpose of Recovery Act highway funding.18

Rather, the designation of economically distressed areas based on the 

special need criteria for Recovery Act highway funding will be “selfexecuting” by the states, meaning that the states will apply the criteria laid 

out in the guidance to identify these areas. In its guidance, FHWA directed 

the states to maintain information as to how they identified, vetted, 

examined, and selected projects located in economically distressed areas 

and to provide FHWA’s division offices with documentation that 

demonstrates satisfaction of the special need criteria. We plan to continue 

to monitor FHWA’s and the states’ implementation of the economically 

distressed area requirement, including the states’ application of the special 

need criteria, in our future reviews. 

The third Recovery Act requirement is for states to certify that they will 

maintain the level of state effort for programs covered by the Recovery 

Act. Most states revised the initial certifications they submitted to DOT. As 

we reported in April 2009, many states initially submitted explanatory 

certifications—such as stating that the certification was based on the “best 

information available at the time”—or conditional certifications, meaning 

that the certification was subject to conditions or assumptions, future 

legislative action, future revenues, or other conditions. On April 22, 2009, 

the Secretary of Transportation sent a letter to each of the nation’s 

governors and provided additional guidance, including that conditional 

and explanatory certifications were not permitted, and gave states the 

option of amending their certifications by May 22. Each of the 16 states 

and the District selected for our review resubmitted their certifications. 

According to DOT officials, the department has concluded that the form of 

each certification is consistent with the additional guidance. 

While DOT has concluded that the form of the revised certifications is 

consistent with the additional guidance, it is continuing to review whether 

the amounts the states reported they planned to expend for covered 

programs are reasonable and if the methods of calculating these amounts 

 

18FHWA’s guidance specifies that special need determinations will be solely for Recovery 

Act highway funding and will not apply to EDA grant programs. 

Page 27 GAO-09-1016 Recovery Act
 

were consistent with DOT guidance. According to DOT officials, FHWA’s 

division offices have completed an initial assessment of the states’ 

certifications. FHWA did not provide these reports for our review as it was 

reviewing them and obtaining the necessary clarifications when we 

completed our review. FHWA officials noted that reviewing states’ 

certifications is challenging because differences in state laws affect how 

states collect and distribute transportation funds, precluding a uniform 

approach to calculating effort across states. Further complicating this 

review is the fact that many states changed the amounts they plan to 

expend for covered programs from their first to their second submission. 

Our analysis shows that, among the 16 states and the District, the amounts 

increased an average of 6.4 percent and ranged among states from a 76 

percent decrease to a 258 percent increase. 

As we have reported, states face drastic fiscal challenges, and most states 

are estimating that their fiscal year 2009 and 2010 revenue collections will 

be well below estimates. In the face of these challenges, some states told 

us that meeting the maintenance-of-effort requirements over time poses 

significant challenges. FHWA told us it plans to complete its review in 

September 2009 and, based on this review, plans to issue additional 

guidance to the states on the methods for calculating level of effort 

amounts at that time. Once this occurs, FHWA said it plans to monitor 

states’ compliance with their certifications but does not plan to require the 

states to take corrective action should the states’ efforts fall short of the 

certified amounts. The only consequence of a state not being able to 

maintain the level of effort certified is that that state will be prohibited 

from benefiting from the redistribution of federal-aid highway obligations 

that will occur after August 1 for fiscal year 2011.19 According to the DOT 

Deputy Assistant Secretary for Transportation Policy, the department 

recognizes the potential that many states will not be able to maintain the 

level of effort specified in their certifications given the continuing decline 

in their fiscal conditions. The Recovery Act does not provide any waivers 

or exemptions for the states—for changes in economic condition, for 

example—from the maintenance-of-effort provision. 

 

19As part of the federal-aid highway program, FHWA assesses the ability of the 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 for some states the available authority to obligate funds 

and increasing the authority of other states. 

Page 28 GAO-09-1016 Recovery Act
 

FTA Reports That Majority of Transit Funds Have Been Obligated, 

with Most Funding Being Used for Bus Fleets, Transit Facilities, 

and Preventive Maintenance 

The Recovery Act appropriated $8.4 billion to fund public transit 

throughout the country through three existing FTA grant programs, 

including the Transit Capital Assistance Program.20 FTA reported that the 

majority of the public transit funds—$6.9 billion (82 percent)—was 

apportioned for the Transit Capital Assistance Program, with $6 billion 

designated for the urbanized area formula grant program and $766 million 

designated for the nonurbanized area formula grant program.21 Under the 

urbanized area formula grant program, $5.4 billion in Recovery Act funds 

were apportioned to large and medium-size urbanized areas (areas with 

populations of at least 200,000) and $572 million for small urbanized areas 

(areas with populations between 50,000 and 199,999) across the country.22

Transit Capital Assistance Program funds may be used for such activities 

as vehicle replacements, facilities renovation or construction, preventive 

maintenance, and paratransit services. Up to 10 percent of apportioned 

Recovery Act funds may also be used for operating expenses.23 Under the 

 

20The other two public transit programs receiving Recovery Act funds are the Fixed 

Guideway Infrastructure Investment program and the Capital Investment Grant program, 

each of which was apportioned $750 million. The Transit Capital Assistance Program and 

the Fixed Guideway Infrastructure Investment program are formula grant programs, which 

allocate funds to states or their subdivisions by law. Grant recipients may then be 

reimbursed for expenditures for specific projects based on program eligibility guidelines. 

The Capital Investment Grant program is a discretionary grant program, which provides 

funds to recipients for projects based on eligibility and selection criteria. 

21Urbanized areas are areas encompassing a population of not less than 50,000 people that 

have been defined and designated in the most recent decennial census as an “urbanized 

area” by the Secretary of Commerce. Nonurbanized areas are areas encompassing a 

population of fewer then 50,000 people. 

22The urbanized area program is defined in 49 U.S.C. §5307. Funds for urbanized areas were 

to be apportioned as provided in 49 U.S.C. §§ 5336 and 5340. According to FTA, there are 

152 large and medium sized urbanized areas and 349 small urbanized areas. In some cases, 

urbanized areas span multiple states. The nonurbanized area program is defined in 49 

U.S.C. § 5311. 

23The 2009 Supplemental Appropriations Act authorizes the use of up to 10 percent of each 

apportionment for operating expenses. Pub. L. No. 111-32, §1202, 123 Stat. 1859 (June 24, 

2009). In contrast, under the existing program, operating assistance is generally not an 

eligible expense for transit agencies within urbanized areas with populations of 200,000 or 

more. 

Page 29 GAO-09-1016 Recovery Act
 

Recovery Act, the maximum federal fund share for projects under the 

Transit Capital Assistance Program is 100 percent.24

Working through the state and regional transportation planning process, 

designated recipients of the apportioned funds—typically public transit 

agencies and metropolitan planning organizations (MPO)—develop a list 

of transit projects that project sponsors (typically transit agencies) submit 

to FTA for Recovery Act funding.25 FTA reviews the project sponsors’ 

grant applications to ensure that projects meet eligibility requirements and 

then obligates Recovery Act funds by approving the grant application. 

Project sponsors must follow the requirements of the existing programs,

which include ensuring the projects funded meet all regulations and 

guidance pertaining to the Americans with Disabilities Act (ADA), pay a 

prevailing wage in accordance with federal Davis-Bacon Act requirem

and comply with goals to ensure disadvantaged businesses are n

discriminated against in the awarding of contracts. 

ents, 

ot 

 

In March 2009, $6.9 billion was apportioned to states and urbanized areas 

in all 50 states, the District of Columbia (District), and four territories for 

transit projects and eligible transit expenses under the Transit Capital 

Assistance Program. As of September 1, 2009, $5.95 billion of the funds 

had been obligated nationwide. 

Similar to Recovery Act funds for highway infrastructure, funds 

appropriated through the Transit Capital Assistance Program must be used 

in accordance with Recovery Act requirements, including the following: 

24The federal share under the existing formula grant program is generally 80 percent. 

25Designated recipients are entities designated by the chief executive officer of a state, 

responsible local officials, and publicly owned operators of public transportation to receive 

and apportion amounts that are attributable to transportation management areas. 

Transportation management areas are areas designated by the Secretary of Transportation 

as having an urbanized area population of more than 200,000, or upon request from the 

governor and metropolitan planning organizations designated for the area. Metropolitan 

planning organizations are federally mandated regional organizations, representing local 

governments and working in coordination with state departments of transportation that are 

responsible for comprehensive transportation planning and programming in urbanized 

areas. MPOs facilitate decision making on regional transportation issues including major 

capital investment projects and priorities. To be eligible for Recovery Act funding, projects 

must be included in the region’s TIP and the approved State Transportation Improvement 

Program (STIP). 

Page 30 GAO-09-1016 Recovery Act
 

• Fifty percent of Recovery Act funds apportioned to urbanized areas or 

states were to be obligated within 180 days of apportionment (before Sept. 

1, 2009) and the remaining apportioned funds are to be obligated within 1 

year. The Secretary of Transportation is to withdraw and redistribute to 

other urbanized areas or states any amount that is not obligated within 

these time frames.26

• State governors must certify that the state will maintain the level of state 

spending for the types of transportation projects, including transit 

projects, funded by the Recovery Act that it planned to spend the day the 

Recovery Act was enacted. As part of this certification, the governor of 

each state is required to identify the amount of funds the state plans to 

expend from state sources from February 17, 2009, through September 30, 

2010.27 This requirement applies only to state funding for transportation 

projects. The Department of Transportation will treat this maintenance-ofeffort requirement through one consolidated certification from the 

governor, which must identify state funding for all transportation projects. 

With regard to the first requirement, FTA reviewed the amount of funding 

obligated and concluded that the 50 percent requirement was met in all 

medium-size and large urbanized areas. FTA also determined that the 50 

percent obligation requirement for nonurbanized areas had been met by 

each state. FTA did not, however, determine obligation rates for each of 

the 349 small urbanized areas—that is, for areas with populations of less 

then 200,000 but at least 50,000 people. Instead, it treated funding for small 

urbanized areas as apportioned to the governors of those states or 

territories within which the small urbanized areas were located. Using this 

statewide obligation rate, it determined that at least 50 percent of the total 

 

26Recovery Act, div A, title XII, 123 Stat. 115, 209. The Recovery Act states that 180 days 

following the apportionment of transit capital assistance funds (i.e., on Sept. 1, 2009), the 

Secretary “shall withdraw from each urbanized area or State an amount equal to 50 

percent of the funds apportioned to such urbanized areas or States less the amount of 

funding obligated” by that date. (Emphasis added.) 

27Recovery Act, div. A, title XII, § 1201(a). 

Page 31 GAO-09-1016 Recovery Act
 

funding apportioned for small urbanized areas was obligated.28 See table 

6. 

Table 6: Percentage of Recovery Act Transit Capital Assistance Program Funds Obligated Nationwide and Selected States 

and Urbanized Areas as Reported by FTA 

Dollars in millions 

Obligation 

State Apportionment Obligated amount 

Percentage of

 apportionment 

obligated 

Large urbanized (populations over 1 

million) 

Los Angeles-Long Beach-Santa Ana CA $388.5 $385.1 99

Riverside-San Bernardino CA 36.4 35.5 98

Sacramento CA 30.1 29.6 98

San Diego CA 80.8 80.8 100

San Francisco-Oakland CA 173.7 120.3 69

San Jose CA 55.2 55.2 100

Denver-Aurora CO 66.6 66.6 100

Washington, D.C. DC-MD-VA 214.6 213.0 99

Atlanta GA 87.7 75.5 86

Chicago IL-IN 327.6 325.6 99

Boston MA-NH-RI 199.8 131.7 66

St. Louis IL-MO 47.2 47.2 100

New York-Newark NY-NJ-CT 1,181.7 999.2 85

Philadelphia PA-NJ-DE-MD 188.5 157.5 84

Pittsburgh PA 49.3 48.9 99

Providence MA-RI 46.9 32.7 70

 

28FTA points to 49 U.S.C. § 5336(e) and (f) as justifying its approach. Section 5336(e) has 

long authorized states’ chief executive officers (Governors) to expend small urbanized area 

funds for areas for which no designated recipient has been assigned. Among other things, 

section 5336(f) permits governors to transfer apportionments between small urbanized 

areas, or to other urbanized or nonurbanized areas, after consulting with responsible local 

officials and publicly owned operators of public transportation. FTA states that since the 

inception of the program it has treated each state’s small urbanized areas apportionments 

as one cumulative apportionment to the Governor. 

Page 32 GAO-09-1016 Recovery Act
 

Dollars in millions 

 Obligation 

 State Apportionment Obligated amount 

Percentage of

 apportionment 

obligated 

Medium-size urbanized (populations 

between 200,000 and 999,999) 

Antioch CA 8.6 5.8 68

Bakersfield CA 8.1 8.1 100

Concord CA 28.2 14.4 51

Fresno CA 12.1 10.9 90

Indio-Cathedral City-Palm Springs CA 4.7 4.7 100

Lancaster-Palmdale CA 9.8 9.8 100

Mission Viejo CA 13.4 13.4 100

Modesto CA 5.6 5.6 99

Oxnard CA 10.2 5.8 57

Santa Rosa CA 6.2 6.2 100

Stockton CA 10.0 10.0 100

Temecula-Murrieta CA 4.1 4.1 100

Thousand Oaks CA 4.0 2.0 51

Victorville-Hesperia-Apple Valley CA 3.4 3.4 100

Colorado Springs CO 8.8 4.6 52

Fort Collins CO 3.4 3.4 100

Bridgeport-Stamford CT-NY 35.3 33.9 96

Augusta-Richmond County GA-SC 3.3 3.3 100

Columbus GA-AL 3.0 3.0 100

Savannah GA 4.5 4.0 90

Davenport IA-IL 5.2 5.2 100

Peoria IL 4.2 4.2 100

Rockford IL 3.7 3.7 100

Round Lake Beach-McHenry-Grayslake IL 5.5 5.4 98

Barnstable Town MA 7.6 7.6 100

Springfield MA-CT 17.9 17.9 100

Worcester MA-CT 12.4 12.4 100

Atlantic City NJ 14.4 7.2 50

Trenton NJ 15.5 7.7 50

Albany NY 14.7 14.7 100

Buffalo NY 24.4 24.4 100

Poughkeepsie-Newburgh NY 23.4 20.3 87

Page 33 GAO-09-1016 Recovery Act
 

Dollars in millions 

 Obligation 

 State Apportionment Obligated amount 

Percentage of

 apportionment 

obligated 

Rochester NY 15.8 9.4 60

Syracuse NY 10.3 10.3 100

Youngstown OH-PA 4.7 4.7 100

Allentown-Bethlehem PA-NJ 10.5 8.8 84

Harrisburg PA 7.0 5.0 71

Lancaster PA 9.8 9.8 100

Reading PA 4.3 4.3 100

Scranton PA 5.7 5.7 100

Chattanooga TN-GA 4.7 4.7 100

Small urbanized (populations between 

50,000 and 199,999) 

California 75.3 66.0 88

Colorado 11.4 11.4 100

Georgia 12.3 9.1 74

Illinois 13.2 10.4 79

Massachusetts 9.2 7.9 86

New Jersey 6.3 3.5 56

New York 13.7 12.6 93

Pennsylvania 17.6 12.9 73

Nonurbanized (populations under 50,000) 

California 34.0 34.0 100

Colorado 12.5 10.3 83

Georgia 25.6 20.8 81

Illinois 21.2 11.5 54

Massachusetts 5.2 3.7 70

New Jersey 4.8 4.8 100

New York 26.3 20.4 78

Pennsylvania 30.2 30.2 100

Selected urbanized and nonurbanized 

areas total $3,901.8 $3,423.7 88

U.S. total $6,734 $5,950 88

Source: GAO analysis of FTA data. 

Notes: Some urbanized areas may cross two or more state borders. 

U.S. total includes 50 states, the District, and U.S. territories. 

Page 34 GAO-09-1016 Recovery Act
 

Almost 87 percent of Recovery Act Transit Capital Assistance Program 

obligations are being used for upgrading transit facilities, improving bus 

fleets, and conducting preventive maintenance. Many transit agency 

officials told us they decided to use Recovery Act funding for these types 

of projects since they are high-priority projects that support their agencies’ 

short- and long-term goals, can be started quickly, improve safety, or 

would otherwise not have been funded. Specifically, $2.8 billion, or 47 

percent, of Recovery Act funds obligated nationally have been for transit 

infrastructure construction projects and related activities, which range 

from large-scale projects, such as upgrading power substations, to a series 

of smaller projects, such as installing improved audio systems for the 

hearing impaired. The Metropolitan Atlanta Rapid Transit Authority, for 

example, used Recovery Act funds to comprehensively upgrade and 

replace the fire protection system at its transit facilities. In New York, the 

Metropolitan Transportation Authority funded the installation of new 

locker and rest facilities for transit agency personnel and the rehabilitation 

of bus buildings. In addition, $1.8 billion, or 31 percent, is being used for 

improvements to local transit agencies’ bus fleets, including purchasing 

new buses and renovating older buses. For example, with Recovery Act 

funds, the Pioneer Valley Transit Authority in Massachusetts is purchasing 

29 new buses to replace its aging fleet, and the Los Angeles County 

Metropolitan Transportation Authority in California, according to agency 

officials, is ordering 140 compressed natural gas buses. Other transit 

agencies reported using Recovery Act funds for other types of bus fleet 

improvements, such as replacing fare boxes and installing bicycle racks on 

buses. Finally, $515 million, or 9 percent, has been obligated for preventive 

maintenance, which is considered a capital project by FTA, and $738 

million for other capital expenses such as leases, training, and finance 

costs. 

Page 35 GAO-09-1016 Recovery Act
 

Figure 5: Nationwide Transit Capital Assistance Program Recovery Act Obligations 

by Project Type as of September 1, 2009 

12%

47%

Source: GAO analysis of Federal Transit Administration data.

9%

2%

Rail car purchases and rehabilitation

$97 million

Less than 1%

Operating expense

$4.7 million

Preventative maintenance 

$515 million

Bus purchases and rehabilitation

$1.8 billion

Transit infrastructure construction 

$2.8 billion

Other capital expenses

$738 million

31%

Note: Percentages may not add to 100 due to rounding. “Transit infrastructure construction” includes 

engineering and design, acquisition, construction, and rehabilitation and renovation activities. “Other 

capital expenses” includes items such as leases, training, finance costs, mobility management project 

administration and other capital programs. 

As previously noted, all states have submitted maintenance-of-effort 

certifications to DOT, certifying that the state will maintain the level of 

state spending that it planned to spend the day the Recovery Act was 

enacted for all transportation projects, including transit projects, funded 

by the Recovery Act. DOT has concluded that the form of each 

certification is consistent with the additional guidance. Unlike federal 

highway infrastructure programs, which are administered through a 

federal-state partnership, federal transit programs are generally 

administered through a federal-local partnership, although rural programs 

are administered at the state level. Therefore, in some states, officials 

believe that the maintenance-of-effort requirement can be more easily met 

for transit projects due to the fact that the state does not provide any 

transit funding, making the requirement irrelevant, or the state transit 

funding has decreased over the years. For example, in Colorado, officials 

Page 36 GAO-09-1016 Recovery Act
 

for the Regional Transit District stated that since their agency did not 

receive any transit funding from the state annually, officials believed that 

the maintenance-of-effort requirement did not apply. In addition, Illinois 

Department of Transportation officials stated that while the state attempts 

to provide funding for transit operating expenses for some rural areas, it 

has not been able to provide consistent funding for transit capital projects. 

State Highway and Transit Officials Express Concerns and 

Confusion about Reporting Requirements 

Recipients of highway and transit Recovery Act funds, such as state DOTs 

and transit agencies, are subject to multiple reporting requirements. First, 

under section 1201(c) of the Recovery Act, recipients of transportation 

funds must submit periodic reports on the amount of federal funds 

appropriated, allocated, obligated, and reimbursed; the number of projects 

put out to bid, awarded, or work has begun or completed; project status; 

and the number of direct and indirect jobs created or sustained, among 

other things.29 DOT is required to collect and compile this information for 

Congress, and it issued its first report to Congress in May 2009. DOT is 

working to develop a model that will be used to estimate indirect jobs 

created and sustained rather than have individual recipients develop these 

estimates. DOT, through FTA, conducted a training session consisting of 

three webinars to provide information on the 1201(c) reporting 

requirements, such as who should submit these reports and what 

information is required. FTA is planning on conducting another three 

webinars and providing additional guidance before the end of September 

2009. Second, under section 1512, recipients of Recovery Act funds, 

including but not limited to transportation funds, are to report quarterly on 

a number of measures, such as the use of funds and the number of jobs 

created or retained. OMB has issued implementing guidance for recipient 

reporting. For example, on June 22, 2009, OMB issued guidance to dispel 

some confusion related to reporting on jobs created and retained by 

providing, among other information, additional detail on how to calculate 

the relevant numbers. 

Despite the OMB and DOT guidance, both highway and transit officials 

expressed concerns and challenges with meeting the recipient reporting 

 

29The first periodic report was due no later than 90 days after the date of enactment of the 

act, with updated reports due no later than 180 days, 1 year, 2 years, and 3 years after 

enactment. 

Page 37 GAO-09-1016 Recovery Act
 

requirements. While both highway and transit officials raised concerns, 

transit officials tended to raise more specific concerns than their highway 

counterparts. This may reflect differing experiences collecting this type of 

information. FTA officials noted that recipients of transit grants have not 

had to collect similar information in the past. Conversely, while FHWA 

does not routinely require state DOTs to provide information on jobs 

created or sustained for highway projects, it has collected such 

information in the past. The specific concerns raised by transit officials 

include the following: 

• Calculation of direct jobs: A number of agencies expressed confusion 

about calculating the number of direct jobs resulting from Recovery Act 

funding, especially with regard to using Recovery Act funds for purchasing 

equipment. For example, officials from the New York Department of 

Transportation and Greater Glens Fall Transit Agency, located in upstate 

New York, had questions concerning how to calculate direct jobs created 

from the purchase of buses made with Recovery Act funding versus how 

to count jobs created from Recovery Act-funded construction projects. 

Officials in Georgia noted that while FTA guidance on its reporting 

requirements indicated that transit providers did not need to report jobs 

associated with the vehicle replacements because they were indirect jobs, 

OMB’s guidance did not indicate that jobs associated with vehicle 

replacements were indirect jobs. Transit agencies in Massachusetts 

reported similar concerns. 

• Contractors and subcontractors: Another issue that caused confusion 

at a number of transit agencies we visited involved how transit agencies 

were required to report project contractors and subcontractors. During 

our review, we found that there were significant differences in how transit 

agencies were counting contractors. For example, in California, officials at 

the Orange County Transportation Authority stated that they only plan to 

include direct hours worked by contractors in their jobs estimates. By 

contrast, officials from California’s San Joaquin Regional Transit District 

plan to include in their direct job estimates all hours of contractors 

working on Recovery Act-funded projects by basing job estimates on 

specific hours and pay data pulled from the internal payroll systems and 

certified payroll documents completed by contractors and subcontractors. 

There was also some confusion in how to count subcontractors. For 

example, some officials from transit agencies in Pennsylvania explained 

that language in the OMB guidance seemed to them to require that 

“subrecipients” submit the names and salaries of the five highest paid 

executives in their organization but was unclear whether this referred to 

Recovery Act project subrecipients or subcontractors. However, officials 

subsequently told us that they had resolved their questions. 

Page 38 GAO-09-1016 Recovery Act
 

• Calculating the number of full–time-employee equivalents (FTE) 

from work hours: Finally, one transit agency highlighted that they had 

concerns about the process for calculating the number of FTEs based on 

the number of hours worked on a project. In New York, Metropolitan 

Transit Authority officials said they will need to take the job title, figure 

out the “normal” hours worked in a year, and divide the number of these 

hours by four to figure out the hours worked in that reportable quarter. 

Agency actions on identifying recipient reporting challenges and 

providing additional guidance: Recipients of highway and transit 

Recovery Act funds, such as state DOTs and transit agencies, are subject 

to multiple reporting requirements. Both DOT and OMB have issued 

implementation guidance for recipient reporting. For example, DOT, 

through FHWA and FTA, has provided training and guidance to recipients. 

Despite these efforts, highway and transit officials expressed concerns and 

challenges with meeting these reporting requirements. While both highway 

and transit officials raised concerns, transit officials tended to raise more 

specific concerns than their highway counterparts, which may reflect 

differing experiences collecting this type of information. 

Recommendation: The Secretary of Transportation should continue the 

Department’s outreach to state DOTs and transit agencies to identify 

common problems in accurately fulfilling reporting requirements and 

provide additional guidance, as appropriate. 

Agency comments and our evaluation: We provided DOT with a draft 

of the transportation section of this report for its review and comment. 

With regard to our recommendation, DOT noted that it has conducted 

outreach, including providing training and guidance, to recipients and will 

continue to assess the need to provide additional information. We revised 

the draft report and recommendation to reflect DOT's ongoing and 

planned outreach efforts. DOT also provided technical comments on the 

draft report, which we incorporated as appropriate. 

Our review of states’ use of Recovery Act funds covers three programs 

administered by the U.S. Department of Education (Education)—State 

Fiscal Stabilization Fund (SFSF); Elementary and Secondary Education 

Act (ESEA) Title I, Part A; and the Individuals with Disabilities Education 

Act (IDEA), Parts B and C. 

States Have Begun to Draw 

Down Recovery Act Funds for 

Education Programs 

• State Fiscal Stabilization Fund. The State Fiscal Stabilization Fund 

(SFSF) included approximately $48.6 billion to award to governors by 

Page 39 GAO-09-1016 Recovery Act
 

formula and another $5 billion to award to states or school districts as 

competitive grants. The Recovery Act created the SFSF in part to help 

state and local governments stabilize their budgets by minimizing 

budgetary cuts in education and other essential government services, such 

as public safety. Stabilization funds for education distributed under the 

Recovery Act must be used to alleviate shortfalls in state support for 

education to school districts and public institutions of higher education 

(IHE). States must allocate 81.8 percent of their SFSF formula grant funds 

to support education (these funds are referred to as education 

stabilization funds) and must use the remaining 18.2 percent for public 

safety and other government services, which may include education (these 

funds are referred to as government services funds). For the initial award 

of SFSF formula grant funds, Education made available at least 67 percent 

of the total amount allocated to each state,30 but states had to submit an 

application to Education to receive the funds. The application required 

each state to provide several assurances, including that the state will meet 

maintenance-of-effort requirements (or will be able to comply with waiver 

provisions) and that it will implement strategies to advance four core 

areas of education reform as described by Education: (1) increase teacher 

effectiveness and address inequities in the distribution of highly qualified 

teachers; (2) establish a pre-K-through-college data system to track 

student progress and foster improvement; (3) make progress toward 

rigorous college- and career-ready standards and high-quality assessments 

that are valid and reliable for all students, including students with limited 

English proficiency and students with disabilities; and (4) provide 

targeted, intensive support and effective interventions to turn around 

schools identified for corrective action or restructuring.31 In addition, 

states were required to make assurances concerning accountability, 

transparency, reporting, and compliance with certain federal laws and 

regulations. After maintaining state support for education at fiscal year 

2006 levels, states must use education stabilization funds to restore state 

funding to the greater of fiscal year 2008 or 2009 levels for state support to 

school districts or public IHEs. When distributing these funds to school 

districts, states must use their primary education funding formula, but they 

can determine how to allocate funds to public IHEs. In general, school 

districts maintain broad discretion in how they can use education 

 

30Beginning on July 1, 2009, Education released the remaining 33 percent of government 

services funds to states with approved applications. 

31Schools identified for corrective action have missed academic targets for 4 consecutive 

years, and schools implementing restructuring have missed academic targets for 6 

consecutive years. 

Page 40 GAO-09-1016 Recovery Act
 

stabilization funds, but states have some ability to direct IHEs in how to 

use these funds. 

• ESEA Title I. The Recovery Act provides $10 billion to help local 

educational agencies (LEA) educate disadvantaged youth by making 

additional funds available beyond those regularly allocated through Title I, 

Part A of the Elementary and Secondary Education Act (ESEA) of 1965. 

The Recovery Act requires these additional funds to be distributed through 

states to LEAs using existing federal funding formulas, which target funds 

based on such factors as high concentrations of students from families 

living in poverty. In using the funds, LEAs are required to comply with 

current statutory and regulatory requirements and must obligate 85 

percent of the funds by September 30, 2010.32 Education is advising LEAs 

to use the funds in ways that will build the agencies’ long-term capacity to 

serve disadvantaged youth, such as through providing professional 

development to teachers. Education made the first half of states’ Recovery 

Act ESEA Title I, Part A funding available on April 1, 2009, and announced 

on September 4, 2009, that it had made the second half available. 

• IDEA. The Recovery Act provided supplemental funding for programs 

authorized by Parts B and C of the Individuals with Disabilities Education 

Act (IDEA), the major federal statute that supports the provisions of early 

intervention and special education and related services for infants, 

toddlers, children, and youth with disabilities. Part B funds programs that 

ensure preschool and school-aged children with disabilities have access to 

a free and appropriate public education and is divided into two separate 

grants—Part B grants to states (for school-age children) and Part B 

preschool grants (section 619). Part C funds programs that provide early 

intervention and related services for infants and toddlers with 

disabilities—or at risk of developing a disability—and their families. 

Education made the first half of states’ Recovery Act IDEA funding 

available to state agencies on April 1, 2009, and announced on September 

4, 2009, that it had made the second half available. 

 

32LEAs must obligate at least 85 percent of their Recovery Act ESEA Title I, Part A funds by 

September 30, 2010, unless granted a waiver, and must obligate all of their funds by 

September 30, 2011. This will be referred to as a carryover limitation. 

Page 41 GAO-09-1016 Recovery Act
 

As of September 18, 2009, Pennsylvania was the only state covered by our 

review that had not received approval from Education for its initial SFSF 

application. For the other 15 states and the District of Columbia in our 

review, Education approved their initial applications and made available a 

total of about $16 billion in initial education stabilization funds. As of 

August 28, 2009, all but 4 of these had drawn down some of these funds. In 

total, about 36 percent of the funds initially made available had been 

drawn down by these states, as shown in table 7.33

Most States Have Begun 

Drawing Down Recovery Act 

Funds for Education Programs, 

but Expenditures Sometimes 

Differ from Amounts Drawn 

Down by States 

Table 7: SFSF Education Stabilization Funds Made Available by the U.S. Department of Education and Funds Drawn Down by 

States 

State 

Total state allocation 

for education 

stabilization funds 

Phase I education 

stabilization funds made 

available as of 

August 28, 2009

Funds drawn down by 

states as of 

August 28, 2009 

Percentage of 

available funds 

drawn down

Arizona $831,869,331 $557,352,452 $154,138,300 28

California 4,875,498,758 3,266,584,168 3,020,198,909 92

Colorado 621,878,397 416,658,526 154,811,775 37

District of Columbia 73,110,443 48,983,997 0 0

Florida 2,208,839,245 1,479,922,294 8,438,521 1

Georgia 1,260,799,096 844,735,394 238,773,562 28

Illinois 1,681,130,685 1,126,357,559 1,038,987,579 92

Iowa 386,373,745 258,870,409 57,230,002 22

Massachusetts 813,303,212 544,913,152 322,002,904 59

Michigan 1,302,368,993 872,587,225 573,635,420 66

Mississippi 392,067,945 262,685,523 0 0

New Jersey 1,088,335,775 729,184,969 0 0

New York 2,468,557,791 1,653,933,720 49,900,000 3

North Carolina 1,161,931,564 778,494,148 136,095,123 17

Ohio 1,463,709,963 980,685,675 61,096,405 6

Pennsylvania 0 0 0 — 

Texas 3,250,272,133 2,177,682,329 0 0

Total $23,880,047,075 $15,999,631,540 $5,815,308,499 36

Source: U.S. Department of Education. 

 

33As of August 28, 2009, Education had made $21 billion in SFSF grants for education, 

including government services funds, available to the 15 states and the District of 

Columbia—of which over $7.7 billion had been drawn down. 

Page 42 GAO-09-1016 Recovery Act
 

Education did not approve Pennsylvania’s initial SFSF application because 

the application did not include data for some public institutions of higher 

education in the calculations for the state’s maintenance-of-effort for 

education funding and amounts needed to restore education funding to 

prior year levels. Education officials said they asked Pennsylvania to 

revise the application to include data for those institutions, but as of 

September 18, Pennsylvania had not submitted a revised application to 

Education. 

Because states have been finalizing and revising their budgets since 

submitting their initial SFSF applications, some will need to amend their 

SFSF applications to reflect the new budget figures for state support for 

education. According to Education guidance, a state must amend its SFSF 

application if there are changes to the reported levels of state support for 

education that were used to determine maintenance-of-effort or to 

calculate the amounts needed to restore state support for education to 

prior year levels. For example, California has amended its SFSF 

application to change its calculations of state support for education. 

Mississippi submitted its initial SFSF application before passing its fiscal 

year 2010 budget and plans to amend it to include the enacted budget 

information. The District of Columbia plans to amend its application to 

increase the amount needed to restore the District’s support for 

elementary and secondary education to the fiscal year 2008 funding level. 

Due to recent budget cuts to higher education for fiscal year 2010, 

Colorado amended its SFSF application to reduce the amount reported as 

state support for higher education and requested a waiver from the 

maintenance-of-effort requirements for SFSF for fiscal year 2010. 

Of the 15 states and the District of Columbia covered by our review to 

which Education has made SFSF funds available, 12 states had drawn 

down education stabilization funds as of August 28, 2009. Of these 12 

states, 9 were able to provide expenditure data from their LEAs for this 

report, as shown in table 8. Also, of the six states that had made education 

stabilization funds available to their IHEs and from which we attempted to 

collect education stabilization expenditure data for IHEs—Arizona, 

Colorado, Illinois, Iowa, North Carolina, and Ohio—five were able to 

report expenditures. When expenditures by LEAs and IHEs are 

substantially less than the amounts drawndown by the state, such as in 

Illinois, the state may be experiencing problems with its cash 

management. Illinois has distributed SFSF funds to LEAs in semi-monthly 

payments, but according to state officials, the state does not have the 

ability to identify specific cash needs from LEAs prior to distributing these 

funds. Table 8 shows the amounts of SFSF education stabilization funds 

Page 43 GAO-09-1016 Recovery Act
 

drawn down by states, the reported expenditures by LEAs in those states 

that could provide this information, and the reported expenditures by 

IHEs in the 5 states that provided the information. 

Table 8: State Drawdowns of Education Stabilization Funds Compared to Reported 

Expenditures by LEAs and IHEs in States We Reviewed That Could Provide the 

Information 

Dollars in millions 

State 

Funds drawn 

down as of 

August 28, 2009

Expenditures 

by LEAs 

Expenditures 

by IHEsa

Arizona 154.1 0 154.1

California 3,020.2 -b -

Colorado 154.8 0 154.8

District of Columbia 0 0 -

Florida 8.4 7.2 -

Georgia 238.8 157.9 -

Illinois 1,039.0 165.6 0

Iowa 57.2 -b -b 

Massachusetts 322.0 -b -

Michigan 573.6 0 -

Mississippi 0 0 -

New Jersey 0 -b -

New York 49.9 0 -

North Carolina 136.1 14.3 127.0

Ohio 61.1 54.6 56.3

Pennsylvaniac0 0 -

Texas 0 0 -

Sources: U.S. Department of Education and state educational agencies. 

Notes: Expenditures shown in the table are as of the following dates: June 30, 2009—Georgia; 

August 31, 2009—Colorado (LEAs), Florida, New York, North Carolina (LEAs) and Texas; September 

1, 2009-Michigan; September 2, 2009-Colorado (IHEs), Illinois (LEAs); September 4, 2009-

Mississippi; September 11, 2009-District of Columbia; September 15, 2009-Ohio; September 16, 

2009-Illinois (IHEs) and Arizona; September 18, 2009—North Carolina (IHEs). 

a

GAO attempted to collect expenditure data for IHEs from six states—Arizona, Colorado, Illinois, 

Iowa, North Carolina, and Ohio. 

b

State could not provide data on expenditures by LEA or IHEs for the time period covered by our 

report. 

c

Pennsylvania’s application for SFSF funds is pending; therefore, Pennsylvania has not received 

SFSF funds from Education. 

Page 44 GAO-09-1016 Recovery Act
 

As of August 28, 2009, 11 of the states we reviewed had drawn down Title 

I, Part A Recovery Act funds, and reported LEA expenditures from the 

states were generally higher than the amounts drawn down. In total, these 

11 states have drawn down 15 percent of the first half of Title I Recovery 

Act funds, which Education made available to the states on April 1, 2009.34

For eight states, reported expenditure figures for LEAs were larger than 

the amounts drawn down. Massachusetts, as an example, reported that 

LEAs have spent over $2 million in Title I funding, but the state had only 

drawn down $1.5 million as of August 28, 2009. This is because in 

Massachusetts, according to state officials, the state draws down funds 

according to its agreement with the U.S. Department of Treasury, and it is 

not unusual for drawdowns to lag behind expenditures. 

However, three states were unable to report LEA expenditure information 

for the period covered by this report, including California, which accounts 

for the vast majority of ESEA Title I, Part A Recovery Act funds drawn 

down to date. As we reported in July, according to Education officials, 

California officials informed the department that the drawdown of Title I 

Recovery Act funds was in lieu of the state’s normally scheduled 

drawdown of school year 2008-2009 Title I funds. However, in California, 

we found that, as of August 7, 2009, 7 of the 10 California LEAs receiving 

the largest Title I allocations had not spent any Title I, Part A Recovery Act 

funds and, therefore, had cash balances. Further, California officials told 

us that they had conducted an informal survey of 180 LEAs in July 2009 to 

determine whether LEAs were maintaining regular ESEA Title I cash 

balances, and nearly all of the 64 LEAs responding reported unreimbursed 

expenses—having spent more regular ESEA Title I funds than they 

received. The officials told us they determined that these unreimbursed 

expenses would largely offset the ESEA Title I Recovery Act fund cash 

balances for the majority of these LEAs, and they believe that the 

calculation of interest due to the federal government on the Recovery Act 

balances would incorporate this offset. Therefore, they did not view the 

Title I Recovery Act balances as a problem. We discussed this issue with 

Education officials, but they have yet to make a final determination of 

whether such unreimbursed expenses can be offset against Title I 

Recovery Act balances for the purpose of calculating interest due to the 

federal government. Table 9 shows Title I, Part A Recovery Act 

drawdowns and expenditures. 

 

34On September 4, 2009, Education announced that it had made the second half of 

Title I, Part A funds available to states. 

Page 45 GAO-09-1016 Recovery Act
 

Table 9: ESEA Title I, Part A Recovery Act Funds Made Available to and Drawn Down by States We Reviewed, and Funds 

Expended by LEAs in States That Could Provide the Information 

Dollars in millions 

State 

Title I Recovery Act 

funds made 

available as of 

August 28, 2009 

Funds drawn 

down as of 

August 28, 2009

Percentage of 

available funds 

drawn down

Expenditures 

by LEAs 

Drawdowns minus 

expenditures 

(negative totals in 

parentheses)

Arizona $97.5 $1.1 1.1 $3 $(1.9)

California 562.5 450.3 80.1 -a -

Colorado 55.6 0.3 0.5 0.3 0

District of Columbia 18.8 0 0 0 0

Florida 245.3 18.1 7.4 18.6 (0.5)

Georgia 175.5 0.4 0.2 3.6 (3.2)

Illinois 210.1 0.4 0.2 0.4 0 

Iowa 25.7 8.1 31.5 -a -

Massachusetts 81.8 1.5 1.8 2.2 (0.7)

Michigan 195.0 0 0 0 0

Mississippi 66.4 0 0 0 0

New Jersey 91.5 0 0 -a 0

New York 453.6 0 0 0 0

North Carolina 128.7 6.2 4.8 9.6 (3.4)

Ohio 186.3 0.5 0.3 2.8 (2.3)

Pennsylvania 200.3 0 0 23.0 (23.0) 

Texas 474.4 2.4 0.5 2.8 (0.4)

Total $3,269.0 $489.3 15.0 $66.3 

Sources: U.S. Department of Education and state educational agencies. 

Notes: Expenditures are as of the following dates: August 31, 2009-Florida, North Carolina, and 

Texas; September 1, 2009- Colorado, Michigan, New Jersey, and New York; September 2, 2009-

Georgia and Illinois; September 3, 2009-Pennsylvania; September 4, 2009- Massachusetts; 

September 8, 2009-Mississippi; September 9, 2009-Arizona; September 11, 2009- District of 

Columbia; and September 15, 2009-Ohio. 

a

State could not provide data on expenditures by LEAs for the time period covered by our report. 

As of August 28, 12 of the states we reviewed had drawn down IDEA, Part 

B Recovery Act funds, and reported expenditures from the states were 

generally higher than the amounts drawn down. In total, these 12 states 

have drawn down about 10 percent of the first half of IDEA, Part B 

Recovery Act funds, which Education made available to the states on April 

Page 46 GAO-09-1016 Recovery Act
 

1, 2009.35 For eight states, reported expenditure figures for LEAs were 

larger than the amounts drawn down. Table 10 shows the total IDEA, Part 

B Recovery Act funds drawn down by states as of August 28, 2009, and 

expenditures by LEAs for states that were able to report that information. 

Table 10: IDEA, Part B Recovery Act Funds Made Available to and Drawn Down by States We Reviewed, and Funds Expended 

by LEAs in States That Could Provide the Information 

Dollars in millions 

State 

IDEA, Part B Recovery 

Act funds made available 

as of August 28, 2009 

Funds drawn 

down as of 

August 28, 2009

Percentage of 

available funds 

drawn down

Expenditures 

by LEAs 

Drawdowns 

minus 

expenditures

(negative totals 

in parentheses)

Arizona 92.1 0.1 0.1 1.8 (1.7)

California 634.0 269.0 42.4 -a -

Colorado 77.0 4.0 5.2 4.1 (0.1)

District of 

Columbia 8.4 0 0 0 0 

Florida 323.5 39.4 12.2 42.7 (3.3)

Georgia 162.1 0.2 0.1 0.5 (0.3)

Illinois 262.4 1.5 0.6 1.2 0.3

Iowa 63.1 25.2 39.9 -a -

Massachusetts 145.4 6.2 4.3 9.4b (3.2)

Michigan 207.0 5.4 2.6 0 5.4

Mississippi 61.2 0 0 0 0 

New Jersey 186.2 0 0 -a -

New York 397.1 0 0 0 0 

North Carolina 163.2 21.8 13.4 26.8 (5.0)

Ohio 225.5 0.7 0.3 4.0 (3.3)

Pennsylvania 220.8 0 0 0 0 

Texas 485.0 2.2 0.5 3.6 (1.4) 

Total 3714.0 375.7 10.1 94.1 

Sources: U.S. Department of Education and state educational agencies. 

Notes: Expenditures are as of the following dates: August 31, 2009-Florida and Texas; September 1, 

2009-Colorado, New Jersey, and New York; September 2, 2009-Georgia and Michigan; September 3, 

2009-Illinois and Pennsylvania; September 4, 2009-Massachusetts; September 9, 2009-Arizona; 

September 11, 2009-District of Columbia; and September 15, 2009-Ohio. 

 

35On September 4, 2009, Education announced that it had made the second half of 

IDEA Recovery Act funds available to states. 

Page 47 GAO-09-1016 Recovery Act
 

a

State could not provide data on expenditures by LEAs for the time period covered by our report. 

b

Massachusetts expenditures do not include IDEA Part B Preschool Grants. 

Education Continues to 

Issue Guidance, Has 

Increased Technical 

Assistance, and Has 

Modified Some Monitoring 

Procedures to Address 

Recovery Act Issues but 

Has Not Completed 

Monitoring Plans for SFSF 

Funds 

Education Has Issued Additional Recovery Act Guidance and 

Proposed Guidance 

Over the summer of 2009, Education issued and proposed guidance on a 

wide range of Recovery Act provisions and is in the process of finalizing 

the proposed guidance after reviewing public comments. The department 

issued proposed guidance on the application process for the remaining 

SFSF education stabilization funds as well as for the Race to the Top 

funds. The department has also issued proposed guidance on 

administrative costs and guidance on Title I waivers; allowable uses of 

Title I, Part A and IDEA, Parts B and C funds; the use of SFSF education 

stabilization funds to meet IDEA maintenance-of-effort requirements; and 

recipient reporting. 

Remaining SFSF education stabilization funds. On July 29, 2009, 

Education issued proposed requirements, definitions, and approval criteria 

pertinent to application for the remaining SFSF education stabilization 

funds that Education will release to states in fiscal year 2010. To obtain the 

remaining funds, Education proposed that states will have to submit 

applications that include a number of specific information requirements, 

including indicators. Education would require states to provide data that 

would show the extent to which they are implementing educational 

reforms in each of the four core areas. For example, with respect to 

increasing teacher effectiveness and addressing inequities in the 

distribution of highly qualified teachers, states would be required to 

provide (1) a description of teacher performance evaluation systems used 

in the states’ LEAs, (2) data on the distribution of performance ratings or 

levels in the LEAs, and (3) a statement about whether performance ratings 

or levels are available to the public by school for each LEA. Some of the 

indicators included in the proposal relate to data states already collect and 

report to Education, and for these indicators, states will not need to 

provide additional data but would have to confirm the data and make it 

publicly available. In addition to the information requirements, the 

proposal includes a requirement that each state submit a plan describing 

the state’s ability to collect and make the data easily available to the 

public. The proposal was open for comments through August 28, 2009, and 

Education anticipates issuing final guidance in the fall of 2009 after it has 

reviewed the public comments. 

Page 48 GAO-09-1016 Recovery Act
 

Race to the Top funds. On July 29, 2009, Education issued proposed 

requirements and selection criteria for the competitive Race to the Top 

(RTT) grant program, and announced that $4.35 billion would be awarded 

to states.36 According to Education, the program is designed to encourage 

and reward states that are creating conditions for educational reform, 

achieving significant improvement in student outcomes, and implementing 

ambitious plans related to the four core reform areas. Education plans to 

award RTT grants in two phases—phase 1 will be for states that are 

already prepared to apply, and phase 2 will be for states that need more 

time to plan their reform efforts. Under Education’s proposal, to be 

eligible to apply for an RTT grant, a state must have an approved SFSF 

application and must not have any legal, statutory, or regulatory barriers 

to linking data on student achievement or student growth to teachers for 

the purpose of teacher and principal evaluations. Education also proposed 

that states describe in their applications how the additional RTT funds 

would be used to implement policies and practices related to the four 

educational reform areas. According to the proposal, states will be judged 

according to 19 selection criteria that fall into two categories: 

(1) state reform conditions criteria—used to assess a state’s past progress 

and its success in creating conditions for reform in specific areas related 

to the four educational reform areas; and 

(2) reform plan criteria—used to assess a state’s plans for future efforts in 

the four educational reform areas. 

In addition, the proposal includes a competitive preference for state 

applications that address certain issues related to science, technology, 

engineering, and mathematics. The proposal was open for comments 

through August 28, 2009, and over 1,100 individuals and organizations 

submitted comments. Education anticipates issuing final guidance in the 

fall of 2009 or winter of 2010 prior to making RTT Phase 1 applications 

available. 

 

36The Race to the Top grant program is also referred to as the State Incentive 

Grant Fund. Education has indicated that it will issue proposed requirements in 

the winter of 2009-2010 and award up to $650 million for a related program for 

LEAs—the Innovation Fund. 

Page 49 GAO-09-1016 Recovery Act
 

Administrative costs. The Secretary of Education recently proposed37 to 

allow states to reserve more Title I, Part A and IDEA, Part B38 funds for 

administrative costs incurred in meeting Recovery Act data collection 

requirements, including costs related to administering, monitoring, and 

reporting on the use of these funds.39 In its announcement of the proposed 

change, the department noted that, while the Recovery Act imposed new 

requirements on states under Title I, Part A and IDEA, Part B, the statutory 

limits on the amount of funds states may reserve for administering these 

programs were set before the Recovery Act was passed. Based on the 

proposal, the 16 states and the District of Columbia covered by our review 

would be able to use between $14 million and $20 million in total to help 

defray the costs of administering Title I, Part A and IDEA, Parts B 

Recovery Act funds.40 The 30-day comment period closed on September 

16, 2009. Education officials expect the proposal will take effect by the 

end of calendar year 2009. 

 

ESEA Title I waivers. In July, the department issued guidance on Title I, 

Part A waivers, including waivers related to Recovery Act funds. This 

guidance clarified and expanded the department’s Recovery Act fact sheet 

and guidance issued in April 2009. In addition, although individual LEAs 

can still apply for waivers directly from the department, the July 2009 

guidance encouraged states to apply for waivers on behalf of their LEAs, 

3774 Fed. Reg. 41402 (August 17, 2009). 

38According to officials, the proposal increases funds for IDEA, Part B, Grants to 

States (IDEA Section 611). 

39The amount of Title 1, Part A funds that a state educational agency (SEA) may 

currently reserve for state administration is limited by section 1004(b) of the 

ESEA to no more than 1 percent of the amount the SEA would receive under Title 

I, part A, if $14 billion were appropriated for parts A, C, and D of Title I. Any SEA 

whose amount under section 1004(b) would be less than $400,000 is permitted to 

reserve up to $400,000. The total amount appropriated in fiscal year 2009 exceeds 

$14 billion, triggering this cap. The amount of IDEA, Part B grants to states that an 

SEA may currently reserve for state administration is limited by section 611(e)(1) 

of IDEA to not more than the maximum amount the SEA was eligible to reserve 

for fiscal year 2004 or $800,000 (adjusted annually for inflation), whichever is 

greater. 

40Under the proposal, states that apply for Title I waivers on behalf of their LEAs 

would be eligible to receive a higher level of funding for administration than if 

they did not apply for such waivers. 

Page 50 GAO-09-1016 Recovery Act
 

which could in turn apply for waivers from the SEA.41 For example, states 

could apply for the authority to grant LEAs’ requests for waivers of the 

carryover limitation42 more than once every 3 years or to exclude 

Recovery Act funds in calculating the amount of funds LEAs must re

for various required activities. To receive the flexibility afforded by 

waivers, LEAs must provide assurances and information to the SEA as pa

of the application process. For example, Education’s waiver guidance 

specifies that LEA applications must identify how the funds freed up by 

the waiver will be used and that LEAs must provide data to show that such

activities are needed. In addition, LEA applications must make the case

that the effectiveness of strategies proposed is evidence based. As of 

September 17, 2009, 13 of the states we reviewed and the District of 

Columbia have applied for at least one Title I, Part A waiver (Arizo

California, Colorado, the District of Columbia, Florida, Georgia, Illin

Iowa, Massachusetts, Michigan, New Jersey, North Carolina, Ohio

Pennsylvania). Of these, the Secretary had approved Title I Recovery Act 

related waiver applications from 9 states: Arizona, Colorado, Georgia, 

Illinois, Iowa, Massachusetts, North Carolina, Ohio, and Pennsylvania. 

serve 

rt 

na, 

ois, 

, and 

 

Allowable uses of Title I, Part A and IDEA, Parts B and C funds. On 

September 2, 2009, Education released guidance on allowable uses of Title 

I, Part A Recovery Act funds. In our July 2009 report, we noted that local 

officials we interviewed frequently mentioned wanting more guidance on 

this issue. The guidance provides answers to a number of specific usage 

questions and presents allowable uses that LEAs could consider to 

advance particular types of educational reform. Examples of specific 

usage issues addressed in the guidance include when it would be 

appropriate for LEAs to reserve Title I, Part A Recovery Act funds to meet 

district priorities rather than distributing funds directly to schools, what 

should happen to equipment purchased with these funds in the future if 

the school no longer operates a Title I program, and to what extent these 

funds can be used to hire or retain various types of staff. To help LEAs and 

schools plan how to use Title I funds, the guidance identifies educational 

41Unlike LEAs applying directly to Education, LEAs that apply to implement an 

approved SEA waiver do not have to fulfill various requirements for notice and 

comment and reporting—the SEA assumes responsibility for these requirements. 

42Without the waiver, an SEA could waive the carryover limitation for an LEA at 

most once every three years if (1) it determined that the LEA’s request was 

reasonable and necessary or (2) a supplemental Title I, Part A appropriation 

became available. 

Page 51 GAO-09-1016 Recovery Act
 

strategies that could be used to help in (1) adopting rigorous standards 

and assessments, (2) establishing data systems and using data for 

improvement, (3) increasing teacher and school leader effectiveness and 

the equitable distribution of effective teachers and school leaders, (4) 

turning around the lowest achieving Title I Schools, and (5) improving 

results for students in Title I schools. 

Education also released guidance on allowable uses of IDEA, Parts B and 

C Recovery Act funds. While the IDEA, Part B guidance recognizes that 

many LEAs may need to use a large portion of Recovery Act funds to 

support teacher salaries or other critical short-term needs, it also suggests 

how LEAs can also use these funds to support activities that increase the 

capacity of LEAs and schools to improve results for students with 

disabilities, including under certain circumstances using some IDEA, Part 

B funds to implement schoolwide activities that support students with and 

without disabilities. The IDEA, Part C guidance includes five questions43

decision makers should consider in determining how to use Part C 

Recovery Act funds and provides examples of potential uses to improve 

outcomes for infants and toddlers with disabilities and their families. 

Using SFSF funds to meet maintenance-of-effort requirements.

Education released revised guidance on treating SFSF education 

stabilization and government services funds as nonfederal funds for 

purposes of meeting the IDEA, Part B maintenance-of-effort requirement 

on July 1, 2009. Once treated as nonfederal funds, these funds can (in 

certain circumstances) be used toward the IDEA, Part B state-level 

maintenance-of-effort requirement. This guidance indicates that, with prior 

approval from Education, a state may use SFSF education stabilization 

funds toward meeting the IDEA, Part B maintenance-of-effort requirement, 

if those funds are used to replace state support for special education 

provided through primary funding formulas. SFSF government services 

funds can also be used, with prior approval, toward the IDEA, Part B 

maintenance-of-effort requirement, as long as those funds are used for the 

education of children with disabilities. Similarly, an LEA may use SFSF 

funds toward the IDEA, Part B local-level maintenance-of-effort 

 

43The questions are: (1) Will the proposed use of funds result in improved 

outcomes? (2) Will the proposed use of funds increase capacity? (3) Will the 

proposed use of funds accelerate systems change? (4) Will the proposed use of 

funds avoid the cliff and serve as a bridge to improve productivity? (5) Will the 

proposed use of funds foster continuous improvement? 

Page 52 GAO-09-1016 Recovery Act
 

requirement. To do so, the LEA must use the funds for the education of 

children with disabilities, and it cannot include SFSF funds that the state is 

using toward meeting the state-level maintenance-of-effort requirement. 

Officials from Education’s Office of Elementary and Secondary Education 

said they were working on developing similar guidance for treating SFSF 

funds as nonfederal funds for purposes of meeting Title I, Part A 

maintenance-of-effort requirements. 

Recipient reporting. Education, in September, 2009, released two sets of 

guidance on recipient reporting: Clarifying Guidance on Section 1512 

Quarterly Reporting and Clarifying Guidance on Reporting on Jobs 

Creation Estimates by Recipients. The guidance on estimating jobs 

creation covers a range of issues, including specifics on how to convert 

hours worked into an estimate of a full-time-equivalent job and the 

requirements for collecting information from vendors on jobs created. 

Also, the guidance specifies that prime recipients, to the maximum extent 

practicable, should collect information from all subrecipients and vendors 

in order to generate the most comprehensive and complete job impact 

numbers possible. However, in limited circumstances and with prior 

approval from Education and OMB, a prime recipient can use an approved 

statistical methodology to generate estimates of job impact, thereby 

collecting data from a smaller subset of subrecipients or vendors. The 

guidance states that a statistical methodology should only be used in those 

cases in which a comprehensive collection of jobs data from all 

subrecipients and vendors is overly costly or burdensome. 

Prior to the issuance of its guidance, the department had provided a 

variety of other assistance to prime recipients and subrecipients on 

recipient reporting. For example, Education conducted webinars for state 

and LEA officials to help them understand different technical 

requirements related to the Recovery Act. To assist its recipients in 

meeting Recovery Act reporting requirements, Education developed tip 

sheets on how to complete the data elements in the quarterly reports for 

education programs. For example, on August 28, 2009, the Office of 

Special Education Programs (OSEP) released a Reporting Tip Sheet for its 

programs, which includes reporting information for IDEA Part B Grants to 

States, Preschool Grants and Part C Early Intervention programs. The tip 

sheet provides guidance for each data element on which recipients and 

subrecipients are to report. OSEP officials said that they conducted a 

conference call for state staff responsible for Part B and Part C Recovery 

Act recipient reporting to walk through the tip sheet and respond to 

questions. 

Page 53 GAO-09-1016 Recovery Act
 

Education Is Providing Intensive Technical Assistance to Six 

States Identified as “High Risk” to Help Them Implement Good 

Practices in Using Recovery Act Funds 

To target technical assistance resources to the states where such help 

could have the greatest impact, the department used a risk-based 

approach to identify “high risk” states and territories to receive intensive 

technical assistance. Five of the six states or territories identified as high 

risk are part of our review: California, the District of Columbia, Illinois, 

Michigan, and Texas.44 Department officials weighed a number of factors 

when assessing risk, such as the number of monitoring or audit findings in 

the state and the level of turnover in education leadership within the state. 

The department’s process for identifying these six states included Title I 

and IDEA program risk analyses. 

Education officials from several offices that share an interest in providing 

coordinated assistance are working together to contribute both 

programmatic and financial expertise to these high-risk states. For 

example, Education officials have been scheduling monthly calls with 

each of these states to help them identify and implement good practices in 

managing and using Recovery Act funds, according to an Education 

official. These “open forum” calls help state officials get their questions 

answered directly by experts in the department and help department 

officials respond to state-specific concerns and challenges in 

implementing the Recovery Act. In the future, this intensive technical 

assistance could include on-site visits to these six high risk states and to 

their LEAs, for example, to help state officials implement school 

improvement requirements, according to an Education official. 

Education Has Updated ESEA Title I and IDEA Monitoring Plans to 

Cover Recovery Act Funds and Is Monitoring State Drawdowns of 

Federal Funds 

ESEA Title I monitoring and technical assistance. To respond to the 

substantial increase in federal funding it oversees as a result of the 

Recovery Act, the office responsible for overseeing Title I has adapted 

how it monitors states and provides technical assistance. One of the most 

significant changes has been moving to a risk-based approach to 

determine which states to visit for on-site reviews. Specifically, the office 

 

44The sixth state/territory, Puerto Rico, is not covered by GAO’s review. 

Page 54 GAO-09-1016 Recovery Act
 

used a risk-based assessment to identify the 18 states that will receive 

monitoring visits during the 2009- 2010 monitoring cycle. States were 

selected using such factors as the number of previous monitoring findings, 

state coordinator turnover, and size of the Title I allocation. All six of the 

states identified as high risk department-wide will receive on-site 

monitoring during the fiscal year 2010 monitoring cycle, as will an 

additional 12 states that are considered high risk from a Title I 

perspective.45

Title I officials have also responded to the Recovery Act by changing the 

monitoring cycle from 3 years to 2 years to coincide with the availability of 

Recovery Act funds and adding a substantial number of questions related 

to the Recovery Act to the standardized questions they ask state and LEA 

officials during monitoring visits. In monitoring the use of Recovery Act 

funds, Education is also monitoring the rate at which Recovery Act funds 

are drawn down and spent, how Recovery Act funds are being used, and 

how reporting requirements are being met. 

Title I Education officials are also planning to use the results of their risk 

assessment to target technical assistance efforts. Specifically, in addition 

to working with other Education offices to provide coordinated intensive 

technical assistance to the six high risk states, Title I officials plan to 

provide customized assistance to Title I Directors in the 12 states they 

identified as also being high risk from a Title I perspective, six of which 

are in our review: Colorado, Florida, Massachusetts, New Jersey, New 

York, and North Carolina. This assistance may include scheduling calls to 

answer specific questions or to help address outstanding compliance 

issues, according to an Education official. In addition, Education officials 

may plan technical assistance meetings for these 12 states in school year 

2009-2010 on topics such as uses of Title I, Part A Recovery Act funds and 

upcoming 2009-2010 monitoring, according to an Education official. The 

goals of these meetings would be to improve these states’ readiness for 

their 2009-2010 monitoring visit and to increase the capacity of states to 

support Title I schools and LEAs. 

IDEA monitoring and data collection efforts. Regarding IDEA, 

Education will pursue its regular targeted monitoring visits and technical 

 

45The 12 states are Arkansas, Colorado, Delaware, Florida, Idaho, Louisiana, 

Massachusetts, Missouri, New Jersey, New York, North Carolina, and Oklahoma. 

Page 55 GAO-09-1016 Recovery Act
 

assistance in 16 states or territories,46 and, in response to the Recovery 

Act, Education’s Office of Special Education Programs (OSEP) will also 

perform a desk review of all states over the next 6 to 8 months. According 

to Education officials, the department uses annual performance report 

information and focused monitoring priorities to determine in which states 

it will conduct monitoring visits.47 In the course of its monitoring visits, the 

department verifies the effectiveness of state systems for general 

supervision, data collection and fiscal management, as well as reviews 

state progress toward the goals from its state performance plan. This year, 

the department will also focus on various elements from the Recovery Act, 

including reporting requirements. According to OSEP officials, certain 

requirements that have always been in place under IDEA have heightened 

importance given the larger appropriations under the Recovery Act, 

including requirements for IDEA funds used for construction or equipment 

costing more than $5,000—expenditures that might be more common than 

in past years given the larger appropriations under the Recovery Act. In 

conducting site visits, Education reviews state records, makes visits to 

selected LEAs for on-site examination of student records, and assesses 

state special education systems. Following these visits, Education issues a 

report on findings and, when noncompliance is found, requires states to 

demonstrate correction of the non-compliance. OSEP officials said the 

content of the desk review is still in development, but that it would focus 

as much on technical assistance for states as it would on reviewing states. 

Also, OSEP plans to provide guidance to SEAs regarding their Recovery 

Act monitoring efforts and the reporting of accurate data for recipient 

reporting under the Recovery Act. OSEP officials said the office will also 

choose states for targeted technical assistance based on the results of 

their upcoming Recovery Act desk reviews. 

Education also plans to collect more information than it has in the past 

from states regarding whether LEAs are exercising flexibility in spending 

their IDEA allocations, in an attempt to better understand how LEAs are 

adjusting their use of funds with the increased funds they have received. 

 

46The 16 states and territories are Arizona, Alaska, Bureau of Indian Education, 

Delaware, District of Columbia, Federated States of Micronesia, Louisiana, 

Minnesota, Missouri, Montana, New Hampshire, Ohio, Vermont, Virginia, 

Washington, and Wisconsin. 

47OSEP’s focused monitoring priorities, which helped determine which states to 

visit for 2009-2010 are: timely provision of early intervention services; Part C to 

Part B transition; and placement in the least restrictive environment. 

Page 56 GAO-09-1016 Recovery Act
 

Specifically, Education is planning to collect information on the number of 

LEAs that are taking advantage of the flexibility to decrease their local 

IDEA, Part B expenditures by up to 50 percent of the amount of the 

increase in their overall IDEA, Part B allocation.48 These “freed up” funds 

must be spent on activities allowable under the ESEA. This is of potential 

concern in future years because LEAs are required to maintain their 

previous year’s level of local spending on special education and related 

services to continue to receive IDEA funds, and by reallocating local funds 

out of IDEA programs, they will lower the level of local spending the LEA 

must maintain in subsequent years. Education is also collecting 

information on the number of school districts that are setting aside funds 

for Coordinated Early Intervening Services (CEIS).49 Education officials 

expect to have this information collected in 2011. As part of its monitoring 

and desk reviews, OSEP will review whether states are ensuring that only 

eligible LEAs are taking advantage of the maintenance-of-effort flexibility 

and that states are collecting information on LEAs that are setting aside 

funds for CEIS. 

Monitoring of state drawdowns and cash management. Education is 

monitoring states’ drawdowns of Recovery Act funds and has identified 

 

48Generally, in any fiscal year in which an LEA’s IDEA, Part B allocation exceeds 

the amount the LEA received in the previous year, the LEA may reduce its local 

spending on disabled students by up to 50 percent of the amount of the increase, 

as long as the LEA (1) uses those freed-up funds for activities that could be 

supported under the Elementary and Secondary Education Act of 1965, (2) meets 

the requirements under the Act, and (3) can provide each child a free and 

appropriate public education. 

49CEIS are services provided to students in kindergarten through grade 12 (with a 

particular emphasis on students in kindergarten through grade 3) who are not 

currently identified as needing special education or related services but who need 

additional academic and behavioral supports to succeed in a general education 

environment. IDEA regulations permit LEAs to set aside up to 15 percent of the 

amount the LEA receives under IDEA Part B to develop and implement CEIS, 

minus any amount by which the LEA reduces its local maintenance-of-effort, 

using the flexibility described in the previous footnote. IDEA regulations require 

an LEA to reserve 15 percent of IDEA Part B funds available for comprehensive 

CEIS if there is significant disproportionality based on race or ethnicity with 

respect to the identification of children with disabilities; the identification of 

children in specific disability categories; the placement of children with

disabilities in particular educational settings; or the incidence, duration, and type 

of disciplinary actions, including suspensions and expulsions. 

Page 57 GAO-09-1016 Recovery Act
 

issues with cash management in some states. To help ensure that states 

are complying with federal cash management requirements, including that 

states only draw down federal funds to meet the timing needs of a 

particular program, Education monitors states’ drawdowns of Recovery 

Act funds.50 Whenever a state requests a large drawdown of funds, 

Education officials told us they contact the state before approving the 

release of the funds to learn why it is drawing down the funds and whether 

it can document that it has an immediate need for the funds. The 

department’s monitoring of cash management drew officials’ attention to a 

substantial drawdown request of SFSF funds in Arizona that Education 

ultimately denied. Arizona planned to use the funds to backfill a $250 

million reduction in general fund appropriations for LEAs in fiscal year 

2009. However, when Arizona tried to draw down the SFSF funds for this 

purpose, Education denied the drawdown. According to Education 

officials, Arizona’s plans for the funds would have violated Recovery Act 

requirements because Arizona had not required LEAs to submit 

applications for the funds and LEAs would not have been aware that the 

funds they had used in fiscal year 2009 were Recovery Act funds, and, 

therefore, LEAs would not have been able to properly account for the 

funds in accordance with Recovery Act requirements. 

The substantial increase in federal education funds going to states due to 

the Recovery Act has increased the importance of cash management 

issues in some states, including Illinois and California. Specifically, Illinois 

has distributed SFSF funds to LEAs in semi-monthly payments, but 

according to state officials, the state does not have the ability to identify 

specific cash needs from LEAs prior to distributing these funds. However, 

disbursements of federal funds by states to LEAs when they are not 

prepared to spend them may result in state or LEA interest liability and 

reflect an inefficient use of federal cash. To track this issue, Illinois is 

 

50The Cash Management Improvement Act of 1990, as amended, requires the Secretary of 

the Treasury, along with the states, to establish equitable funds transfer procedures so that 

federal financial assistance is paid to states in a timely manner and funds are not 

withdrawn from Treasury earlier than they are needed by the states for grant program 

purposes. The act requires that states pay interest to the federal government if they draw 

down funds in advance of need and requires the federal government to pay interest to 

states if federal program agencies do not make program payments in a timely manner. The 

Department of the Treasury promulgates regulations to implement these requirements. 31 

C.F.R. pt. 205. However, cash management by subgrantees, such as LEAs, is subject to 

Department of Education grant administration regulations, which may require subgrantees 

to remit to the U.S. government interest earned on excess balances. See 34 C.F.R. §§ 74.22, 

80.21. 

Page 58 GAO-09-1016 Recovery Act
 

completing reports designed to identify excess cash balances maintained 

by LEAs, and according to state officials, LEAs are considered to be 

maintaining excess cash balances when they do not expend the funds they 

receive within the established time frame. Cash management by Illinois 

and its LEAs is an issue we intend to continue addressing in future reports. 

California drew down 80 percent of its available Title I, Part A Recovery 

Act funds in May 2009 and immediately distributed them to LEAs. 

According to Education officials, California Department of Education 

officials said that the drawdown was in lieu of its normally scheduled 

drawdown of school year 2008-2009 Title I funds, and therefore the 

schools would be ready to use the funds quickly. However, in August, we 

contacted the 10 LEAs in California that had received the largest amounts 

of Title I, Part A Recovery Act funds and found that 7 had not spent any of 

these funds and that all 10 reported large cash balances—ranging from 

$4.5 million to about $135 million. The California Department of Education 

is taking action to improve its overall cash management, including a pilot 

program to monitor LEA cash balances. Education is providing these 

states, and others, with targeted technical assistance on cash management, 

and Education’s Office of Inspector General (OIG) is focusing on cash 

management practices in its work.51

Education Is Developing Plans to Monitor Recipients of SFSF 

Funds, and Some States Face Challenges Establishing Monitoring 

Procedures for SFSF Funds 

Because SFSF is a new program established under the Recovery Act, 

Education has yet to finalize monitoring plans and processes. Education 

officials said they are developing an approach to monitor SFSF funds, 

which they anticipate will be completed around the time the department 

releases the final SFSF guidance in the fall of 2009. In the interim, 

Education officials said they are taking several steps to monitor 

information they are receiving from states as well as to provide technical 

assistance to states. For example, according to Education officials, prior 

to approving SFSF awards, Education screened each state’s application to 

ensure the state complied with statutory requirements to receive the 

funds. Now that almost all of the states have been approved for funding, 

Education officials reported that they have provided written guidance and 

 

51The OIG reported in March 2009 that the California Department of Education needed to 

strengthen controls to ensure that LEAs correctly calculate and promptly remit interest 

earned on federal cash advances (ED-OIG/A09H0020, March 2009). The OIG plans to issue 

a report on Illinois’s cash management later this fall. 

Page 59 GAO-09-1016 Recovery Act
 

conducted webinars to improve states’ and LEAs’ awareness of the 

appropriate uses of SFSF funds and related reporting requirements. 

Further, Education officials said they are monitoring fund drawdowns and 

following up with states on any press reports about questionable uses of 

SFSF funds. Education officials also plan to review information reported 

by states on SFSF funds in their required quarterly Recovery Act reports. 

Regarding requirements for states to monitor subrecipients’ use of SFSF 

funds, Education initially made states aware of this requirement by 

enumerating administrative requirements in the SFSF application and 

requiring governors to provide assurances that they will comply with the 

requirements. To re-emphasize this requirement, Education recently sent 

an e-mail to states to remind them of their responsibility to thoroughly and 

effectively monitor subrecipients under SFSF to ensure compliance with 

applicable federal requirements. The e-mail specified that to comply with 

these requirements, each state must have a comprehensive monitoring 

plan for SFSF supported activities and that the monitoring plan should 

address areas such as the following: 

• a monitoring schedule, 

• monitoring policies and procedures, 

• data collection instruments (e.g., interview guides and review checklists), 

• monitoring reports and feedback to subrecipients, and 

• processes to verify that required corrective actions are implemented. 

However, it is not clear that states have focused on this requirement and 

begun to put in place subrecipient monitoring systems that comply with 

Education’s requirements. For example, before Education sent the e-mail 

regarding SFSF monitoring, education officials in North Carolina said they 

had not developed specific monitoring plans for SFSF funds and they 

planned to rely on existing procedures for monitoring LEAs’ uses of Title I, 

Part A and IDEA, Parts B and C funds. After receiving the e-mail, state 

officials told us they are now developing monitoring plans specifically for 

SFSF funds. 

Furthermore, some states face challenges in developing monitoring plans 

for SFSF funds because of their existing problems in monitoring 

subrecipients of other education funds. In particular, Education’s OIG has 

identified subrecipient monitoring of education funds as an area of 

Page 60 GAO-09-1016 Recovery Act
 

concern, and state auditors have cited problems with subrecipient 

monitoring. In its reports on education program fiscal issues,52 the OIG 

stated that inadequate monitoring by the SEA was one of the most 

common internal control weaknesses. As an example of state subrecipient 

challenges, New Jersey’s 2008 Single Audit found material weaknesses in 

the SEA’s auditing of IDEA, Part B, including no evidence of state 

monitoring of LEAs’ use of federal funds. 53 Further, Arizona’s 2008 Single 

Audit found that the SEA did not comply with the subrecipient monitoring 

requirements of ESEA Title I and IDEA because it did not obtain Single 

Audit reports within 9 months of the subrecipients’ fiscal year-end, did not 

retain documents to support that the SEA tried to ensure audit 

requirements were met, and it did not issue management decisions within 

6 months after receipt of subrecipient Single Audit reports. 

Additionally, states may face a number of other challenges in establishing 

subrecipient monitoring programs for SFSF funds. Because the SFSF 

program is new, state officials will need to develop new procedures and 

reallocate or hire new staff and train them to conduct monitoring. Also, 

SFSF funds may be administered by governors’ offices rather than through 

state agencies with more experience directly monitoring programs. 

Another potential challenge to developing an effective monitoring program 

is that the Recovery Act does not designate SFSF funds that may be set 

aside specifically for administration, which would include monitoring 

responsibilities. While states could choose to use SFSF government 

services funds for this purpose, doing so would leave the states with less 

funds to use for public safety, education, and other purposes. Finally, 

some states could be challenged in setting up an effective monitoring 

program due to budget shortfalls that could limit their ability to maintain 

 

52U.S. Department of Education Office of Inspector General, Fiscal Issues 

Reported in ED-OIG Work Related to LEAs and SEAs, ED-OIG/X05J0005 

(Washington, D.C.: July 21, 2009). 

53Single Audits are prepared to meet the requirements of the Single Audit Act, as amended, 

and provide a source of information on internal control and compliance findings and the 

underlying causes and risks. The Single Audit Act requires states, local governments, and 

nonprofit organizations expending $500,000 or more in federal awards in a year to obtain 

an audit in accordance with the requirements set forth in the act. A Single Audit consists of 

(1) an audit and opinions on the fair presentation of the financial statements and the 

Schedule of Expenditures of Federal Awards; (2) gaining an understanding of and testing 

internal control over financial reporting and the entity’s compliance with laws, regulations, 

and contract or grant provisions that have a direct and material effect on certain federal 

programs (i.e., the program requirements); and (3) an audit and an opinion on compliance 

with applicable program requirements for certain federal programs. 

Page 61 GAO-09-1016 Recovery Act
 

adequate staff to handle the increased monitoring workload, for SFSF 

funds as well as other Recovery Act funds. 

We recommend that the Secretary of Education take further action such as 

collecting and reviewing documentation of state monitoring plans to 

ensure that states understand and fulfill their responsibility to monitor 

subrecipients of SFSF funds and consider providing training and technical 

assistance to states to help them develop and implement state monitoring 

plans for SFSF. 

Recommendation to the 

Secretary of Education 

We provided Education a draft of this report section for review and 

comment. The department did not provide formal written comments, but it 

did provide technical comments, which we incorporated in this section 

when appropriate. 

Agency Comments 

States Used Recovery Act 

WIA Youth Funds to Create 

Summer Youth 

Employment and Training 

Opportunities 

The Recovery Act provides an additional $1.2 billion in funds for 

Workforce Investment Act (WIA) Youth Program activities, including 

summer employment. Administered by the Department of Labor (Labor), 

the WIA Youth Program is designed to provide low-income in-school and 

out-of-school youth 14 to 21 years old, who have additional barriers to 

success, with services that lead to educational achievement and successful 

employment, among other goals. Funds for the program are distributed to 

states based on a statutory formula; states, in turn, distribute at least 85 

percent of the funds to local areas, reserving as much as 15 percent for 

statewide activities. The local areas, through their local workforce 

investment boards, have the flexibility to decide how they will use the 

funds to provide required services. 

While the Recovery Act does not require all funds to be used for summer 

employment, in the conference report accompanying the bill that became 

the Recovery Act,54 the conferees stated they were particularly interested 

in states using these funds to create summer employment opportunities 

for youth. While the WIA Youth Program requires a summer employment 

component to be included in its year-round program, Labor has issued 

guidance indicating that local areas have the flexibility to implement 

stand-alone summer youth employment activities with Recovery Act 

 

54H.R. Rep. No. 111-16, at 448 (2009). 

Page 62 GAO-09-1016 Recovery Act
 

funds.55 Local areas may design summer employment opportunities to 

include any set of allowable WIA youth activities—such as tutoring and 

study skills training, occupational skills training, and supportive 

services—as long as it also includes a work experience component. 

A key goal of a summer employment program, according to Labor’s 

guidance, is to provide participants with the opportunity to (1) experience 

the rigors, demands, rewards, and sanctions associated with holding a job; 

(2) learn work readiness skills on the job; and (3) acquire measurable 

communication, interpersonal, decision-making, and learning skills. Labor 

has encouraged states and local areas to develop work experiences that 

introduce youth to opportunities in “green” educational and career 

pathways. Work experience may be provided at public sector, private 

sector, or nonprofit work sites. The work sites must meet safety 

guidelines, as well as federal and state wage laws.56 Labor’s guidance 

requires that each state and local area conduct regular oversight and 

monitoring of the program to determine compliance with programmatic, 

accountability, and transparency provisions of the Recovery Act and 

Labor’s guidance. Each state’s plan must discuss specific provisions for 

conducting its monitoring and oversight requirements. 

The Recovery Act made several changes to the WIA Youth Program when 

youth are served using these funds. It extended eligibility through age 24 

for youth receiving services funded by the act, and it made changes to the 

performance measures, requiring that only the measurement of work 

readiness gains will be required to assess the effectiveness of summer-only 

employment for youth served with Recovery Act funds. Labor’s guidance 

allows states and local areas to determine the methodology for measuring 

work readiness gains within certain parameters. States are required to 

report to Labor monthly on the number of youth participating and on the 

services provided, including the work readiness attainment rate and the 

summer employment completion rate. States must also meet quarterly 

performance and financial reporting requirements. 

 

55Department of Labor, Training and Employment Guidance Letter No. 14-08 (Mar. 18, 

2009). 

56Current federal wage law specifies a minimum wage of $7.25 per hour. Where federal and 

state laws have different minimum wage rates, the higher rate applies. 

Page 63 GAO-09-1016 Recovery Act
 

For this report, we focused on Recovery Act-funded WIA summer youth 

employment activities in 10 of our 16 states.57 We did not review the 

District of Columbia because officials told us they were not using 

Recovery Act funds for their summer youth employment program. The 10 

states in our review represent nearly 60 percent of the $1.2 billion in 

Recovery Act WIA youth funds allotted by Labor. We supplemented our 

work in the 10 states by analyzing national data on the characteristics of 

youth participating in Recovery Act-funded WIA youth activities and the 

extent to which funds have been drawn down. 

As we noted in our July 2009 bimonthly report, the 10 states we reviewed 

generally planned to use Recovery Act funds to increase the number of 

youth served through summer activities. The July report also indicated 

that the limited time frame that states and local areas had to implement a 

stand-alone summer program presented challenges to officials. Once the 

Recovery Act was passed, officials had only about 4 months to get their 

new summer youth employment activities up and running—a process that 

officials told us would normally begin many months earlier. Moreover, 

local areas often lacked recent experience in operating such a stand-alone 

program. Prior to receiving the Recovery Act funds, many states and local 

areas had greatly reduced their summer youth employment programs and 

no longer offered a stand-alone summer program—or they had found 

funding sources other than WIA, such as state, local, or foundation funds, 

to cover it. Local areas without recent experience had to build the 

program from the ground up. These areas had to quickly confront many 

basic decisions—how to structure the program, how to recruit work sites 

and participants, whether to use contracted providers (and for what 

functions), or whether to administer the program in house. Some other 

areas, however, had maintained well-developed summer youth 

employment programs. These areas already had some of these basic 

structures in place but still found it daunting to quickly expand their 

existing programs. 

States Were Generally 

Successful in Serving Increased 

Numbers of Youth in Summer 

Activities 

Most States That Set Targets for Number of Youth to Be Served 

Have Met or Exceeded Them 

In July 2009, we reported that states expected large increases in the 

number of youth they served. These increases have generally materialized. 

 

57We reviewed WIA youth activities in California, Florida, Georgia, Illinois, Massachusetts, 

Michigan, New York, Ohio, Pennsylvania, and Texas. 

Page 64 GAO-09-1016 Recovery Act
 

Eight of the 10 states in our current review set targets, totaling more than 

120,000, for the number of youth they expected to serve this summer, 

according to our survey.58 Five of the states—Georgia, Massachusetts, 

New York, Pennsylvania, and Texas—reported they had met or exceeded 

their targets by mid-August. Three other states—Florida, Illinois,

Michigan—said they had not yet met their targets but expected to. For 

example, Florida set a target to serve 16,000 youths this summer, but 

officials could not report that they had met it due to late reporting by some 

local areas. 

 and 

Nationwide, as of July 31, 2009, almost 300,000 youths were participating 

in Recovery Act-funded WIA youth activities; more than three-fourths 

were placed in summer employment, according to Labor’s data. In our 10 

states, over 150,000 youths were served, with just under three-fourths 

placed in summer employment as of July 31, 2009. Youth 14 to 18 years old 

comprised the largest category of participants, ranging from 63 percent in 

Florida to 80 percent in Massachusetts. From 4 percent to 10 percent of 

participants were age 22 to 24, the new age category authorized under the 

Recovery Act. The proportion of out-of-school youth, a special focus of the 

WIA Youth Program, ranged from 24 percent to 45 percent in our 10 states. 

Nationwide, about 36 percent of the youth served with Recovery Act funds 

were out of school, compared with just over 42 percent in the most recent 

data for the regular WIA Youth Program (see table 11). 

Table 11: Recovery Act-Funded WIA Youth Participation in Selected States, as of 

July 31, 2009 

State 

Number 

served

Percentage 

placed in 

summer 

employment

Percentage 

out of 

school 

Percentage

22-24 years 

old

Percentage 

14-18 years 

old

California 33,789 42 38 7 69

Florida 11,902 64 45 10 63

Georgia 9,873 100 24 5 77

Illinois 15,078 62 43 10 66

Massachusetts 5,640 93 43 4 80

Michigan 13,705 89 35 9 66

New York 21,375 89 27 7 71

 

58California and Ohio reported that they did not set targets for the number of youth they 

expected to serve in summer activities. 

Page 65 GAO-09-1016 Recovery Act
 

State 

Number 

served

Percentage 

placed in 

summer 

employment

Percentage 

out of 

school 

Percentage

22-24 years 

old

Percentage 

14-18 years 

old

Ohio 12,530 69 28 8 72

Pennsylvania 5,102 96 34 7 69

Texas 21,602 91 25 7 74

Total for 10 

states 150,596 73 34 8 70

Nationwide 297,169 76 36 7 71

Source: Department of Labor data based on information reported by the states. 

States’ Draw Down Rates Have Been Increasing 

As of August 31, 2009, about 34 percent of Recovery Act WIA youth funds 

($397 million) had been drawn down nationwide, according to Department 

of Labor data—an increase of 28 percentage points from the 6 percent we 

reported in July.59 Across our 10 states, drawdowns have been steadily 

increasing since June. (See fig. 6.) 

 

59Drawdowns represent cash transactions: funds drawn down by states and localities to pay 

their bills. These are cash drawdowns from the Department of Health and Human Services’ 

Payment Management System. Under the procedures for using these funds, funds are to be 

drawn down no more than 3 days in advance of paying bills. 

Page 66 GAO-09-1016 Recovery Act
 

Figure 6: National Draw Down Rates for Recovery Act Funds for the WIA Youth 

Program, as of August 31, 2009 

0

5

10

15

20

25

30

35

40

May June July August

Percentage of funds spent

Source: GAO analysis of Department of Labor data.

1%

7%

19%

34%

Among the 10 states, the percentage drawn down ranged from 20 percent 

for California to 51 percent for Georgia and Texas (see table 12). 

Table 12: Selected States’ Drawdowns as of August 31, 2009 

Dollars in millions 

State Allotment

Amount drawn 

down

Percentage drawn 

down

California $186.6 $38.0 20

Florida 42.9 21.2 50

Georgia 31.4 16.0 51

Illinois 62.2 23.5 38

Massachusetts 24.8 8.3 33

Michigan 73.9 20.2 27

New York 71.5 17.0 24

Ohio 56.2 15.8 28

Pennsylvania 40.6 9.4 23

Page 67 GAO-09-1016 Recovery Act
 

Dollars in millions 

State Allotment

Amount drawn 

down

Percentage drawn 

down

Texas 82.0 41.6 51

Nationwide $1,167.2 $397.1 34

Source: GAO analysis of Department of Labor data. 

Local areas we visited provided WIA youth participants with a range of 

summer work activities in the public, private, and nonprofit sectors. Some 

local areas offered academic and occupational skills training. 

Local Areas Used Their 

Flexibility to Offer a Variety of 

Summer Youth Employment 

Activities 

Type of Work Experience 

Across the public, private, and nonprofit work sites, the specific work 

activities that youth were assigned ranged from clerical work and 

custodial work to animal care, customer service, and serving as camp 

counselors or legislative aides. 

Public sector work sites included local government offices; public parks, 

recreation centers, and camps; public schools and community colleges; 

public libraries; and animal shelters. 

• In Weatherford, Texas, for example, a youth who wanted to become a 

veterinarian was able to gain firsthand experience when she was assigned 

to work at a city animal shelter. Her responsibilities included working with 

veterinarians, taking care of animals, cleaning kennels, and completing 

intake paperwork. 

Private-sector work sites included hospitals and retail stores. 

• In Dayton, Ohio, for example, a local university student and aspiring 

entrepreneur was placed in a small retail store to shadow a small business 

owner and learn the various skills needed to operate the store, including 

customer service, stock duties, product placement, and data entry. 

Nonprofit work sites included museums and community action agencies. 

• In Chicago, for example, the Museum of Science and Industry enrolled 

youth as peer educators who facilitated children’s science activities at 

various sites across the city, such as at libraries and schools. 

Page 68 GAO-09-1016 Recovery Act
 

Role of Academic and Occupational Skills Training 

Some youth also received academic and occupational skills training as 

part of their summer activities. Academic training linked summer 

employment and academic learning for out-of-school youth and in-school 

youth. For example: 

• Philadelphia: All youth participants in Philadelphia were required to 

complete an academic project that would be evaluated by certified 

teachers and eligible for academic credit. 

• Oneida County, New York: Out-of-school youth were allowed to enroll 

in a General Education Diploma training course for 3 hours a day outside 

of their work hours and get paid for 2 of the 3 hours. 

Occupational training provided youth with exposure to various career 

fields. For example: 

• Hillsborough County, Florida: Youth ages 17 to 19 participated in a 4-

week Employment and Leadership Exploration program. The instruction 

covered business ethics and business simulation models. The youth 

worked in teams and applied the skills learned to create a simulated online 

magazine of their choice. Participants also completed a skills assessment 

and participated in one on-site visit to an employer. 

• Atlanta, Georgia: About 100 youth participated in a summer learning 

program where they attended classes and workshops to study drama, 

video production, and other visual arts. These youth worked with industry 

professionals in these areas and were expected to complete a project 

related to their area of study. For example, the youth in the drama 

program were responsible for developing and producing a play that was 

held at the end of the summer program. They also attended occupational 

workshops and participated in basic life and career skills training. 

• Columbus, Ohio: Over 200 youth ages 14 to 17 participated in an 

information technology program aimed at developing computer skills, 

exploring career pathways, and accessing college and financial aid 

information. 

The local areas we visited used different approaches to pay their youth—

direct deposit, prepaid debit cards, or paper checks. For example, in both 

Columbus and Dayton, Ohio, youth received their pay through direct 

deposit into a bank account established for the youth at the beginning of 

Local Areas Used Different 

Methods to Distribute Youth 

Payroll 

Page 69 GAO-09-1016 Recovery Act
 

the program. Some youth in Broward County, Florida, also received their 

pay by way of direct deposit or prepaid debit card. Some local areas, 

however, distributed paper checks. 

The paycheck distribution process in one local area did not go smoothly—

Detroit youth encountered multiple challenges in getting their paychecks. 

We observed payroll distribution on three occasions. Initially, the payroll 

distribution site had long lines, and the process for obtaining the checks 

was unclear. According to the summer work activities contractor, many 

youth did not know where to go to get their paychecks or with whom to 

speak to resolve issues. In subsequent observations, we saw that some 

problems persisted. For example, we observed youth waiting in lines for 

up to 4 hours while standing in the rain to receive their paychecks. Local 

area officials confirmed that wait times were, on average, 3 to 4 hours. 

Further, on several occasions, local police were called to assist with 

crowd control. At the time of our site visit, officials told us they were 

working to correct these problems. 

Local area officials continued to report challenges in some areas as they 

implemented their summer youth activities. In July, we reported that state 

and local areas faced challenges in three areas: tight time frames, a lack of 

staff capacity to meet the expanded needs, and difficulty in determining 

and documenting youth eligibility. In our current review, we continued to 

find challenges in determining and documenting youth eligibility. In 

addition, we found that some local areas faced initial challenges in 

recruiting sufficient numbers of youths. 

Local Areas Continued to Face 

Challenges in Implementing 

Their Recovery Act-Funded 

WIA Summer Youth 

Employment Activities 

Determining and Documenting Youth Eligibility 

As the summer activities got under way, officials still found it challenging 

to determine youth applicants’ eligibility.60 In seven states, officials 

mentioned that it was challenging for youth and their parents to provide 

the proper eligibility documentation in a timely manner. These local 

officials often said that youth had to come back to the office multiple 

 

60To be eligible for services under the WIA Youth Program, an individual must be between 

the ages of 14 and 21 (24 for services funded by the Recovery Act), be a low-income 

individual, and have at least one of the following listed barriers: Be (1) deficient in basic 

literacy skills; (2) a school dropout; (3) homeless, a runaway, or a foster child; (4) pregnant 

or parenting; (5) an offender; or (6) an individual (including a youth with a disability) who 

requires additional assistance to complete an educational program, or to secure and hold 

employment. 

Page 70 GAO-09-1016 Recovery Act
 

times to provide the documentation needed to be eligible to participate.61

Officials also mentioned that it was especially challenging to determine the 

eligibility of older youth (18 to 24 years old). Based on their experiences, 

officials in one local area said that older youth who are not employed or in 

school often do not have documentation to prove their eligibility for the 

program, such as a birth certificate or Social Security card, or proof of 

household income or citizenship. Two states reported they had identified 

issues with verifying eligibility during their monitoring efforts and in each 

case took corrective action. Illinois officials found some local areas were 

not always correctly verifying participants’ eligibility, and in California, 

officials found missing documentation in some participants’ case files. 

Labor is aware of the issues related to eligibility and is conducting an 

ongoing evaluation of the WIA youth program that includes a focus on the 

eligibility determination process. Labor contracted with Mathematica 

Policy Research Inc. to perform this evaluation. The evaluation included 

site visits to 20 local areas between mid-July and early August 2009. An 

interim report is due in January 2010 and a final report in 2011. 

Recruiting Youth 

Across the local areas we visited, some officials reported that they initially 

found it challenging to recruit sufficient numbers of eligible older youth. 

Local area officials addressed this challenge in several ways. Many local 

areas used various forms of advertisement—radio, television, and flyers—

to inform youth about the summer programs. Some local areas also used a 

rolling admissions process, so that youth could have more time to apply 

for the program. A few local areas raised the hourly wage they offered to 

youth, which attracted many additional applicants. For example, when 

Broward County, Florida, officials increased the wage from $7.21 to $9 per 

hour, they received more than 3,000 applications. But the county was 

forced to reduce the number of participants from 900 to 724 to 

compensate for the increased wages. Officials in Columbus, Ohio, also 

reported a similar experience when they increased their wages. Moreover, 

wages in a local area in Georgia were set up to $14 an hour in some cases 

 

61All 10 states reported having statewide requirements for documenting eligibility for the 

WIA Youth Program. Acceptable forms of eligibility documentation vary depending on the 

data element. Examples include public assistance identification cards to support total 

household income, birth certificates for proof of citizenship, and applicant statements to 

document those items, which, in some cases, are not verifiable or which may cause undue 

hardship for individuals to obtain, such as residency for homeless individuals not residing 

in a shelter or income for individuals who claim little to no income. 

Page 71 GAO-09-1016 Recovery Act
 

to bring them on par with unsubsidized employees at the work site who 

had the same job description. 

Although Labor encouraged states to develop work experiences in green 

jobs and provided some guidance, officials in several states told us they 

were not always clear what constituted a green job or how to incorporate 

it into the summer program. Labor provided some discussion of green jobs 

in its March 18, 2009, guidance to states on Recovery Act funds. The 

guidance highlights areas within the energy efficiency and renewable 

energy industries that will receive large Recovery Act investments, such as 

energy-efficient home retrofitting and biofuel development, and also 

provides examples of occupations that could be impacted by green 

technologies, including power plant operators, roofers, and construction 

managers. Labor officials told us that their reporting requirements for 

Recovery Act funds do not require states to provide information on green 

jobs. 

Limited Guidance from Labor 

Contributed to Mixed Local 

Efforts in Developing Green 

Work Experiences 

Officials in several of the states we reviewed told us that the lack of clarity 

in the definition of a green job made it difficult to incorporate green jobs 

into the summer activities. Some local areas decided not to include green 

jobs in their summer program at all, while others took steps to define and 

identify green jobs. However, their definitions varied. For example, local 

area definitions of green jobs included the following: 

• jobs that improved the health of the planet, 

• jobs that help with conservation, recycling, or preserving our environment, 

and 

• jobs that build awareness and understanding of the natural environment 

and encourage careers in environmental sciences and industry. 

The methods for defining green jobs also varied. For example, some local 

areas identified the jobs by allowing employers to self-report whether their 

jobs were green. Georgia provided its local areas with guidance on how to 

define green jobs, including summarizing Labor’s guidance and listing 

examples of green jobs. In Michigan, officials in Detroit told us they had 

developed a task force to define and identify green jobs and planned to 

place 600 youth in green jobs. In Lansing, Michigan, officials reported they 

had difficulty identifying significant numbers of green jobs suitable for 

youths, although they created some green jobs for youths in the Lansing 

Page 72 GAO-09-1016 Recovery Act
 

Board of Water and Light and the School of Agriculture at Michigan State 

University. 

We also found a wide variation in youths’ experiences in jobs that were 

classified as green. In some cases, youth were working toward green 

educational or career pathways. For example: 

• In Harrisburg, Pennsylvania, a work site included tours of recycling 

facilities, discussed how to make homes more energy efficient, and 

exposed youth to “green” careers, such as electricity consumption 

auditors. 

• Participants at a Philadelphia work site tested the permeability of soil 

samples that were provided to them from the site of a major oil spill in 

Alaska. 

• In Georgia, one workforce board worked with a local technical college to 

develop a 4-week water management camp for youth. This camp 

combined work experience and classroom activities in bioscience and 

environmental science to help youth develop marketable skills applicable 

to the water quality management industry. 

• In Savannah, Georgia, a nonprofit organization developed a computer 

recycling program for at-risk youth to learn how to refurbish computers 

that would have ended up in land fills. 

However, in other cases, it is unclear whether youth working in jobs the 

local area classified as green were actually working toward “green” 

educational or career pathways. For example: 

• In Columbus, Ohio, two youth were assigned to an automotive research 

facility whose projects include researching and designing alternative fuel 

vehicles. Although they were exposed to green technology, their actual 

tasks involved clearing brush and painting a fence. 

• In Georgia, an organic food company was considered a green employer, 

however, at least one of the youth was performing clerical duties. 

• In Burke County, Georgia, some youth were working at the forestry 

commission performing clerical and office work. 

Labor officials told us they are aware of the difficulties and confusion that 

some states and local areas have experienced with respect to providing 

youth with green work experiences. Labor officials said they expect that 

Page 73 GAO-09-1016 Recovery Act
 

their Recovery Act Competitive Grants for Green Jobs Training Initiative 

will generate substantial information on best practices for training 

workers for green jobs. Through this initiative, Labor plans to award green 

training funds for projects that prepare workers for careers in energy 

efficiency and renewable energy sectors as described in the Green Jobs 

Act of 2007. Labor officials added that Labor’s ongoing evaluation of the 

WIA Youth Program should shed further light on state and local areas’ 

experiences in developing green jobs for youth. 

The 10 states we reviewed generally reported that they are relying on 

existing WIA monitoring structures to oversee the use of Recovery Act 

funds for WIA summer youth activities. State-level monitoring of WIA 

summer youth programs varied by state, but nearly all state monitoring 

included financial auditing, site visits, and file reviews, and some also 

included interviews with work site supervisors and/or program 

participants. A number of states targeted their monitoring efforts using 

risk-based approaches. For example, California reported using 

assessments to focus monitoring on work sites considered high risk, based 

on factors such as geographic location, type of work being conducted, and 

the age of the participants. Some states, such as Georgia, have taken a 

multistage approach to monitoring, with the first stage involving 

preprogram assessment and a second stage involving program review and 

financial auditing. 

States’ Monitoring Efforts Built 

on Existing Structures but 

Required Additional Resources 

To conduct their monitoring efforts, states and local areas have often 

found it necessary to add staff in order to meet the steep demands of 

monitoring the expanded summer youth activities. For example, officials 

in Oneida County, New York, reported that they temporarily hired 4 

employees to manage their summer youth monitoring efforts. In some 

cases, efforts to bring on new staff fell short. In Detroit, Michigan, for 

example, where all summer youth employment activities were contracted 

to an outside organization, city and contractor officials reported that they 

initially planned to hire 50 work site monitors, but as of September 9, 2009, 

had 21 work site monitors on staff. Similarly, Michigan state officials’ plan 

to hire additional staff had not yet materialized at the time of our visit 

because they had been unable to obtain permission to do so. As of midAugust, Michigan had not conducted any oversight reviews of the WIA 

summer youth employment activities. 

Page 74 GAO-09-1016 Recovery Act
 

Labor has provided support for state and local efforts through actions 

such as issuing guidance, monitoring implementation, providing technical 

assistance, and conducting a program evaluation. For example, Labor 

announced its initial plans for implementing Recovery Act programs on 

March 4, 2009, about 2 weeks after the act was passed. From March to May 

2009, Labor announced states’ allotments, as well as issued comprehensive 

implementation guidance and guidance on performance reporting. Its 

guidance on recipient reporting was issued in August 2009. 

Labor Has Taken a Wide Range 

of Actions to Support 

Implementation of Summer 

Employment Activities for 

Youth 

In the spring of 2009, as states were planning their summer youth 

employment activities, Labor administered a checklist to gauge each 

state’s readiness for implementing these activities and to help officials 

target technical assistance. The checklist covered a broad range of topics, 

including the states’ plans for training staff and for monitoring summer 

youth employment activities. In addition, Labor held conferences in each 

of its regions to provide a forum for discussing experiences and issues in 

implementing Recovery Act-funded programs, including WIA summer 

youth activities. 

Starting at the end of June, Labor’s regional offices began conducting local 

site visits in each of their states to monitor and gather information on WIA 

Youth Program experiences. Labor has also hired a contractor to provide 

technical assistance to states and local areas. According to Labor officials, 

the contractor will be holding technical assistance conferences in late fall 

2009 to discuss serving older out-of-school youth and green jobs in 

preparation for implementing services with the remaining Recovery Act 

funds. Further, as mentioned, Labor has contracted with Mathematica to 

conduct an evaluation of the WIA Youth Program to better understand the 

issues and challenges. 

While many program officials, employers, and participants we spoke with 

believe the summer youth activities have been successful, measuring 

actual outcomes has proven challenging and may reveal little about what 

the summer activities achieved. The Recovery Act requires that only the 

work readiness measure be used to assess the effects of the summer-only 

youth employment activities. This measure is defined as the percentage of 

participants in summer employment who attain a work readiness skill 

goal. Under Labor’s guidelines, states and local areas are permitted to 

determine the specific assessment tools and the methodology they use to 

determine improvements in work readiness, but it must be measured at 

the beginning and completion of the summer experience. In implementing 

the requirements of the Recovery Act, Labor officials told us they had little 

time to develop a standardized approach. Moreover, because some local 

Broad Flexibility for States and 

Localities to Measure Gains in 

Work Readiness of Youth May 

Limit Usefulness of Data 

Page 75 GAO-09-1016 Recovery Act
 

areas already had work readiness assessments in place, Labor officials 

were concerned that requiring a new approach would place additional 

stress on a workforce system already stretched thin. 

In our review of the 10 states, we found that the methodologies used to 

measure work readiness varied widely, calling into question the 

comparability and the usefulness of the indicator when rolled up at the 

national level. Of the 10 states, only Illinois established a single approach 

to be used statewide in measuring work readiness gains. The approaches 

used in the other 9 states varied from local area to local area and 

sometimes from contractor to contractor. For example, in Philadelphia, all 

work sites administered the same work readiness assessment tool—one 

that focuses on skills such as oral and written communication, leadership, 

and teamwork. But in Pennsylvania’s South Central workforce area, the 

decision about how to conduct the pre- and post-assessment was left to 

the individual contractors. In Columbus, Ohio, officials were using a 

comprehensive work readiness assessment tool that included questions in 

such dimensions as collaboration in the workplace, problem solving, and 

characteristics of good leadership. In addition, youth were required to do 

an extensive self-evaluation in these and other dimensions. Dayton, Ohio, 

youth, on the other hand, were given a 20-question true-false survey that 

included questions such as “I understand the importance of demonstrating 

a positive attitude in the workplace.” The North Central Texas Workforce 

Board’s methodology for identifying work readiness included a variety of 

components in addition to a pre- and post-assessment administered at the 

beginning of the work experience activity during the work readiness class. 

For example, youth were also required to participate in a mock interview 

with an employer, and obtain a positive evaluation from their supervisor. 

Labor officials told us that they are aware of the range of work readiness 

tools being used and the issues with measuring work readiness and that 

they view this as an area that could be improved. As part of Mathematica’s 

evaluation of the summer youth activities, Labor has asked researchers to 

focus on gathering lessons learned related to measuring work readiness. 

Seven of our 10 states reported they plan to track long-term outcomes, 

such as job placement and employment retention, for at least some of the 

youth they served this summer, largely through the tracking systems they 

use for the WIA year-round program. For example, Pennsylvania plans to 

study the outcomes and employment activities of the older youth (22 to 24 

years old). Officials also plan to review placements offered to all 

participants in the summer program to determine whether certain 

placements—for example, private sector versus public sector work sites—

Other Efforts May Shed 

Additional Light on Program 

Outcomes and Characteristics 

Page 76 GAO-09-1016 Recovery Act
 

provided better employment activities than others. Pennsylvania officials 

also said they plan to develop and use an evaluation tool to help officials 

identify best practices in their summer youth employment activities. These 

best practices will be highlighted at an annual forum of Pennsylvania’s 

local workforce officials and stakeholders. 

Beyond these evaluation efforts, states must meet additional reporting 

requirements under the Recovery Act that may help policymakers at all 

levels gauge the impact of the summer employment activities. 

• Recipients of Recovery Act funding are required to submit detailed 

information on the use of the funds every quarter, beginning with the 

quarter ending September 30, 2009, including information on jobs created 

and retained. According to Labor’s August 14, 2009, guidance, Recovery 

Act-funded employment and training programs are not intended to have a 

significant job creation component. The guidance specified that recipients 

should only report job creation/retention numbers for those individuals 

who are hired or retained to execute program activities, and whose 

salaries are paid with Recovery Act funds. However, on September 21, 

2009, Labor issued additional guidance that clarified the reporting 

requirements associated with the summer youth employment activities. 

Labor stated that, consistent with OMB guidance, summer youth 

employment activities and employment activities occurring outside the 

summer months funded with the Recovery Act WIA Youth funds are to be 

included in the job creation estimates.62 

• To gauge the progress states and local areas are making in implementing 

Recovery Act-funded activities, Labor has instituted new monthly 

reporting requirements and is posting information from these reports on 

its Web site. In the new report, states must provide aggregate counts of all 

Recovery Act youth participants, including the characteristics of 

participants, the number of participants in summer employment, services 

received, attainment of a work readiness skill, and completion of summer 

youth employment. 

 

62The job creation estimates are to include all paid work opportunities funded with the 

Recovery Act WIA Youth funds and are not to include academic opportunities, according to 

Labor’s guidance. 

Page 77 GAO-09-1016 Recovery Act
 

State and local officials charged with implementing the WIA summer youth 

employment activities reported difficulties in responding to the Recovery 

Act’s focus on green industries without a clear standard for what 

constitutes a green job. Despite a significant increase in funding under the 

Recovery Act, flexibilities given to states and local areas in how they 

measure work readiness—the sole indicator to gauge the effect of the 

summer work activities—provide little understanding of what the program 

actually achieved. U.S. Department of Labor officials acknowledge that 

these are areas for improvement and cite their competitive grants for 

green job training and ongoing evaluation of the summer youth 

employment activities as important steps. 

Agency-Specific Guidance on 

Green Jobs and Training 

Outcomes for Youth 

Employment 

Recommendations We recommend that the Secretary of Labor take the following two actions: 

• 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. 

• To enhance the usefulness of data on work readiness outcomes, provide 

additional guidance on how to measure work readiness of youth, with a 

goal of improving the comparability and rigor of the measure. 

We provided Labor a draft of this report section for review. The 

department provided written comments, which are reprinted in appendix 

II. Labor agreed with our recommendations to provide additional guidance 

in two areas: defining green jobs and measuring work readiness. With 

regard to green jobs, Labor indicated that it recognizes the need to provide 

assistance to states and local areas to help them prepare youth for careers 

in green industries, and it highlighted several steps it is taking to better 

understand and define green jobs. First, it noted that its Bureau of Labor 

Statistics is developing a definition for green sectors and green jobs that 

officials hope will inform state and local workforce development efforts to 

identify and target green jobs and their training needs. Labor also noted 

that it is planning to hold technical assistance forums in late 2009 that will 

focus on ways to prepare youth for careers in green industries, and it cited 

its plans to leverage the results of the Recovery Act-funded competitive 

grants for green job training to provide insights on delivering services to 

youth, and others, along green career pathways. 

Agency Comments 

Regarding our recommendation on the work readiness measure for WIA 

youth summer employment activities, Labor acknowledged that the lack of 

Page 78 GAO-09-1016 Recovery Act
 

comparability in the way work readiness gains were measured has led to a 

less meaningful outcome measure at the state and national level. Labor 

indicated that it is currently assessing the methodologies used this 

summer to measure work readiness and plans to further refine the work 

readiness indicator and determine a more effective way to measure it. In 

the event that a significant number of local areas have Recovery Act funds 

available for summer employment in 2010, or if Labor receives funds for 

future summer employment activities where the work readiness measure 

is used to gauge effectiveness, Labor indicated that it will issue further 

guidance that provides for reporting of more consistent and meaningful 

data. 

In addition, Labor commented that it considers the work readiness 

measure meaningful at the local level and suggested that we qualify our 

findings to acknowledge this point. In our view, the work readiness 

measure may be meaningful at the local level to the extent that a local area 

uses appropriate and consistent measures across worksites. However, it is 

unclear the extent to which this is occurring. Our work identified 

instances in which a local area was using measures that varied by 

contractor. Thus, we did not revise our findings. Labor also provided 

technical comments, which we incorporated as appropriate. 

The Recovery Act requires the U.S. Department of Housing and Urban 

Development (HUD) to allocate $3 billion through the Public Housing 

Capital Fund to public housing agencies using the same formula for 

amounts made available in fiscal year 2008. As we noted in our July report, 

HUD allocated Capital Fund formula dollars to public housing agencies 

shortly after passage of the Recovery Act and, after entering into 

agreements with more than 3,100 public housing agencies, obligated these 

funds to public housing agencies on March 18, 2009.63 As of September 5, 

2009, 2,211 public housing agencies (71 percent of the housing agencies 

that entered into agreements with HUD for Recovery Act funds) had 

reported to HUD that they had obligated a total of $957 million, or about 

32 percent of the total Capital Fund formula funds HUD allocated to them. 

A Growing Number of 

Housing Agencies Are 

Obligating and 

Beginning to Draw 

Down Recovery Act 

Formula Funds 

 

63HUD allocated Capital Fund formula dollars from the Recovery Act to 3,134 public 

housing agencies, but as of September 5, 2009, 12 housing agencies chose not to accept 

Recovery Act funding, no longer had eligible public housing projects that could utilize the 

funds, or had not yet entered into an agreement with HUD for the funds. As a result, these 

funds were not obligated by HUD. HUD officials subsequently stated that one additional 

housing agency had rejected funds totaling $151,174. 

Page 79 GAO-09-1016 Recovery Act
 

According to HUD officials, housing agencies report obligations when they 

have entered into binding commitments to undertake specific projects. A 

majority of housing agencies that had obligated funds—1,578 of 2,211 

housing agencies—had also drawn down funds in order to pay for project 

expenses already incurred. In total, public housing agencies had drawn 

down almost $146 million, or just less than 5 percent of the total HUD 

allocated to them. Funds drawn down increased by $114 million from the 

level reported as of June 20, 2009. 

Figure 7: Percentage of Public Housing Capital Fund Formula Grants Allocated by HUD That Have Been Obligated and Drawn 

Down Nationwide, as of September 5, 2009 

Drawing down funds

Obligating funds

Entering into agreements for funds

Funds obligated by HUD

99.9%

$2,982,132,788

Funds obligated 

by public housing agencies

32.1%

$956,829,705

Funds drawn down

by public housing agencies

4.9%

$145,566,831

2,211

1,578

Number of public housing agencies

Source: GAO analysis of HUD data.

3,122

Note: The 3,122 housing agencies to which HUD obligated funds includes one housing agency that 

HUD officials subsequently stated had rejected funds totaling $151,174. 

The number of housing agencies that had reported any obligations grew by 

728 since our July 2009 report. The new obligations by housing agencies 

that had not previously reported obligations totaled about $178 million. In 

addition, 710 housing agencies that had previously reported obligations 

increased the amount they had obligated since our July 2009 report by 

$322 million. Of note, 744 housing agencies had obligated 100 percent of 

their funds as of September 5, 2009, placing them well ahead of the 

Recovery Act’s 12-month deadline for public housing agencies to obligate 

Page 80 GAO-09-1016 Recovery Act
 

all of their grant funds. The remaining 2,378 housing agencies—including 

911 housing agencies that had obligated no funds as of September 5, 

2009—have until March 17, 2010, to obligate 100 percent of their funds. 

HUD will recapture any funds not obligated at that time. 

Of the 47 housing agencies we selected for in-depth review throughout our 

Recovery Act work, 44 had obligated funds totaling $147 million, or about 

28 percent of the total Capital Fund formula funds HUD had allocated to 

them. Obligations increased by about $81 million from the level we 

reported in July and included obligations by 14 housing agencies that had 

not previously reported any obligations. A majority of housing agencies 

that had obligated funds—37 of 44 housing agencies—had also drawn 

down funds. In total, these housing agencies had drawn down $13.1 

million, or about 2.5 percent of the total allocated to them by HUD—an 

increase of about $10.5 million from the level we reported in July 2009. 

Figure 8: Percentage of Public Housing Capital Fund Formula Grants Allocated by HUD That Have Been Obligated and Drawn 

Down by 47 Public Housing Agencies Visited by GAO, as of September 5, 2009 

Drawing down funds

Obligating funds

Entering into agreements for funds

Funds obligated by HUD

100%

$531,001,215

Funds obligated 

by public housing agencies

27.7%

$147,083,554

Funds drawn down

by public housing agencies

2.5%

$13,130,686

44

37

Number of public housing agencies

Source: GAO analysis of HUD data.

47

Page 81 GAO-09-1016 Recovery Act
 

HUD officials stated that obligations were being reported at a somewhat 

slower pace than what they had expected. They cited the “Buy American” 

provision of the Recovery Act64 —specifically, the time it took to get clear 

guidance on how that provision applied to housing agencies—as one 

factor that may have slowed housing agencies down in obligating 

Recovery Act funds. According to HUD guidance issued August 21, 2009, 

unless the size of the Recovery Act grant or the size of a contract funded 

by the grant is less than $100,000, projects funded with Recovery Act grant 

funds are subject to this provision, provided no other exceptions are 

granted. In some cases, HUD officials had heard from public housing 

agencies that this provision had forced housing agencies to find new 

vendors and contractors. In other cases, public housing agencies were 

taking more time to make sure they were in compliance with this and 

other procurement requirements, given the extra level of scrutiny being 

given to Recovery Act projects.65 As we reported previously, public 

housing agencies we visited had a mixed assessment of the impact of this 

provision on their ability to obligate funds quickly. 

 

64Section 1605(a) of Title XVI of the Recovery Act (Pub. L. 111-5) states, “None of the funds 

appropriated or otherwise made available by this Act may be used for a project for the 

construction, alteration, maintenance, or repair of a public building or public work unless 

all of the iron, steel, and manufactured goods used in the project are produced in the 

United States.” 

65The Secretary of Housing and Urban Development exercised authority granted by the 

Recovery Act to direct that requirements relating to the procurement of goods and services 

arising under state and local laws and regulations shall not apply to amounts made 

available for Capital Fund formula grants. Additional guidance from HUD stated that public 

housing agencies must follow procurement requirements found in 24 CFR Part 85 and shall 

amend their procurement policies to remove any requirements that are contrary to these 

regulations. 

Page 82 GAO-09-1016 Recovery Act
 

Several factors could explain differences in rates of obligating and 

drawing down funds among housing agencies, including the size of the 

grant received, the types of projects being undertaken, or additional 

monitoring by HUD. We found that housing agencies that received 

Recovery Act formula grants of less than $100,000 had obligated and 

drawn down funds at a faster rate than housing agencies that received 

grants of more than $500,000.66 We analyzed the rates at which housing 

agencies had obligated and drawn down funds, grouping housing agencies 

by the size of the Recovery Act formula grant they had received and 

calculating the average percentage of funds obligated and drawn down for 

each group. For housing agencies with smaller grants—that is, less than 

$100,000—the average percentage of Recovery Act funds obligated was 

about 48 percent, while for housing agencies with larger grants—that is, 

more than $500,000—the average percentage of Recovery Act funds 

obligated was 35 percent (see table 13). Similarly, the average percentage 

of Recovery Act funds drawn down was 24 percent for housing agencies 

with smaller grants, compared with 7 percent for housing agencies with 

larger grants. 

Housing Agencies 

Receiving Smaller 

Recovery Act Grants Are 

Obligating and Drawing 

Down Funds Faster Than 

Housing Agencies 

Receiving Larger Grants 

Table 13: Comparison of the Average Percentage of Funds Obligated and Drawn Down among Housing Agencies Grouped by 

Size of Recovery Act Grant, as of September 5, 2009 

Amount of Recovery Act Grant 

 Less than $100,000 $100,000 to $500,000 More than $500,000 Total

Number of housing agencies 924 1398 800 3,122

Portion of total Recovery Act formula grant funds 2% 11% 87% 100%

Average percentage of funds obligated 47.9% 43.4% 35.1% 42.6%

Average percentage of funds drawn down 24.5% 15.3% 7.1% 15.9%

Source: GAO analysis of HUD data. 

One reason housing agencies that received smaller grants may be 

obligating and drawing down funds at a faster rate is that they more often 

operate under simplified and less formal procurement guidelines, known 

 

66We selected these amounts as thresholds for comparing groups of housing agencies 

because they were more and less than the median grant amount ($192,198). Under 24 CFR 

Part 85, the “simplified acquisition threshold” is $100,000. We compared various thresholds 

greater than the median and determined that $500,000—which is the minimum amount of 

federal funds expended by nonfederal entities to be subject to Single Audits—was an 

appropriate threshold, in part because the number of housing agencies with grants of more 

than $500,000 is similar to the number of housing agencies with grants of less than 

$100,000. 

Page 83 GAO-09-1016 Recovery Act
 

as small purchase procedures, for contracts under the simplified 

acquisition threshold of $100,000 established by federal regulations. These 

conditions allow them to enter into contracts with fewer procurement 

restrictions relative to the restrictions facing housing agencies receiving 

larger grants, which may be more likely to enter into contracts of more 

than $100,000 given the resources they have available to them. HUD 

officials concurred that the difference in the rates of obligating and 

drawing down funds may be related to these procurement regulations. In 

the future, agencies receiving smaller grants also may benefit from an 

exception to the “Buy American” provision of the Recovery Act. That is, 

HUD guidance specifies that where the size of the Capital Fund formula 

grant is less than $100,000, the “Buy American” requirement does not 

apply. 

As we reported in July 2009, many of the projects already under way at the 

housing agencies we visited are small and narrowly focused. Based on our 

review of housing agency plans and our prior interviews with selected 

public housing agency officials, we also found that housing agencies that 

received smaller grants are using Recovery Act funds on a limited number 

of these types of projects—some that simply involve exchanging old 

equipment or appliances for new—rather than undertaking complex 

architectural, engineering, or redesign work on building structures. HUD 

officials also told us that housing agencies that received smaller grants 

tend to have fewer people involved in making decisions about projects in 

order to begin projects and tend to focus on smaller projects. For 

example, Evansdale Municipal Housing Authority in Iowa planned to use 

its $77,364 grant on five projects: installing new ceiling lights, replacing 

carpet and vinyl flooring in several units, reroofing storage sheds and eight 

duplexes, and replacing hot water heaters. As of September 5, 2009, 

Evansdale Municipal Housing Authority had obligated 100 percent of its 

grant funds and drawn down about 60 percent. Similarly, Holyoke Housing 

Authority in Colorado planned to use its $59,934 grant on four projects: 

replacing an underground sprinkler system, patio fences, patio doors, and 

a sewer line camera. As of September 5, 2009, Holyoke Housing Authority 

had obligated and drawn down 54 percent of its Recovery Act grant funds. 

In contrast, the plans of and interviews with selected housing agencies 

that received larger Recovery Act grants indicate that they are using 

Recovery Act funds on either a larger number of projects (of various sizes 

or scopes) or on projects with a broader scope, some of which may 

involve architectural, engineering, or redesign work on building structures 

that may be more complex than other projects. HUD officials told us that 

HUD field office staff automatically review any housing agency’s plan that 

Page 84 GAO-09-1016 Recovery Act
 

includes funds for development activities—such as constructing new 

buildings—in order to make sure the plans are sound. This process 

requires the housing agency to obtain additional approvals. As a result, it 

can take additional time and may contribute to housing agencies 

obligating funds at a slower rate. In addition, unless a contract is less than 

$100,000 or an exception is granted, these projects are subject to the “Buy 

American” requirement noted previously. As we reported in July, these 

larger projects generally had not yet begun or were only just beginning, 

and as a result, very little funding had been obligated or drawn down. For 

example, the Philadelphia Housing Authority planned to use its $90.6 

million grant on six broad projects, including rehabilitating 300 units at 

scattered sites for $29.5 million, performing mechanical and elevator 

upgrades at 31 sites for $21 million, and reconfiguring a midrise building 

from 71 units to at least 53 units for $14.6 million. As of September 5, 2009, 

the Philadelphia Housing Authority had obligated 32 percent of its 

Recovery Act grant funds but had drawn down about 2 percent of its 

funds. Similarly, the Buffalo Municipal Housing Authority planned to use 

its $14.5 million grant on 42 projects at various sites. As of September 5, 

2009, the Buffalo Municipal Housing Authority had obligated about 1 

percent of its funds and had drawn down less than 1 percent of its 

Recovery Act grant funds. Some large housing agencies that received large 

Recovery Act grants did not undertake a large number of projects or 

projects with a broader scope. For example, the City of Des Moines 

Municipal Housing Authority added its $1,455,108 Recovery Act grant to 

other funds to complete a single project. As of September 5, 2009, it had 

obligated 100 percent of its Recovery Act funds, although it had not yet 

drawn down any funds. 

HUD Continues to Monitor 

Troubled Housing 

Agencies’ Use of Recovery 

Act Funds 

As we reported in July 2009, HUD has identified 172 housing agencies that 

it has designated as troubled under its Public Housing Assessment System 

(PHAS67). Of these 172 troubled housing agencies, 106 (61.6 percent) were 

considered by HUD to be low-risk troubled, 53 (30.8 percent) were 

considered medium-risk troubled, and the remaining 13 (7.6 percent) were 

considered high-risk troubled. As of September 5, 2009, these troubled 

 

67HUD developed PHAS to evaluate the overall condition of housing agencies and to 

measure performance in major operational areas of the public housing program. These 

include financial condition, management operations, and physical condition of the housing 

agencies’ public housing programs. Housing agencies that are deficient in one or more of 

these areas are designated as troubled performers by HUD and are statutorily subject to 

increased monitoring. 

Page 85 GAO-09-1016 Recovery Act
 

housing agencies accounted for 6 percent of all Recovery Act funds 

provided by HUD, and they continue to obligate and draw down Recovery 

Act funds at a slower rate than nontroubled housing agencies (see fig. 9). 

Figure 9: Comparison of Troubled Housing Agencies and Nontroubled Housing Agencies’ Obligation and Drawdown Rates 

Source: GAO analysis of HUD data.

Recovery Act funds allocated by HUD

(Total: $2,985,000,000)

Funds obligated

by HUD

Funds obligated

by housing

agencies

Funds drawn

down by housing

agencies

6%

94%

$185,944,247

Troubled 

housing agencies

(172 agencies)

$2,799,055,753

Nontroubled 

housing agencies

(2,962 agencies)

100%

$185,944,247

14.3%

$26,515,934

2.4%

99.9%

$2,796,188,541

33.3%

$930,313,771

5.1%

$141,193,989

$4,372,842

Note: As of September 5, 2009, 12 of the 2,962 nontroubled housing agencies had not entered into 

agreements with HUD for Recovery Act funds, and therefore HUD did not obligate funds to them. 

HUD officials subsequently stated that one additional housing agency had rejected funds totaling 

$151,174. 

One reason for these slower obligation and draw down rates is the 

additional monitoring that HUD is implementing for housing agencies that 

are designated as troubled performers under PHAS. For example, 

according to HUD officials, all 172 troubled public housing agencies—

regardless of risk category—have been placed on a “zero threshold” status, 

which means HUD has not allowed them to draw down Recovery Act 

funds without HUD field office approval.68 HUD officials stated to us that 

 

68The Recovery Act provided HUD with the authority to decide whether to provide troubled 

housing agencies with Recovery Act funds. Although HUD determined that troubled 

housing agencies have a need for Recovery Act funding, it acknowledged that troubled 

housing agencies would require increased monitoring and oversight in order to meet 

Recovery Act requirements. 

Page 86 GAO-09-1016 Recovery Act
 

the ability to place housing agencies on “zero threshold” has always been 

available and had been used for housing agencies that have had problems 

obligating and expending their Capital Fund grants appropriately prior to 

the Recovery Act. However, HUD has implemented more extensive 

monitoring for all troubled housing agencies, including requiring that HUD 

field office staff review all award documents (i.e., solicitations, contracts, 

or board resolutions, where applicable) prior to actual obligation of 

Recovery Act funds. 

In addition to reviewing supporting documentation prior to approval of all 

obligations and drawdowns, HUD’s strategy for monitoring troubled 

housing agencies has included conducting on-site and remote reviews of 

troubled housing agencies. Specifically, HUD officials stated to us that 

they have completed on-site and remote reviews of all 13 of the high-risk 

troubled housing agencies and have completed remote reviews for all of 

the medium- and low-risk troubled housing agencies. HUD officials stated 

that they are in the process of completing on-site reviews for the mediumrisk troubled housing agencies and the low-risk troubled housing agencies 

by September 30, 2009 and December 31, 2009 respectively. On-site 

reviews are conducted on the premises of housing agencies by teams 

comprised of staff from the Office of Field Operations, both at 

headquarters and field offices. While on site at housing agency premises, 

these teams are to conduct various activities including following up on 

outstanding items from the remote review. In addition, on-site reviews are 

to assess whether the housing agency is appropriately and effectively 

administering their Recovery Act Capital Fund grant. On-site reviews are 

also to include identification of any new open audit findings since the 

prior review, as well as follow up on annual statement revisions and 

environmental reviews. 

Remote reviews of troubled housing agencies are not conducted on 

housing agency premises. According to HUD officials, these reviews focus 

on grant initiation activities, the annual statement, environmental 

compliance, procurement, and Recovery Act grant performance. Also 

during on-site reviews, HUD staff are to consider open audit findings 

related to Capital Fund grants. In reviewing procurement activities, HUD 

staff are to determine if troubled housing agency procurement procedures 

ensure compliance with the Recovery Act’s “Buy American” provisions. 

HUD officials stated they are reviewing the results of on-site and remote 

reviews for consistency before presenting final reports but that field office 

teams inform housing agencies of any identified deficiencies as a result of 

the reviews. 

Page 87 GAO-09-1016 Recovery Act
 

HUD Is Developing a 

Strategy for Monitoring 

Nontroubled Housing 

Agencies 

Building on its efforts to more closely monitor the use of Recovery Act 

funds by troubled housing agencies, HUD is developing a strategy for 

monitoring nontroubled housing agencies which HUD stated will be 

effective by October 1, 2009. HUD officials stated that under its draft 

strategy, they have identified 2,950 nontroubled housing agencies and have 

separated them into two groups for the purposes of monitoring and 

oversight: high risk and low risk.69 The high-risk group is composed of the 

332 housing agencies that have been identified as the highest risk based in 

part on the amount of their Recovery Act funding. The low-risk group 

consists of the remaining 2,618 nontroubled housing agencies. HUD’s draft 

strategy calls for remote reviews to be completed by January 15, 2010, on 

all nontroubled housing agencies in both the high- and low-risk groups. In 

addition, HUD’s draft strategy calls for on-site reviews for a sample of 

nontroubled housing agencies from each of the two risk groups, with the 

objective of reaching those at greatest risk and ensuring coverage of 

grantees constituting the greatest amount of formula grant dollars. Under 

the draft strategy, HUD plans to use Office of Field Operations (OFO) 

headquarters and field office staff to conduct the reviews. HUD plans to 

have the remote reviews focus on four main components: grant initiation, 

environmental compliance, procurement, and grant administration. On-site 

reviews of a sample of housing agencies will focus on the same four 

components of the remote reviews and will also include a review of the 

contract administration of the procurements related to the use of 

Recovery Act funds. While HUD has not finalized its procedures of on-site 

and remote reviews of nontroubled housing agencies officials stated that 

they expect the procedures to be very similar to those for troubled 

housing agency’s remote and on-site reviews. 

HUD’s draft strategy calls for on-site reviews for a sample of the high-risk 

nontroubled housing agencies to be completed by February 15, 2010. HUD 

plans to identify this sample as follows: 

 

69The total number of nontroubled housing agencies to be monitored by HUD excludes 12 

housing agencies that chose not to accept Recovery Act funding, no longer had eligible 

public housing projects that could utilize the funds, or had not yet entered into an 

agreement with HUD for the funds as of September 5, 2009. HUD officials subsequently 

stated that one additional housing agency had rejected funds, which would bring the total 

number of nontroubled housing agencies to be monitored to 2,949, of which 2,617 would be 

low risk. 

Page 88 GAO-09-1016 Recovery Act
 

• housing agencies that represent the top 100 housing agencies in the highrisk group based on the amount of Recovery Act funding received, 

• housing agencies that have more than 500 public housing units and are 

within a 50-mile radius of the field office, and 

• housing agencies identified by the field office as having one or more risk 

factors that warrant an on-site review. 

For the remaining 2,618 housing agencies in the low-risk group, HUD’s 

draft strategy calls for on-site reviews for a sample to be completed by 

February 15, 2010. HUD plans to identify this sample of housing agencies 

for on-site reviews as follows: 

• housing agencies that have more than 500 public housing units and are 

within a 50-mile radius of the field office, and 

• housing agencies identified by the field office as having one or more risk 

factors that warrant an on-site review. 

HUD officials stated that one of the risk factors, among others, that field 

offices may consider in selecting additional nontroubled housing agencies 

for on-site reviews (in both the high- and low-risk categories) is the status 

of open Single Audit findings that are related to the Capital Fund program. 

However, HUD stated that the strategy will not require that field offices 

target and expedite on-site reviews of housing agencies that have open 

findings that could affect their use of Recovery Act funds. Open audit 

findings may indicate housing agencies that have greater risk of misusing 

Recovery Act funds. Single Audits provide federal agencies with 

information on the use of federal funds, internal control deficiencies, and 

compliance with federal program requirements. HUD began tracking the 

status of Single Audit findings through a centralized system in 2007 and 

has tracked whether findings have been appropriately addressed and 

closed by the housing agency in this system since that time.70 HUD’s 

centralized system does not contain information on the status of audit 

findings reported prior to 2007. While HUD is working with housing 

agencies to ensure that appropriate action is taken to resolve and correct 

findings of deficiency that these audits have identified, many housing 

 

70HUD’s Monitoring and Planning System (MAPS) is used to track resolution of audit 

findings. 

Page 89 GAO-09-1016 Recovery Act
 

agencies that have received Recovery Act funds have open findings that 

appear unresolved in HUD’s tracking system. 

Housing agencies with recent Single Audit findings have received more 

than $900 million in Recovery Act funds. Specifically, 31 percent of all 

Recovery Act Capital Fund grants awarded to housing agencies have been 

provided to 464 nontroubled housing agencies that had at least one audit 

finding reported in 2007, 2008, or both. These housing agencies are 

obligating and drawing down Recovery Act funds at a faster rate than 

troubled housing agencies but at a slightly slower rate than nontroubled 

housing agencies that have not had Single Audit findings (see fig. 10). 

Page 90 GAO-09-1016 Recovery Act
 

Figure 10: Comparison of Obligation and Drawdown Rates for Nontroubled Agencies with No Audit Findings, Troubled 

Agencies, and Nontroubled Agencies with Audit Findings 

Source: GAO analysis of HUD data.

Recovery Act funds allocated by HUD

(Total: $2,985,000,000)

Funds obligated

by HUD

Funds obligated 

by housing

agencies

Funds drawn

down by housing

agencies

6%

31%

63% $185,944,247

Troubled 

housing agencies

(172 agencies)

$909,355,555

Nontroubled 

housing agencies

with findings

(464 agencies)

$1,889,641,904

Nontroubled 

housing agencies

without findings

(2,498 agencies)

100%

$185,944,247

14.3%

$26,515,934

2.4%

99.9%

$908,170,134

29.9%

$271,650,323

3.2%

$29,405,818

99.9%

$1,887,960,113

34.9%

$658,663,448

5.9%

$111,788,171

$4,372,842

An open finding may not necessarily affect the use of Recovery Act funds. 

HUD officials stated to us that its centralized system for tracking audit 

findings does not contain information that would allow it to definitively 

determine if an open finding could directly or indirectly affect Recovery 

Act funding. For example, HUD’s centralized system for tracking findings 

does not contain budget codes that would identify the specific HUD funds, 

such as public housing Capital Funds, that the housing agency auditors 

determined were affected by the finding. Of the 464 nontroubled housing 

agencies that have had recent findings, we identified 155 that have 

unresolved deficiency findings identified by recent Single Audits, 

according to information from HUD’s tracking system. These deficiencies 

Page 91 GAO-09-1016 Recovery Act
 

were either material weaknesses or significant deficiencies.71 A material 

weakness means there is a deficiency or combination of deficiencies in the 

housing agency’s internal control such that there is a reasonable 

possibility that the housing agency will not prevent, detect, and correct 

material noncompliance. A significant deficiency is less severe than a 

material weakness, but it is required to be reported in housing agency 

Single Audits reporting package. According to HUD officials, after 

reviewing the status of these findings, HUD Office of Field Operations staff 

were able to identify 94 housing agencies where audit findings should have 

been shown as closed in HUD’s tracking system, and an additional 13 

housing agencies that had audit findings not related to the Capital Fund, 

leaving 48 housing agencies with open audit findings relevant to 

administration of the Capital Fund program. HUD’s analysis of findings 

was limited to those housing agencies with findings reported in its 

tracking system and thus did not include findings that may have been 

reported prior to 2007. It is important that HUD continue to monitor 

housing agencies with open audit findings that may have a direct or 

indirect effect on the housing agencies’ use and reporting on the use of 

Recovery Act funds. We recommended that HUD systematically evaluate 

the results of audits to identify and understand problems of inappropriate 

use and mismanagement of public housing funds, identify emerging issues, 

and evaluate overall monitoring and oversight processes.72 Identifying and 

targeting housing agencies with open audit findings related to Recovery 

Act funds for enhanced monitoring, such as on-site reviews, could achieve 

this objective. Further, HUD’s strategic goals for its public housing 

program call for the department to resolve issues identified by audits and 

improve its management of internal controls to, among other things, 

eliminate fraud, waste, and abuse. 

HUD officials stated that they estimate their strategy as currently 

proposed would allow for on-site reviews at housing agencies that have 

received at least $2 billion, or two-thirds of the noncompetitive Capital 

Fund grants provided to housing agencies under the Recovery Act and that 

its goal was to conduct on-site reviews at those housing agencies with the 

greatest risk which it has identified as those with the largest amounts of 

Recovery Act dollars. According to HUD, 18 of the 48 housing agencies 

 

71Sixteen of these housing agencies had both a material weakness and a significant 

deficiency. These were only counted once in the material weakness category. 

72GAO, Public Housing: HUD’s Oversight of Housing Agencies Should Focus More on 

Inappropriate Use of Program Funds, GAO-09-33 (Washington, D.C.: June 11, 2009). 

Page 92 GAO-09-1016 Recovery Act
 

with outstanding findings have received over $44 million dollars in 

Recovery Act funds and are already among the agencies targeted to 

receive on-site reviews, which were selected based on factors such as the 

size of their Recovery Act grant and the number of housing units they 

manage. The remaining 30 housing agencies with open findings received 

almost $11 million of the total Recovery Act funds; however HUD has not 

currently targeted these housing agencies for on-site reviews. HUD has 

taken important steps in developing its strategy for monitoring 

nontroubled housing agencies, including developing a risk-based 

approach, and reviewing open audit findings to determine whether they 

may affect the housing agencies’ reporting on and use of Recovery Act 

funds. Expanding its criteria for selecting housing agencies for on-site 

reviews to include those with open audit findings related to the housing 

agencies administration of their Capital Fund Grant increases the potential 

for HUD to detect misuse of funds. This is particularly important for 

Recovery Act funds because of the accelerated obligation and draw down 

rates instituted by the Act. 

Recommendation: To enhance HUD’s ability to prevent, detect, and 

correct noncompliance with the use of Recovery Act funds, we 

recommend that the Secretary of the Department of Housing and Urban 

Development expand the criteria for selecting housing agencies for on-site 

reviews to include housing agencies with open Single Audit findings that 

may affect the use of and reporting on Recovery Act funds. 

HUD Has Begun to Review 

Applications for Capital 

Fund Recovery 

Competition Grants 

HUD is required to award nearly $1 billion to public housing agencies 

based on competition for priority investments, including investments that 

leverage private sector funding or financing for renovations and energy 

conservation retrofit investments. In a Notice of Funding Availability 

(NOFA) published May 7, 2009, and revised June 3, 2009, HUD outlined 

four categories of funding for which public housing agencies could apply: 

• creation of energy-efficient communities ($600 million); 

• gap financing for projects that are stalled due to financing issues ($200 

million); 

• public housing transformation ($100 million); and 

• improvements addressing the needs of the elderly or persons with 

disabilities ($95 million). 

Page 93 GAO-09-1016 Recovery Act
 

For the energy-efficient communities category, public housing agencies 

self-scored their applications—which were due July 21, 2009—according 

to criteria outlined in the NOFA.73 The last three categories were 

threshold based, meaning applications that met all of the threshold 

requirements will be funded in order of receipt.74 If funds were 

after all applications meeting the thresholds had been funded, HUD could 

remove thresholds after August 1, 2009, in order to fund additional 

applications in the order of receipt until all funds have been awarded. 

Applications in these three categories were accepted until August 18, 2009. 

If funds remain in a category after all eligible applications have been 

funded, HUD also has the authority to transfer funds to another categor

As of September 9, 2009, HUD officials told us they have not transferr

funds betwe

available 

y. 

ed 

en categories. 

 

Large Response to Capital 

Fund Recovery 

Competition Has Slowed 

HUD’s Review Process 

HUD has begun reviewing applications for all four funding categories of 

the Capital Fund Recovery Competition (CFRC) program, which has $995 

million available to award. HUD officials told us that as of August 18, 2009, 

HUD received and is reviewing 1,759 applications.75 HUD staff review 

applications in all four funding categories to check that required 

documents, such as signed antilobbying certifications, project narratives, 

proposed budgets, and expected timelines, are included in the package. 

For applications in the energy-efficient communities category only, HUD 

reviewers allow applicants to correct incomplete applications within five 

days and resubmit until the deadline. Following the initial check, all 

73Applications in this category are to be ranked against criteria that increase energy 

efficiency and the energy performance of public housing properties, thus reducing energy 

usage, generating cost savings, and reducing greenhouse-gas emissions. 

74NOFA requirements establish multiple rounds of funding that lift funding limits and 

threshold requirements one by one over time if there are insufficient successful 

applications to consume the funding available under each level. See HUD’s Fiscal Year (FY) 

2009 Notice of Funding Availability (NOFA) for the Capital Fund Recovery Competition 

Grants; Revised to Incorporate Changes, Corrections, and Clarifications, Docket No. FR5311-N-02 (June 3, 2009). 

75HUD accepted applications in the creating energy-efficient communities category from 

June 22, 2009, until July 21, 2009. HUD accepted applications for the other three categories 

from June 22, 2009, until August 18, 2009. Before July 6, 2009, HUD staff reviewed 

applications in the gap financing, transforming public housing, and improvement for the 

elderly and persons with disabilities categories regardless of the order in which they were 

received. Applications received after July 6, 2009, were assigned a number in order of 

receipt and were reviewed based on the assigned order. 

Page 94 GAO-09-1016 Recovery Act
 

applications undergo a three-step process: (1) a reviewer evaluates the 

project narrative, proposed budget, and timeline; (2) a verifier performs a 

check for compliance with the NOFA and other regulations; and (3) a 

designated approver makes an award or ineligibility decision. Applications 

in the energy-efficient communities category are subject to an additional 

review process. For these applications, public housing agencies self-certify 

that their applications meet specific criteria, attest to their accuracy, and 

develop a detailed narrative about project costs and budgeting prior to 

submitting their applications. HUD gives points to each application based 

on the certifications made by public housing agencies and ranks them in 

descending order by score to determine award funding. 

Officials told us that although there have been approximately 40 to 50 staff 

reviewing applications part time or full time, the review process has been 

slower than expected. According to officials, this is due to the number of 

applications with lengthy narratives needing review. Further, HUD 

officials stated that their staff are reviewing CFRC applications while 

carrying out their ongoing responsibilities related to managing the public 

housing capital fund program. Nevertheless, the officials said there are 

many applications in process. According to program guidance published 

on HUD’s Recovery Act Web site, program officials had set August 31, 

2009, as a milestone for awarding all CFRC grants. However, because of 

the large number of applications received by July 6, 2009, HUD officials 

determined they needed additional time to complete their reviews; in turn, 

they decided to award the grants on a category-by-category basis. As of 

September 3, 2009, HUD had awarded $96 million in the transforming 

public housing category to 15 public housing agencies. These awards are 

meant to help redevelop blighted public housing that is distressing the 

surrounding community. Per the requirements of the Recovery Act, HUD 

must obligate all CFRC grant funds to public housing agencies by 

September 30, 2009. According to HUD officials, they anticipate meeting 

the deadline. 

HUD is developing a strategy for monitoring the grants after they are 

awarded. HUD officials said that developing the strategy would be a joint 

effort between the interested offices in HUD headquarters. Officials told 

us there are some challenges to monitoring the competitive grants, relative 

to monitoring formula fund grants. These include needing more time to 

assess the use of grant funds because projects must meet specific criteria 

as outlined in the NOFA and searching for and hiring employees with 

special skills and expertise, such as in energy usage, to work on 

monitoring. HUD officials told us that two new headquarters employees 

dedicated to implementing the Recovery Act have already begun work, 

Page 95 GAO-09-1016 Recovery Act
 

and that the Department is in the process of hiring three more of these 

employees. According a HUD official, criminal and civil penalties for 

misrepresentation in the applications are likely to deter public housing 

agencies from such action. 

HUD and Industry 

Stakeholders Report That 

Public Housing Agencies 

Have Encountered Few 

Challenges during the 

Application Process 

HUD officials told us they are generally satisfied with the CFRC process 

and that the review process is progressing with relatively few problems, 

though administering the program solely from HUD headquarters has been 

a challenge. The officials noted that they received positive feedback from 

public housing agencies on their handling of the competition, especially on 

the prepopulated spreadsheets developed for use during the application 

process. Some of the public housing industry officials we spoke with 

heard of few challenges or problems from their members regarding the 

competitive grant application process, though they note that public 

housing agencies have been reluctant to publicize or share the content of 

their CFRC applications while the competition is ongoing. However, other 

public housing industry officials also said they were concerned about the 

Capital Fund competition on behalf of smaller public housing agencies. 

HUD officials said some agencies reported problems submitting 

applications for CFRC grants because of technology challenges, such as 

access to the Internet only through dial-up service, or misunderstanding 

the NOFA. For agencies having problems applying, HUD officials dealt 

directly with agencies’ questions in order to ensure agencies could submit 

their applications on time. The officials noted, however, that public 

housing agencies that waited until the last minute to submit their 

applications faced challenges meeting the submission deadline. 

Representatives from one of the public housing industry groups told us 

that their members have been largely satisfied with the level of guidance 

and support provided by HUD during the CFRC application process. 

HUD Guidance on Two 

Recipient Reporting 

Solutions Is Forthcoming 

HUD is using two ways to satisfy reporting requirements for public 

housing agencies under the Recovery Act: (1) FederalReporting.gov 

created and managed by OMB and the Recovery Accountability and 

Transparency Board (RATB) for all Recovery Act recipients to report on 

the nature of projects undertaken with Recovery Act funds and on jobs 

created and retained76 and (2) the Recovery Act Management and 

Reporting System (RAMPS) system HUD developed for Recovery Act 

 

76Pub. L. 111-5, §Sec. 1512, 123 Stat. 115, 287 (Feb. 17, 2009). 

Page 96 GAO-09-1016 Recovery Act
 

reporting purposes, including public housing agencies’ compliance 

information for the National Environmental Policy Act (NEPA), as 

required by the Recovery Act.77 HUD officials told us they have been 

meeting biweekly with OMB staff, and officials from various federal 

agencies, to express views on a reasonable level of reporting burden for 

grantees. HUD officials noted that while public housing agencies have had 

to comply with NEPA since it was enacted in 1970, reporting on 

environmental assessments is a new requirement for public housing 

agencies. They stated they intend to expand measures in RAMPS to 

accommodate future information requests. 

HUD also plans to use RAMPS to perform data quality checks on recipient 

reports. According to officials, the department is designing a data-quality 

strategy using RAMPS to pull data from OMB’s FederalReporting.gov after 

they are published. As of September 9, 2009, HUD officials reported that 

staff is finalizing the data quality strategy. 

HUD Recently Issued 

Recipient Reporting 

Guidance for Public 

Housing Agencies, Though 

Officials Are Concerned 

There Is Insufficient Time 

to Become Familiar with 

OMB’s Reporting Solution 

HUD issued guidance to public housing agencies on recipient reporting on 

September 9, 2009. The guidance, in the form of a letter from the HUD 

Secretary and addressed to public housing agencies that have received 

grants under the Recovery Act, provided guidance and instructions on 

both of their reporting obligations: to OMB for jobs and funding-related 

activities and to HUD for reporting on NEPA compliance. The letter 

directed the public housing agencies to the FederalReporting.gov Web site 

for reporting on jobs and activities under the Recovery Act, and it 

informed public housing agencies that they will use HUD’s RAMPS system 

for reporting data on NEPA. Lastly, the letter directed public housing 

agencies to register at FederalReporting.gov as soon as possible, but also 

said that registration for RAMPS, which is a separate from 

FederalReporting.gov registration and is a requirement to use the RAMPS 

system,was not yet available. HUD is working with grantees to identify 

those who need to be registered in RAMPS. The letter also provided Web 

site addresses where public housing agencies could find more information 

 

77Section 1609 of the Recovery Act requires that adequate resources must be devoted to 

ensuring that applicable environmental reviews under the National Environmental Policy 

Act are completed on an expeditious basis and that the shortest existing applicable process 

under the National Environmental Policy Act shall be utilized. The National Environmental 

Policy Act protects public health, safety and environmental quality: by ensuring 

transparency, accountability and public involvement in federal actions and in the use of 

public funds. 

Page 97 GAO-09-1016 Recovery Act
 

about both reporting requirements and an e-mail address they could use to 

send e-mails with questions about recipient reporting. 

HUD has published several FAQs on recipient reporting but noted that 

until OMB’s reporting system was fully developed and operational, they 

could not finalize program-level reporting guidance for public housing 

agencies. OMB has issued various guidance materials for recipient 

reporting, including a data dictionary explaining each data element 

required in the reports, a registration guide providing information on 

registering in the system, and two memorandums detailing recipient 

reporting requirements—the most recent issued on June 22, 2009. HUD 

officials said that the June recipient reporting guidance was not posted to 

HUD’s Web site until September 3, 2009. Officials from a housing industry 

group told us their members were not aware of the OMB guidance on 

recipient reports until GAO inquired about it. Because the system will not 

be available for data submission until October 1, 2009, and recipient 

reports are due by October 10, 2009, both HUD officials and industry 

stakeholders voiced concern that grantees will not have enough time to 

become familiar with OMB’s reporting system. HUD officials reported that 

OMB’s Web seminars had been available online since mid-summer. 

Though Primarily Relying 

on OMB Support for 

Recipient Reporting, HUD 

Is Taking Additional Steps 

to Ensure Public Housing 

Agencies Meet Reporting 

Requirements 

Though HUD plans to provide Recovery Act-specific assistance and 

training to public housing agencies on recipient reporting, they will 

reinforce to public housing agencies that they must submit reports 

through OMB’s reporting solution and that all technical questions on 

recipient reporting must be directed to OMB. The officials also noted that 

OMB will be the primary agency responsible for issuing all guidance 

related to recipient reporting requirements and the use of the 

FederalReporting.gov solution. The officials stated that HUD’s role will be 

to reinforce and assist public housing agencies in complying with OMB’s 

guidance while addressing the HUD-specific reporting requirements 

related to environmental assessment reports. However, to assist public 

housing agencies with OMB reporting, HUD officials told us they are 

working to develop templates with prepopulated “dummy” data to provide 

public housing agencies with an example of a correct and data-compliant 

recipient report. Leaders of housing industry groups told us they plan to 

work with member public housing agencies to educate them about the 

OMB guidance and troubleshoot problems prior to the October 10, 2009, 

deadline for recipient reporting. 

HUD plans to take other steps to ensure public housing agencies meet the 

environmental review reporting requirements under the Recovery Act, 

Page 98 GAO-09-1016 Recovery Act
 

including assembling a compliance planning team to troubleshoot 

problems, continuing to issue guidance for using RAMPS, and developing a 

HUD-wide call center for program-level information and technical 

questions on environmental assessment reporting requirements (and 

program-level questions only for the OMB-required jobs and activities 

reports). HUD headquarters officials have been meeting with field office 

officials to develop guidance that will allow field offices to instruct public 

housing agencies on how to comply with environmental assessment 

requirements. They also plan to conduct Web-based seminars to walk 

public housing agencies through the environment assessment reporting 

requirements. 

Housing Industry 

Stakeholders Are 

Concerned about the 

Capacity of Recipient 

Reporting Systems but 

Think Public Housing 

Agencies Will Be Able to 

Measure Job Creation 

Easily 

Some industry stakeholders were concerned that HUD’s information 

technology systems may not have the capacity to handle the new 

environmental assessment reporting requirements because of problems 

public housing agencies have experienced with HUD systems in the past. 

HUD officials said that although Recovery Act reporting is a major 

deviation from HUD’s regular programmatic reporting, RAMPS is ready to 

receive increased levels of reports by the first reporting deadline of 

October 10, 2009. The system’s data entry forms and fields are currently 

able to accept environmental assessment reports; however, HUD officials 

said they continue to modify the appearance of the reporting module and 

plan to add functionality through a series of technological updates over 

the next several months. 

Some of the housing industry officials viewed collecting data to count jobs 

created and retained as relatively straightforward for public housing 

agencies because they already submit reports in compliance with 

Department of Labor regulations that include hourly rates of pay and 

number of hours worked.78 To meet the OMB requirements, public 

housing agencies can collect timesheets from contractors to record and 

measure the number of hours workers spend on a project in terms of fulltime equivalents, thus providing a reasonable starting point to estimate the 

number of jobs created and retained. However, the official from one group 

also told us that calculating job creation and retention from data they 

already collect could be a challenge because public housing agencies are 

 

78Department of Labor regulations applies to any contract which is subject to Federal wage 

standards and which is for the construction, prosecution, completion, or repair of public 

buildings, public works or buildings or works financed by loans or grants from the United 

States. 29 C.F.R. § 3.1 et seq. 

Page 99 GAO-09-1016 Recovery Act
 

not familiar with using the formulas OMB provided to perform such 

calculations.79 HUD published specific guidance for public housing 

agencies on how to report on jobs created and retained on September 3, 

2009; however, according to HUD officials, OMB changed the formula for 

full-time equivalents and requested modifications to the document after 

HUD posted it to their Recovery Act Web site. HUD staff plan to finalize 

and republish the document. 

Agency Comments: 

We provided HUD with excerpts from a draft of this report and received 

written comments from the HUD Office of Capital Improvements and 

Office of Field Operations, both of which are within HUD’s Office of 

Public and Indian Housing. HUD generally agreed with our findings and 

provided technical corrections, which we incorporated as appropriate. In 

regards to our recommendation, HUD noted its recent actions to identify 

housing agencies with open findings related to the administration of the 

Capital Fund Program and HUD’s plans to conduct remote reviews of all 

public housing agencies receiving Recovery Act funds as well as on-site 

reviews targeting housing agencies that collectively have received more 

than $2 billion dollars in Recovery Act funds. We have accordingly 

modified our report to describe recent efforts, and HUD’s plans to conduct 

on-site reviews at some, but not all housing agencies with relevant open 

audit findings. In addition we modified our recommendation to specify 

that HUD expand its criteria for selecting housing agencies for on-site 

reviews to include agencies with open audit findings. 

The Recovery Act appropriated $5 billion over a 3-year period for the 

Weatherization Assistance Program, which the U.S. Department of Energy 

(DOE) administers through each of the states, the District of Columbia, 

and seven territories and Indian tribes. The program enables low-income 

families to reduce their utility bills by making long-term energy efficiency 

improvements to their homes by, for example, installing insulation; sealing 

leaks; and modernizing heating equipment, air circulation fans, or air 

DOE’s Weatherization 

Assistance Program 

 

79OMB uses a simple calculation to convert part-time or temporary jobs into “full-time 

equivalent” jobs to avoid overstating the number of other than full-time, permanent jobs. To 

perform the calculation, a recipient divides the total number of hours worked that are 

funded by the Recovery Act by the number of hours in a full-time schedule for a quarter. 

Page 100 GAO-09-1016 Recovery Act
 

conditioning equipment. Over the past 32 years, the Weatherization 

Assistance Program has assisted more than 6.2 million low-income 

families. By reducing the energy bills of low-income families, the program 

allows these households to spend their money on other needs, according 

to DOE. The Recovery Act appropriation represents a significant increase 

for a program that has received about $225 million per year in recent 

years. 

As of September 14, 2009, DOE had approved all but two of the 

weatherization plans of the states, the District of Columbia, the territories, 

and Indian tribes—including all 16 states and the District of Columbia in 

our review. DOE has provided to the states $2.3 billion of the $5 billion in 

weatherization funding under the Recovery Act. Use of the Recovery Act 

weatherization funds is subject to Section 1606 of the act, which requires 

all laborers and mechanics employed by contractors and subcontractors 

on Recovery Act projects to be paid at least the prevailing wage, including 

fringe benefits, as determined under the Davis-Bacon Act.80 Because the 

Davis-Bacon Act had not previously applied to weatherization, the 

Department of Labor (Labor) had not established a prevailing wage rate 

for weatherization work. In July 2009, DOE and Labor issued a joint 

memorandum to Weatherization Assistance Program grantees authorizing 

them to begin weatherizing homes using Recovery Act funds, provided 

they pay construction workers at least Labor’s wage rates for residential 

construction, or an appropriate alternative category, and compensate 

workers for any differences if Labor establishes a higher local prevailing 

wage rate for weatherization activities. Labor then surveyed five types of 

“interested parties” about local labor rates for weatherization work in each 

of the states.81 The department completed determining county-by-county 

prevailing wage rates in each of the 50 states and the District of Columbia 

by September 3, 2009. 

 

80The Weatherization Assistance Program funded through annual appropriations is not 

subject to the Davis-Bacon Act. 

81The five types of “interested parties” are state weatherization agencies, local community 

action agencies, unions, contractors, and congressional offices. 

Page 101 GAO-09-1016 Recovery Act
 

DOE has provided all 16 states and the District of Columbia in our review 

with half of their weatherization formula funds under the Recovery Act. 

(See table 14.) As of June 30, 2009, DOE had provided each with the initial 

10 percent of its allocation and had provided 9 states and the District of 

Columbia with the next 40 percent of their funds based on the 

department’s approval of their weatherization plans.82 Since that time, 

DOE has finished approving the weatherization plans of all of the states in 

our review. DOE has provided the 16 states and the District of Columbia 

with the second portion of their weatherization funds, giving them access 

to more than $1.4 billion, or 50 percent of their total allocation. DOE plans 

to release the final 50 percent of funding to each state based on the 

department’s progress reviews examining each state’s performance in 

spending the first half of its funds and the state’s compliance with the 

Recovery Act’s reporting and other requirements. 

Most States Have Not 

Begun to Weatherize 

Homes Partly 

Because of Their 

Concerns about 

Prevailing Wage Rate 

Requirements 

Table 14: DOE’s Allocation of the Recovery Act’s Weatherization Funds for 16 States and the District of Columbia, as of 

August 31, 2009 

State 

Total 

allocation 

Initial 

allocation

Date received 

(2009) 

Second 

allocation

Date received 

(2009) 

Allocation 

provided to date

Arizona $57,023,278a$5,702,328 April 10 $22,809,311 June 8 $28,511,639 

California 185,811,061 18,581,106 April 10 74,324,424 June 18 92,905,530 

Colorado 79,531,213 7,953,121 April 1 31,812,485 August 13 39,765,606 

District of Columbia 8,089,022 808,902 March 30 3,235,609 June 18 4,044,511 

Florida 175,984,474 17,598,447 April 10 70,393,790 June 18 87,992,237 

Georgia 124,756,312 12,475,631 April 20 49,902,524 June 26 62,378,155 

Illinois 242,526,619 24,252,662 April 1 97,010,647 June 26 121,263,309 

Iowa 80,834,411 8,083,441 March 27 32,333,764 July 6 40,417,205 

Massachusetts 122,077,457 12,207,746 April 3 48,830,983 July 6 61,038,729 

Michigan 243,398,975 24,339,898 March 27 97,359,590 July 6 121,699,488 

Mississippi 49,421,193 4,942,119 April 3 19,768,477 June 8 24,710,596 

New Jersey 118,821,296 11,882,130 April 7 47,528,518 July 10 59,410,648 

New York 394,686,513 39,468,651 April 13 157,874,605 June 26 197,343,256 

North Carolina 131,954,536 13,195,454 April 1 52,781,814 June 18 65,977,268 

Ohio 266,781,409 26,678,141 March 27 106,712,564 June 18 133,390,705 

Pennsylvania 252,793,062 25,279,306 March 27 101,117,225 August 25 126,396,531 

 

82GAO, Recovery Act: States’ and Localities’ Current and Planned Uses of Funds While 

Facing Fiscal Stresses, GAO-09-829 (Washington, D.C.: July 8, 2009). 

Page 102 GAO-09-1016 Recovery Act
 

State 

Total 

allocation 

Initial 

allocation

Date received 

(2009) 

Second 

allocation

Date received 

(2009) 

Allocation 

provided to date

Texas 326,975,732 32,697,573 April 10 130,790,293 July 10 163,487,866 

Source: GAO analysis of DOE information. 

Notes: DOE allocated the Recovery Act’s weatherization funds among the eligible states, territories, 

and Indian tribes using (1) a fixed, base allocation and (2) a formula allocation for the remaining funds 

that is based on each state’s low-income households, climate conditions, and expenditures by lowincome households on residential energy 

a

DOE allocated an additional $6 million to the Navajo Indian tribal areas in Arizona. 

While DOE has provided each of the states in our review with half of their 

total allocations, 8 of the 14 states for which we collected information had 

not started weatherizing homes using Recovery Act funds as of August 31, 

2009.83 (See table 15.) However, many of the 14 states had used Recovery 

Act funds for startup activities such as hiring and training staff, procuring 

equipment and vehicles, and performing energy audits of eligible homes. 

Other states told us that they would begin weatherizing homes shortly. For 

example, Florida officials expected to award final contracts to local 

agencies to weatherize homes by early September 2009, while Iowa 

officials had informed local agencies that they could start issuing contracts 

and begin weatherization activities. Three states—New York, North 

Carolina, and Pennsylvania—reported not having used any Recovery Act 

funds for the Weatherization Assistance Program as of August 31, 2009, 

though they indicated they were using funds from DOE’s annual 

appropriations for weatherization activities in anticipation of using 

Recovery Act funds. Six states reported having weatherized homes with 

Recovery Act funds. For example, local agencies in Ohio had weatherized 

more than 900 homes by the end of July 2009, and local agencies in 

Colorado reported using Recovery Act funds for basic weatherization 

activities, such as installing insulation and energy-efficient appliances. 

Table 15: Use of Recovery Act Weatherization Funds by 14 States, as of August 31, 

2009 

State 

Funds used for 

start-up activities? 

Funds used for 

weatherizing homes? 

Arizona Yes Yes 

California Yes No 

Colorado Yes Yes 

 

83We did not collect weatherization information from Illinois, Massachusetts, and the 

District of Columbia. 

Page 103 GAO-09-1016 Recovery Act
 

State 

Funds used for 

start-up activities? 

Funds used for 

weatherizing homes? 

Florida Yes No 

Georgia Yes Yes 

Iowa Yes No 

Michigan Yes Yes 

Mississippi Yes Yes 

New Jersey Yes No 

New York NoaNo 

North Carolina NoaNo 

Ohio Yes Yes 

Pennsylvania NoaNo 

Texas Yes No 

Source: GAO analysis of state information. 

a

The state did not use Recovery Act funds to support its weatherization activities. Instead, the state 

used funds from DOE’s annual weatherization appropriation. 

As shown in table 16, many of the states we reviewed reported that DavisBacon Act requirements—which have been applied to DOE’s 

Weatherization Assistance Program for the first time under the Recovery 

Act—are a reason they have not yet started weatherizing homes. 

Specifically, state weatherization officials expressed concerns about wage 

rates and administrative requirements under the Recovery Act’s DavisBacon provision. 

Table 16: Prevailing Wage Rates for Weatherization Work 

State 

Date wage rate 

available 

Weatherization of homes 

delayed until wage 

rate available? 

Areas of Davis-Bacon Act concerns identified by 

state and local officials 

Arizona August 30, 2009 YesaAdministrative requirementsb

California September 3, 2009 Yes Wage rates and administrative requirementsb

Colorado September 1, 2009 No Wage rates 

District of Columbia August 24, 2009cn/adn/ad

Florida September 2, 2009 No Administrative requirementsb

Georgia August 29, 2009 No Wage rates and administrative requirementsb

Illinois September 3, 2009 n/adn/ad

Iowa August 19, 2009 Yes Wage rates and administrative requirementsb

Massachusetts August 17, 2009 n/adn/ad

Michigan August 12, 2009 Yes Wage ratese

Mississippi August 24, 2009 No None cited 

Page 104 GAO-09-1016 Recovery Act
 

State 

Date wage rate 

available 

Weatherization of homes 

delayed until wage 

rate available? 

Areas of Davis-Bacon Act concerns identified by 

state and local officials 

New Jersey August 17, 2009 Yes Wage rates 

New York September 3, 2009 Yes Wage rates and administrative requirementsb

North Carolina August 27, 2009 No None cited 

Ohio September 3, 2009 No Administrative requirementsb

Pennsylvania September 3, 2009 No Administrative requirementsb

Texas September 2, 2009 Yes Wage rates and administrative requirementsb

Source: GAO analysis of information from the Department of Labor and the states. 

a

All but one locality (city of Phoenix) decided to wait for the wage determination before beginning 

weatherization activities. 

b

Administrative requirements include paying workers on a weekly basis and submitting weekly 

certified payroll records. 

c

Labor’s General Wage Determination will be used for the District of Columbia because Labor 

received insufficient information on constructed weatherization projects to enable the issuance of a 

wage determination. 

d

We did not collect weatherization information from the District of Columbia, Illinois, or 

Massachusetts. 

e

Michigan officials said their initial concerns about the prevailing wage rates have dissipated now that 

the actual wage rates are known. 

Regarding wage rates, officials in about half of the states we reviewed 

decided to wait to begin weatherizing homes until Labor had determined 

county-by-county prevailing wage rates for their state. These officials 

explained that they wanted to avoid having to pay back wages to 

weatherization workers who started working before the prevailing wage 

rates were known. 

Arizona officials said all but one of its local service providers decided to 

wait to weatherize homes until the prevailing wage rates were determined 

because they were concerned about the time required to reconcile 

differences in wage rates. Similarly, Iowa officials told us paying back 

wages would be especially burdensome to smaller contractors. Michigan 

officials explained that their initial concerns about the prevailing wage 

rates have been diminished now that Labor has determined wage rates. 

However, officials in Colorado, which had proceeded with weatherizing 

homes, told us that their concerns have increased because Labor’s countyby-county wage rates are higher than the rates the local administering 

agencies had previously paid weatherization workers. As a result, 

Colorado may adjust one of its weatherization performance measures, and 

one county decided to conduct all Recovery Act weatherization work with 

Page 105 GAO-09-1016 Recovery Act
 

county employees rather than awarding contracts.84 California officials 

were also concerned about the prevailing wage rates, and they wrote DOE 

to inquire about the possibility of requesting an exemption from the DavisBacon Act requirements for weatherization workers hired through the 

state’s federal, state, and local workforce development partnerships aimed 

at creating training and employment opportunities for youth and 

dislocated workers. California officials told us that the Davis-Bacon Act 

could weaken or eliminate workforce development as a significant 

component of its weatherization program, stating that paying prevailing 

wages to the inexperienced, entry-level workers typically hired through 

these programs would not be appropriate.85 While officials in about half of 

the states reviewed were concerned about prevailing wage rates prior to 

Labor’s determination, officials in North Carolina and Mississippi were not 

concerned because they expected that the prevailing wages rates would be 

similar to the existing wages being paid to weatherization workers; thus, 

they were not worried about possibly paying back wages. 

Regarding administrative requirements, officials in several states also cited 

concerns about ensuring weatherization activities funded with Recovery 

Act funds comply with Davis-Bacon requirements. Specifically, several 

officials cited concerns about the requirement that contractors and 

subcontractors pay covered workers weekly and submit weekly certified 

payroll records to the contracting agency. Florida officials expressed 

concerns about the increased documentation and administrative tasks 

required for weekly certified payroll. In Georgia, service providers also 

expressed concern about the requirements for a weekly payroll and were 

confused as to which employees would fall under the act’s guidelines. New 

York officials said one strategy that local agencies might use is to 

subcontract all weatherization work funded by the Recovery Act in order 

to limit the impact of Davis-Bacon to just those subcontracts. New York 

officials explained that these weekly payroll requirements are new to the 

organizations administering weatherization services and represent a new 

cost to the program. 

 

84Davis-Bacon Act prevailing wage requirements do not apply to local government 

employees. 29 C.F.R. § 5.2(h); see also Department of Labor Advisory Letter to Department 

of Energy, dated June 1, 2009. 

85According to Labor officials and guidance provided on its Web site, individuals who meet 

Labor’s definition of apprentices and trainees may be paid a percentage of the journeyman 

rate on the wage determination. To do so, however, these individuals must be participating 

in a program that has been registered with Labor or with a State Apprenticeship Agency 

recognized by Labor. 

Page 106 GAO-09-1016 Recovery Act
 

To facilitate better understanding of Davis-Bacon requirements, DOE and 

Labor have recently hosted conferences that contain sessions pertaining to 

the Davis-Bacon Act requirements. DOE sponsored the 2009 National 

Weatherization Conference that included sessions on the Davis-Bacon Act 

and officials from North Carolina said this conference provided them 

needed information.86 Additionally, Labor has hosted four Prevailing Wage 

Conferences and, according to its Web site, Labor will host three 

additional Prevailing Wage Conferences in September to address topics 

such as the administration and enforcement of the Davis-Bacon Act and 

the labor standards provisions of the Recovery Act. Additional guidance 

has been provided via memos to the states. For example, Labor’s May 29, 

2009, memorandum on the applicability of Davis-Bacon labor standards to 

federal and federally assisted construction work funded in whole or in part 

under the provision of the Recovery Act states that the department’s longstanding view is that a project consists of all construction necessary to 

complete the building or work regardless of the number of contracts 

involved so long as all contracts awarded are closely related on purpose, 

time, and place. The memorandum also states in a footnote that the $2,000 

threshold for Davis-Bacon and related act coverage pertains to the amount 

of the prime construction contract, not to the amount of individual 

subcontracts. Cognizant Labor officials told us that, for the Weatherization 

Assistance Program, the prime contract would be the one that a state 

signed with each of its community action agencies. 

Nearly all of the states we reviewed have left responsibility for the 

procurement of weatherization materials with local agencies rather than 

centralizing procurement at the state level. For example, Colorado 

officials approve local agencies’ procurement processes, but the local 

agencies acquire weatherization materials on their own using a 

competitive bid process. In Mississippi, local agencies develop their own 

list of suppliers and purchase materials that meet DOE standards for 

weatherization, while in North Carolina local agencies are responsible for 

developing their own fair market price list for materials. An exception is 

Pennsylvania, where local agencies will be required to purchase materials 

and equipment through the state’s cooperative purchasing program, which 

has established contracts with qualified suppliers. 

Local Agencies 

Generally Have 

Responsibility for 

Procuring 

Weatherization 

Materials 

 

86The 2009 National Weatherization Training Conference was held July 20-23, 2009. 

Page 107 GAO-09-1016 Recovery Act
 

DOE has issued guidance requiring recipients of Recovery Act 

weatherization funds to implement a number of internal controls to 

mitigate the risk of fraud, waste, and abuse.87 Specifically, DOE requires 

state weatherization agencies to conduct on-site monitoring of all 

weatherization service providers to inspect the management of funds and 

the production of weatherized homes. These monitoring visits consist of a 

financial review of the service provider’s records pertaining to salaries, 

materials, equipment, and indirect costs; program reviews of the service 

provider’s records, contracts, and client files; and a production review, 

consisting of the inspection of weatherized homes by the state agencies 

and by the service provider. DOE requires that each state agency inspect 

at least 5 percent of the weatherized units and each service provider 

inspect all of the completed units or units in the process of being 

weatherized. If an inspection reveals reporting inconsistencies, quality 

control issues, or other problems, the state agency is required to increase 

the number of units monitored and frequency of inspection. DOE is 

implementing an enhanced monitoring plan that would allow DOE’s 

weatherization project officers to track each state’s performance. As part 

of this enhanced monitoring, DOE has submitted a deviation request to 

OMB to require the states to submit monthly, rather than quarterly, 

reports. As a result of the significant increase in program funding, many of 

the states are reporting a need to increase staff to implement internal 

controls. DOE provides state agencies with the discretion to develop and 

implement these internal controls in accordance with each state’s 

weatherization plan. 

DOE Has Issued 

Guidance to Mitigate 

Risk in the 

Weatherization 

Program, and Some 

States Have 

Established 

Additional Measures 

State officials can also determine the effectiveness of a recipient’s internal 

controls through assessments conducted as part of the Single Audit Act.88

These audits review the performance and management of nonfederal 

entities receiving $500,000 or more in federal awards. Some state 

weatherization programs, however, have been considered too small to be 

monitored during the state’s Single Audit. Only 1 of the 14 states we 

reviewed had an unresolved Single Audit issue with its state 

 

87See, for example, DOE, “Weatherization Program Notice 09-1B,” (Mar. 12, 2009). 

88The Single Audit Act of 1984, as amended (31 U.S.C. §§ 7501-7507), requires that each 

state, local government, or nonprofit organization that expends $500,000 or more a year in 

federal awards must have a Single Audit conducted for that year subject to applicable 

requirements, which are generally set out in OMB Circular No. A-133, Audits of States, 

Local Governments and Non-profit Organizations (June 27, 2003). If an entity expends 

federal awards under only one federal program, the entity may elect to have an audit of that 

program. 

Page 108 GAO-09-1016 Recovery Act
 

weatherization program. State officials told us that the corrective action 

plan for addressing the Single Audit findings is waiting for federal 

approval. 

Some state weatherization agencies have conducted risk assessments to 

monitor the use of funds and identify service providers that may need 

additional help implementing the weatherization program. In Georgia, for 

example, state officials conducted a risk assessment of all service 

providers and assigned a risk level to each provider. Risk mitigation 

activities in other states include annual reviews of independent auditors’ 

reports, increased frequency of on-site monitoring of service providers and 

weatherized homes, fraud detection training, the requirement of monthly 

reports from service providers, and the use or proposed use of a Webbased reporting database. Some states, however, believe that current 

controls are sufficient, but they will need to hire additional staff to 

accommodate the increase in Recovery Act funding. 

In guidance supplied to the states, DOE stated that, as a minimum, states 

now have to report oversight visits, training, and equipment purchases that 

exceed $5,000. In addition, state officials must report on the number of 

housing units weatherized and the resulting impacts to energy savings and 

jobs created and retained at both the state and local agency level. While 

state officials have estimated the number of housing units that they expect 

to weatherize using Recovery Act funds, only a few of the states have 

begun collecting data about actual impacts. This is primarily because most 

states are just beginning to use the Recovery Act funds to weatherize 

homes or because they are waiting for further guidance about how to 

calculate impacts. Some states plan to use performance measures 

developed by DOE, while others have developed their own measures. 

Florida officials, for example, plan to measure energy savings by tracking 

kilowatts used before and after weatherization, primarily with information 

from utility companies. 

States Are Beginning 

to Monitor Recovery 

Act Weatherization 

Impacts, and Most 

Plan to Meet 

Reporting 

Requirements 

OMB issued guidance in June 2009 describing how prime recipients and 

subrecipients of Recovery Act funds are to report on their use of those 

funds.89 For example, beginning with the quarter ending September 30, 

2009, Section 1512 of the Recovery Act requires reports on the use of 

 

89OMB memorandum, M-09-21, Implementing Guidance for the Reports on Use of Funds 

Pursuant to the American Recovery and Reinvestment Act of 2009 (June 22, 2009). 

Page 109 GAO-09-1016 Recovery Act
 

Recovery Act funding by recipients no later than the 10th day after the end 

of each calendar quarter. In August 2009, OMB updated its June guidance 

identifying the data elements for states to report. As a result, every state 

must, by October 10, 2009, submit to OMB detailed information about their 

use of Recovery Act funds.90 Although weatherization officials in most 

states that we reviewed believe they would be able to meet this deadline, a 

few were less certain. For example, Colorado officials said that unresolved 

issues such as uploading consolidated data to OMB and completing the 

development and testing of the elements that will be used to collect data 

from grant recipients may affect the completeness and timeliness of the 

state’s report. Michigan officials stated that certain agency data for fiscal 

year 2009 would not be finalized until October 24 or 25, 2009. To assist 

local subrecipients in understanding reporting requirements, some state 

agencies have issued guidance, but most are waiting for further DOE 

guidance. 

In Response to Significant 

Risks with the Initial 

Section 1512 Reporting 

Process, OMB and the 

States Are Taking Various 

Actions 

Section 1512 recipient reporting91 and related OMB guidance, as discussed 

earlier in this report, requires recipients to report the total amount of 

Recovery Act funds received, the projects and activities being funded, the 

completion status of the projects being funded, and the impact on job 

creation and retention. Section 1512 of the act requires reports on the use 

of Recovery Act funds by recipients no later than the 10th day after the 

end of each calendar quarter (beginning the quarter ending Sept. 30, 2009). 

The first recipient reports are due to be reported to 

www.federalreporting.gov on October 10, 2009. 

This recipient reporting is intended to provide the public with an 

unprecedented level of transparency into how federal dollars are being 

spent and help drive accountability for the timely, prudent, and effective 

spending of recovery dollars. However, significant risks exist that will 

likely negatively impact the completeness, accuracy, and reliability of the 

information reported in the initial round of Section 1512 reporting. First, 

the reporting requirements are new, and many recipients who will be 

required to report information have never been required to report such 

 

90Recipients must report the total amount of funds received and, of that, the amount spent 

on projects and activities; a list of those projects and activities funded by name to include 

description, completion status, and estimates on jobs created or retained; and detail on 

subawards and other payments. See OMB memorandum M-09-21, p. 8. 

91Pub. L. No. 111-5, Sec. 1512 (c), 123 Stat. 115, 287 (Feb 17, 2009). 

Page 110 GAO-09-1016 Recovery Act
 

information in the past. Recipients’ systems and processes have not 

previously been set up to provide reliable and accurate data for the 

currently required reporting, and recipients may not have sufficient 

personnel with the skills needed to provide assurance over the quality of 

the recipient reporting. The large number of recipients also adds to this 

risk, as it is difficult for states and the federal government to monitor data 

quality coming from the recipients. Data quality issues impact the 

usefulness and reliability of the summarized information at the state and 

federal levels. Significant risks also exist because two new systems have 

been implemented at the federal level for collecting, summarizing, and 

reporting the information. 

In our July 2009 report, we noted that challenges exist in tracking the 

Recovery Act funds in the selected states we reviewed,92 which could also 

impact the recipient reporting processes for those states. The states have 

also expressed concerns about the ability of other entities to track and 

report on Recovery Act funds. These entities generally have not had 

experience in reporting to the federal government on an ongoing basis, 

and numerous Single Audits have raised concerns about subrecipient 

reporting. In our April 2009 report, we noted that significant concerns 

exist regarding subrecipient monitoring, as it is an area where limited 

experience and known vulnerabilities exist.93 The extent to which these 

entities have the capacity to accurately report is unknown. Inherent risks 

also exist with the implementation of new reporting systems at the federal 

level. The large number of recipients and subrecipients related to 

Recovery Act reporting presents a huge challenge to OMB and the RATB 

in the design and activation of the reporting function. 

In an effort to address information risks, OMB’s June 22nd guidance 

includes a requirement for data quality reviews. The data quality guidance 

is intended to emphasize the avoidance of two key data problems—

material omissions94 and significant reporting errors.95 Material omissions 

 

92GAO-09-829. 

93GAO, Recovery Act: As Initial Implementation Unfolds in States and Localities, 

Continued Attention to Accountability Issues Is Essential, GAO-09-580 (Washington, D.C.: 

April 23, 2009). 

94OMB defines material omissions as instances where required data are not reported or 

reported information is not otherwise responsive to the data requests, resulting in 

significant risk that the public is not fully informed as to the status of a Recovery Act 

project or activity. 

Page 111 GAO-09-1016 Recovery Act
 

and significant reporting errors are risks that the financial information is 

incomplete and inaccurate. Reliable financial information should be 

accurate and complete, so that decision makers such as Congress and 

federal agencies can make informed decisions. 

OMB, federal agencies, state agencies, and others have taken various 

actions in preparation for the October reporting. OMB has issued guidance 

in February 2009, April 2009, June 2009, and September 2009; presented at 

conferences; and provided training through webinars.96 The OMB June 22 

memorandum stated that “it is anticipated that federal agencies will, as 

appropriate, issue clarifying guidance to funding recipients.” As noted 

elsewhere in our report, relevant federal agencies have issued or are 

planning on issuing guidance. The selected states and the District have 

issued their own guidance and requirements to state offices, localities, and 

other recipients in order to prepare for the initial recipient reporting. For 

example, the New Jersey Governor’s Chief of Staff issued a memorandum 

on July 10, 2009, requiring departments to submit comprehensive outlines 

of their strategy to comply with Section 1512 reporting.97

In order to prepare for recipient reporting, states and their program offices 

are taking various actions to implement procedures and internal controls 

for recipient reporting. For example, Colorado has assigned a staff 

member to focus on Recovery Act reporting requirements to ensure 

reporting occurs as required by OMB. Also, the New Jersey Recovery 

Accountability Task Force issued written guidance to both state agencies 

and local government units concerning Recovery Act issues, such as 

reporting requirements, project selection criteria, effective contract and 

grant management. In addition, in New Jersey, the Recovery 

Accountability Task Force and the State Inspector General have been 

meeting with departments since May to discuss internal control policies. 

Similar meetings are beginning with municipalities and cities in New 

Jersey. The New Jersey Housing and Mortgage Finance Agency has 

provided seminars to multifamily property owners, developers, and 

managers, in addition to shifting staff resources. Some states have 

 

95OMB defines significant reporting errors as those instances where required data are not 

reported accurately and such erroneous reporting results in significant risk that the public 

will be misled or confused by the recipient report in question. 

96http://www.whitehouse.gov/Recovery/WebinarTrainingMaterials/. 

97The memorandum specifically requested plans identifying likely subrecipients and 

vendors, the proposed process for entering data into FederalReporting.gov, and comparing 

current data collected with the data required under Section 1512 of the act. 

Page 112 GAO-09-1016 Recovery Act
 

conducted dry runs as part of their preparation for the first reporting in 

order to identify areas where additional internal controls and procedures 

may be necessary. For instance, Florida has performed an initial recipient 

reporting pilot by having three agencies provide the data to populate the 

state database. Florida also plans dry runs and submission of test data to 

OMB once OMB has the capability of receiving the data. 

The states and District of Columbia have taken different approaches—

centralized and decentralized—for Section 1512 recipient reporting. The 

11 states and the District with centralized approaches generally are 

planning on having the prime recipients provide the reporting information 

to a state office. For example, Ohio’s recipients are providing their 

information through a reporting hub to Ohio’s Office of Budget and 

Management. Ohio’s Office of Budget and Management will then report the 

information to FederalReporting.gov. Five states are using a decentralized 

approach and are generally planning on having the prime recipients, such 

as state departments, report their information directly to 

FederalReporting.gov. Table 17 indicates our classification of the 

reporting approaches the selected states and District are planning on 

using. 

Table 17: Selected states and the District implemented tracking mechanism to 

identify the state’s prime recipients and subrecipients for reporting purposes, in 

accordance with OMB guidance Section 1512 

Centralized Decentralized 

• Arizona 

• California 

• Colorado 

• District of Columbia 

• Florida 

• Illinois 

• Iowa 

• Massachusetts 

• Michigan 

• North Carolina 

• Ohio 

• Pennsylvania 

• Georgia 

• Mississippi 

• New Jersey 

• New York 

• Texas 

Source: GAO analysis of interviews of cognizant officials. 

The Director of Michigan’s Economic Recovery Office said she believes 

the state will be able to report centrally, but state agencies could report 

directly through the FederalReporting.gov website if needed. Some states 

Page 113 GAO-09-1016 Recovery Act
 

Page 114 GAO-09-1016 Recovery Act

are planning on using their existing accounting systems with some 

modifications for their reporting. For instance, Colorado is developing a 

centralized reporting process that primarily uses its existing accounting 

and contract management systems with certain enhancements, as well as 

manually generated spreadsheets. Other states, such as Florida, are 

developing or have developed a new reporting system. 

The risk associated with recipient reporting is also reflected in concerns 

some state representatives have expressed. To address these concerns and 

clarify the information it has provided, OMB has taken numerous steps. In 

addition to memorandums, webinars, and conferences, OMB has held 

several teleconferences with numerous stakeholders at the state and local 

levels, including recovery czars, budget, information technology, financial, 

and audit officials. OMB also plans to send federal officials to all states 

and some other locations to provide a resource during the initial reporting 

period. At the time of our report, some of the recovery czars and other 

officials noted that confusion remains regarding the guidance. Generally, 

OMB has been working with states to resolve issues as it becomes aware 

of them. For example, in August 2009 an Iowa official said that they 

wanted to confirm that they could use a single D-U-N-S number to report 

Section 1512 information centrally. OMB made some changes to better 

accommodate centralized reporting in response. However, even though 

OMB’s outreach and coordination with the states has been much greater 

than has occurred in the past, the unprecedented reliance upon recipient 

reporting calls for such intensive efforts. 

Although OMB has moved quickly, concerns have arisen as the reporting 

deadline looms, reflecting the uncertainty inherent in this new and more 

transparent way of working together across levels of government. The 

transparency and expectation for accountability raises the stakes, as 

issues will be visible to the public, the media, and Congress, and the 

possibility of misunderstandings related to the data reported are of 

concern to all involved. Some state representatives noted that conflicting 

responses have been provided to questions about recipient reporting. For 

example, New Jersey noted that OMB’s June 22nd guidance clarifies that 

states will not be counting indirect jobs. However, during the webinars, 

there was discussion from OMB staff that this may not, in fact, be the case. 

Duplicate reporting is another risk, according to Florida, because some 

federal agencies informed their state counterpart agencies that they 

should report information directly to the federal agency, in addition to, or 

instead of, the federal site for data collection. 
 

Page 115 GAO-09-1016 Recovery Act

Section 1512 recipient reporting is intended to provide the public with an 

unprecedented level of transparency into how federal dollars are being 

spent and help drive accountability for the timely, prudent, and effective 

spending of recovery dollars. However, significant risks are inherent in the 

upcoming, initial round of reporting that will likely negatively impact the 

completeness, accuracy, and reliability of the information reported. 

Although OMB and the states are actively taking steps to mitigate these 

risks, the first round of recipient reporting will likely present many 

examples where improvements will be needed. We believe that the Section 

1512 process will, by necessity, evolve with future improvements needed 

after the first round of reporting as OMB and RATB continue to take steps 

to ensure data quality and the efficiency of Section 1512 reporting process 

in subsequent quarters. 

As we reported in both our April and July 2009 reports, effective internal 

controls over the use of Recovery Act funds are critical to help allow 

effective and efficient use of resources, compliance with laws and 

regulations, and in achieving accountability over Recovery Act programs. 

In its guidance, OMB has stated that Single Audit reports98 will serve as an 

important accountability mechanism for Recovery Act programs. A Single 

Audit report includes the auditor’s schedule of findings and questioned 

costs, internal control and compliance deficiencies, and the auditee’s 

corrective action plans and a summary of prior audit findings that includes 

planned and completed corrective actions. The Single Audit Act requires 

that a nonfederal entity subject to the act transmit its reporting package to 

a federal clearinghouse designated by OMB no later than 9 months after 

the end of the period audited. 

As we reported in April and July 2009, we are concerned that, as federal 

funding of Recovery Act programs accelerates in the next few months, the 

Single Audit process may not provide the timely accountability and focus 

needed to assist recipients in making necessary adjustments to internal 

controls, so that they achieve sufficient strength and capacity to provide 

assurances that the money is being spent as effectively as possible to meet 

program objectives. 

 

98The reports are required by the Single Audit Act, 31 U.S.C. § 7502, and prepared in 

accordance with OMB Cir. No. A-133, Audits of States, Local Governments, and NonProfit Organizations, which provides guidance to auditors on selecting federal programs 

for audit and the related internal control and compliance audit procedures to be 

performed. 

Concluding Observations 

OMB Has Taken Some 

Steps Related to Single 

Audits’ Focus and 

Reporting on the Recovery 

Act, but Additional Actions 

Are Needed 
 

The Single Audit reporting deadline is too late to provide audit results in 

time for the audited entity to take action on deficiencies noted in Recovery 

Act programs. The Single Audit Act requires that recipients submit their 

financial reporting packages, including the Single Audit report, to the 

federal government no later than 9 months after the end of the period 

being audited.99 As a result, an audited entity may not receive feedback 

needed to correct an identified internal control or compliance weakness 

until the latter part of the subsequent fiscal year. For example, states that 

have a fiscal year end of June 30 have a reporting deadline of March 31, 

which leaves program management only 3 months to take corrective 

action on any audit findings before the end of the subsequent fiscal year. 

For Recovery Act programs, significant expenditure of funds could occur 

during the period prior to the audit report being issued. 

The timing problem is exacerbated by the extensions to the 9-month 

deadline that are routinely granted by the awarding agencies, consistent 

with OMB guidance. According to an HHS OIG official, beginning in May 

2009 HHS IG adopted a policy of no longer approving requests for 

extensions of the due dates of Single Audit reporting package submissions. 

OMB staff have stated that they are evaluating the elimination of time 

extensions on the reporting package but have not issued any official 

guidance or memorandums to the agencies, OIGs, or federal award 

recipients. 

Our April and July 2009 reports on the Recovery Act included 

recommendations that OMB adjust the current audit process to 

• focus the risk assessment auditors use to select programs to test for 

compliance with 2009 federal program requirements on Recovery Act 

funding; 

• provide for review of the design of internal controls during 2009 over 

programs to receive Recovery Act funding, before significant expenditures 

in 2010; and 

 

9931 U.S.C. § 7502(b), (h)(2)(B). The guidance provides that under certain conditions, Single 

Audit auditees may be audited biennially instead of annually. For entities that are audited 

biennially, it is longer before internal control and compliance weaknesses are identified 

and remediated. 

Page 116 GAO-09-1016 Recovery Act
 

• evaluate options for providing relief related to audit requirements for lowrisk programs to balance new audit responsibilities associated with the 

Recovery Act. 

In our July 2009 report, we included a matter for congressional 

consideration pointing out that Congress is considering a legislative 

proposal and could address the following issues: 

• To the extent that appropriate adjustments to the Single Audit process are 

not accomplished under the current Single Audit structure, Congress 

should consider amending the Single Audit Act or enacting new legislation 

that provides for more timely internal control reporting, as well as audit 

coverage for smaller Recovery Act programs with high risk. 

• To the extent that additional audit coverage is needed to achieve 

accountability over Recovery Act programs, Congress should consider 

mechanisms to provide additional resources to support those charged with 

carrying out the Single Audit Act and related audits. 

Although OMB had taken several steps through August 2009 in response to 

our recommendations, those actions did not sufficiently address the risks 

leading to our recommendations. To focus auditor risk assessments on 

Recovery Act-funded programs and to provide guidance on internal 

control reviews for Recovery Act programs, OMB was working within the 

framework defined by existing mechanisms—Circular No. A-133 and the 

Compliance Supplement. In this context, OMB made limited adjustments 

to its Single Audit guidance. 

On September 10, 2009, OMB announced a proposed pilot project that, if 

properly implemented with sufficient coverage of Recovery Act-funded 

programs, could address concerns about the timeliness of Single Audit 

reporting related to internal control weaknesses in Recovery Act 

programs. Accordingly, in our September 10, 2009, testimony for the 

Senate Homeland Security and Governmental Affairs Committee,100 we 

recommended that the Director of OMB take steps to achieve sufficient 

participation and coverage in the pilot project that provides for early 

written communication of internal control deficiencies to achieve the 

objective of more timely accountability over Recovery Act funds. 

 

100GAO, Recovery Act: States’ and Localities’ Current and Planned Uses of Funds While 

Facing Fiscal Stresses, GAO-09-908T (Washington, D.C.: Sept. 10, 2009). 

Page 117 GAO-09-1016 Recovery Act
 

On May 26, OMB issued the 2009 edition of the Circular A-133 Compliance 

Supplement. The new Compliance Supplement is intended to focus auditor 

risk assessment on Recovery Act funding by, among other things, (1) 

requiring that auditors specifically ask auditees about and be alert to 

expenditure of funds provided by the Recovery Act, and (2) providing an 

appendix that highlights some areas of the Recovery Act impacting Single 

Audits. The appendix adds a requirement that large programs and program 

clusters with Recovery Act funding cannot be assessed as low-risk for the 

purposes of program selection without clear documentation of the reasons 

they are considered low risk. It also calls for recipients to separately 

identify expenditures for Recovery Act programs on the Schedule of 

Expenditures of Federal Awards. 

Focusing Auditors’ Program 

Risk Assessments on Programs 

with Recovery Act Funding 

On August 6, 2009, OMB issued Compliance Supplement Addendum No. 1 

to provide additional guidance related to specific compliance 

requirements for some Recovery Act programs (Part 4 of the Addendum). 

This addendum modified the 2009 Compliance Supplement by indicating 

the new Recovery Act programs and new program clusters, providing new 

cross-cutting provisions related to the Recovery Act programs, adding 

compliance requirements for existing programs as a result of Recovery Act 

funding, and emphasizing the importance of internal controls for 

compliance for programs with Recovery Act expenditures (Part 6 of the 

Addendum). 

Even with the two documents issued in May and August, the 2009 

Compliance Supplement does not yet provide specific auditor guidance for 

some new programs funded by the Recovery Act, or for new compliance 

requirements specific to Recovery Act funding within existing programs, 

that may be selected as major programs for audit. OMB acknowledges that 

additional guidance is called for and plans to address specific Recovery 

Act-related compliance requirements in its guidance to be issued at the 

end of September 2009 and its 2010 Compliance Supplement. 

The audit approach in OMB Circular A-133 relies heavily on the amount of 

federal expenditures in a program during a fiscal year and whether 

findings were reported in the previous period to determine whether 

detailed compliance testing is required for that year. Although OMB is 

using clusters for Single Audit selection to make it more likely that 

Recovery Act programs would be selected as major programs subject to 

internal control and compliance testing, the dollar formulas for 

determining major programs have not changed. This approach may not 

provide sufficient assurance that smaller, but nonetheless significant, 

Recovery Act-funded programs would be selected for audit. 

Page 118 GAO-09-1016 Recovery Act
 

In our discussions with state audit officials, many indicated that the above 

approach would not result in a significant increase in the number of major 

programs in the fiscal year 2009 Single Audit of their states. However, 

these officials are anticipating a much larger increase in the number of 

major programs for the fiscal year 2010 Single Audit in their respective 

states as Recovery Act funding is expended. 

To provide additional focus on internal control reviews, OMB’s August 6 

guidance emphasized the importance of prompt corrective action by 

management. This guidance also encouraged early communication by 

auditors to management and those charged with governance of identified 

control deficiencies related to Recovery Act funding that are, or likely to 

be, significant deficiencies or material weaknesses. Such early 

communication is intended to allow management to expedite corrective 

action and mitigate the risk of improper expenditure of federal awards. 

Steps toward More Timely 

Reporting on Internal Controls 

over Recovery Act-Funded 

Programs 

In our July 2009 report, we stated that OMB was encouraging 

communication of weaknesses to management early in the audit process 

but did not add requirements for auditors to take these actions. This step 

was insufficient and did not address our concern that internal controls 

over Recovery Act programs should be reviewed before significant funding 

is expended. Under the current Single Audit framework and reporting 

timelines, the auditor evaluation of internal control and related reporting 

will occur too late—after significant levels of federal expenditures have 

already occurred. 

Auditors vary in the timing and formality of communication of internal 

control findings during the course of the audit. All of the auditors we 

interviewed indicated that they inform program management of 

deficiencies or potential deficiencies prior to the release of the Single 

Audit report. However, the auditors indicated a variety of means of 

reporting and of the anticipated level of government to which the reports 

will be made. One state audit office indicated that it plans to release 

interim reports on internal control to the governor, state legislature, and 

the heads of agencies responsible for administering Recovery Act funding. 

Several state auditors said they release a letter addressing internal control 

issues, including management responses to findings, after completion of 

audit fieldwork but before the release of the Single Audit report. Others 

said that the main means of early communication of audit findings was 

through verbal comments by auditors to program management. 

Under the proposed pilot project announced by OMB on September 10, 

2009, a limited number of voluntarily participating auditors performing the 

Page 119 GAO-09-1016 Recovery Act
 

Single Audits for states would communicate in writing internal control 

deficiencies noted in the Single Audit within 6 months of the 2009 fiscal 

year-end, rather than the 9 months required by the Single Audit Act. As 

currently envisioned, an auditor participating in the pilot would formally 

report internal control deficiencies identified in the course of the Single 

Audit to state and federal officials within 6 months of the end of the 

audited entity’s fiscal year in order to achieve more timely accountability 

for selected Recovery Act-funded programs. Most states have a June 30 

fiscal year-end; consequently, most of the preliminary internal control 

communications would be due by December 31, 2009. Participating 

auditors would be required to focus audit procedures on Recovery Actfunded programs in accordance with guidelines prescribed by OMB. OMB 

would offer to waive Circular A-133’s requirement for risk assessment and 

audit procedures for smaller programs not receiving Recovery Act funding 

as an inducement to participate. OMB plans to identify the participating 

auditors and the programs that will be included by the end of September 

2009. GAO believes that, if the pilot is properly implemented and achieves 

sufficient coverage of Recovery Act-funded programs, it may be effective 

in addressing concerns about the timeliness of Single Audit reporting 

related to internal control weaknesses in Recovery Act programs. The 

pilot is, however, still in its early stages and many surrounding issues are 

yet to be resolved. It is important to note that the pilot project is 

dependent on voluntary participation, which could impact OMB’s ability to 

achieve sufficient scope and coverage for the project to meet its 

objectives. 

While OMB has noted the increased responsibilities falling on those 

responsible for performing Single Audits, it has not issued any proposals 

or plans to address this recommendation to date. Many state audit officials 

we talked with told us their offices have experienced severe cutbacks in 

staff, and several have multiple furlough days for all staff. 

Providing Relief to Balance 

Expected Increased Workload 

States and auditors volunteering to participate in OMB’s proposed pilot 

program will be granted some relief in the workload because the auditor 

will not be required to perform risk assessments of smaller federal 

programs. Auditors conduct these risk assessments as part of the planning 

process to identify which federal programs will be subject to detailed 

internal control and compliance testing. In addition, OMB has indicated 

that additional relief may be granted to participants for low-risk programs 

not receiving Recovery Act funds. 

Congress is currently considering a bill that could provide some financial 

relief to auditors lacking the staff capacity necessary to handle the 

Page 120 GAO-09-1016 Recovery Act
 

increased audit responsibilities associated with the Recovery Act. S. 1064, 

which is currently before the Senate Committee on Homeland Security 

and Governmental Affairs, and its companion bill that was passed by the 

House, H.R. 2182, would amend the Recovery Act to provide for enhanced 

state and local oversight of activities conducted pursuant to the act. One 

key provision of the legislation would allow state and local governments to 

set aside 0.5 percent of Recovery Act funds, in addition to funds already 

allocated to administrative expenditures, to conduct planning and 

oversight. In its current form, this does not specifically address audit 

funding needs. 

Although OMB has taken some steps in response to our recommendations, 

significant uncertainties exist regarding the scope of the pilot project and 

its effectiveness as an accountability mechanism for reporting on internal 

controls over Recovery Act programs. Therefore, we are repeating our 

recommendation from our September 10, 2009, testimony that the Director 

of OMB take steps to achieve sufficient participation and coverage in the 

pilot project that provides early written communication of internal control 

deficiencies to achieve the objective of more timely accountability over 

Recovery Act funds. 

Conclusions 

Recommendations 

Accountability and Transparency 

To leverage Single Audits as an effective oversight tool for Recovery Act 

programs, the Director of OMB should 

• provide more direct focus on Recovery Act programs through the Single 

Audit to help ensure that smaller programs with high risk have audit 

coverage in the area of internal controls and compliance; 

• develop requirements for reporting on internal controls during 2009 before 

significant Recovery Act expenditures occur, as well as for ongoing 

reporting after the initial report; 

• evaluate options for providing relief related to audit requirements for lowrisk programs to balance new audit responsibilities associated with the 

Recovery Act; 

• develop mechanisms to help fund the additional Single Audit costs and 

efforts for auditing Recovery Act programs; and 

Page 121 GAO-09-1016 Recovery Act
 

• take steps to achieve sufficient participation and coverage in the Single 

Audit pilot program that provides for early written communication of 

internal control deficiencies to achieve the objective of more timely 

accountability over Recovery Act funds. 

To reduce the impact of untimely Single Audit reporting, the Director of 

OMB should 

• Formally advise federal cognizant agencies to adopt a policy of no longer 

approving extensions of the due dates of single audit reporting package 

submissions beyond the nine month deadline, and 

• Widely communicate this revised policy to the state audit community and 

others who have responsibility for the conducting single audits and 

submitting the single audit reporting package. 

Because a significant portion of Recovery Act expenditures will be in the 

form of federal grants and awards, the Single Audit process could be used 

as a key accountability tool over these funds. However, in the Single Audit 

Act, enacted in 1984 and most recently amended in 1996, did not 

contemplate the risks associated with the current environment where 

large amounts of federal awards are being expended quickly through new 

programs, greatly expanded programs, and existing programs. The current 

Single Audit process is largely driven by the amount of federal funds 

expended by a recipient in order to determine which federal programs are 

subject to compliance and internal control testing. Not only does this 

model potentially miss smaller programs with high risk, but it also relies 

on audit reporting 9 months after the end of the grantee’s fiscal year—far 

too late to preemptively correct deficiencies and weaknesses before 

significant expenditures of federal funds. Congress is considering a 

legislative proposal in this area and could address the following issues: 

Matter for Congressional 

Consideration 

• To the extent that appropriate adjustments to the Single Audit process are 

not accomplished under the current Single Audit structure, Congress 

should consider amending the Single Audit Act or enacting new legislation 

that provides for more timely internal control reporting, as well as audit 

coverage for smaller Recovery Act programs with high risk. 

• To the extent that additional 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. 

Page 122 GAO-09-1016 Recovery Act
 

States Face Actual and 

Looming Revenue 

Shortfalls Cushioned by 

Recovery Act Funding 

Since our July report, state revenues continued to decline and state budget 

officials anticipated continued fiscal stress cushioned by the temporary 

infusion of Recovery Act funds. Seven of the 16 selected states completed 

their fiscal year 2010 budgets since our July report and one state, 

Pennsylvania, continued to work toward agreement on the fiscal year 2010 

budget even though its fiscal year began July 1.101 In addition, Michigan 

and the District continue to negotiate their budgets in anticipation of fis

years beginning October 1.

cal 

 

102 Some state budget officials also reported 

their use or planned use of reserve or rainy-day funds since our July 

report. State budget officials also discussed actions planned and taken to 

recover central administrative costs related to Recovery Act oversight 

implementation. Officials in some states told us they had or plan to seek 

reimbursement of their central administrative costs through methods 

outlined in OMB guidance, while officials in one state plan to absorb these 

costs. 

Many of the selected states and the District continued to experience steep 

declines in revenue. For example, officials in Michigan’s Economic 

Recovery Office said that in each month since our July report, revenue 

collections dropped below already declining state projections, thus 

creating the potential for a $2 billion budget shortfall by the end of the 

current fiscal year—which in Michigan ends September 30, 2009. Officials 

from Michigan’s House Fiscal Agency estimate that the state’s general fund 

revenues for the upcoming fiscal year may fall to levels not seen since the 

1960’s (after adjusting for inflation). In New York the use of Recovery Act 

funds, as well as other measures, had already addressed a $20.1 billion 

budget gap for fiscal years 2008-2009 and 2009-2010. Continued declining 

revenues have now contributed to an anticipated $2.1 billion budget 

shortfall by the end of the first quarter of the current fiscal year. According 

101In July we reported that Mississippi did not have a fiscal year 2010 budget as of early 

June 2009; Mississippi’s legislature approved the state’s fiscal year 2010 budget on June 30, 

2009. 

102Not all jurisdictions have the same fiscal year. Most of the states we visited have fiscal 

years beginning July 1, with the following exceptions: The fiscal year for Texas begins on 

September 1; the fiscal year for the District of Columbia and Michigan begins October 1; 

and New York’s fiscal year begins April 1. 

Page 123 GAO-09-1016 Recovery Act
 

to New York officials, the state’s growing budget gap is due almost entirely 

to a reduction in state revenues. Officials in the Ohio Governor’s Office 

also said they had revised revenue estimates. According to state officials, 

Ohio’s revenue projections are nearly 6.5 percent below the amount 

included in the first budget submission developed for the current fiscal 

year just seven months ago in February 2009. Budget officials in Colorado 

responded to the current fiscal situation by asking most state agencies to 

submit revised fiscal year 2009-2010 budgets reflecting a ten percent 

reduction in expenditures from the appropriated levels. Georgia took 

similar steps and began fiscal year 2010 with a five percent withholding for 

all state agencies. Georgia budget officials are now asking agencies to 

submit budget reduction plans of four, six, and eight percent for the 

amended fiscal year 2010 and fiscal year 2011 budgets. New Jersey 

officials reported that projected base income and corporate tax revenues 

for fiscal year 2010 will likely come in less than the actual fiscal year 2005 

collections for those taxes. Preliminary projections by California’s 

Department of Finance indicated that the state’s revenues could continue 

to deteriorate and result in a $7 billion shortfall during the current fiscal 

year, with potentially greater shortfalls in future years. California’s 

Legislative Analyst’s Office also expects the state will have cash flow 

deficits for the next three to five years. 

At least two states, Ohio and Florida, have plans for new revenue sources 

to address declining tax receipts. Ohio’s enacted budget relies on a new 

revenue source—proceeds from new video lottery terminals, while Florida 

officials expect cigarette surcharges, motor vehicle fees, and court fees to 

produce more than $2 billion in new revenues. 

Officials in Illinois, Florida and Texas said they were somewhat optimistic 

that an economic recovery would produce increased revenues later in the 

current fiscal year or beginning in 2011. Officials from Illinois anticipated 

that the state will enact legislation that will increase tax revenues and 

provide the fiscal support necessary to transition into fiscal year 2011 

without the need for additional fiscal stabilization funds from the 

Recovery Act. However, officials from many states did not share this 

outlook, and instead reported that they foresee continued revenue 

declines. In a few states, such as Arizona and Colorado, officials also 

projected increases in expenditures. Colorado officials, for example, 

anticipate that fiscal year 2011 will be, in their words, “brutal,” resulting in 

additional budget cuts, while expenditures associated with Medicaid, 

corrections facilities, and higher educational enrollments are expected to 

increase. 

Page 124 GAO-09-1016 Recovery Act
 

All of the selected states and the District have at least one rainy day or 

reserve fund and, as reported in our April and July reports, states 

continued to use these reserve funds to address declining revenues. More 

than half of the 16 selected states used their rainy-day or reserve funds to 

address budget shortfalls in either fiscal year 2009, 2010 or both. For 

example, officials in Massachusetts used $1.39 billion in state rainy-day 

funds to help stabilize the state’s budget during fiscal year 2009, and state 

officials anticipate using $214 million in rainy-day funds in fiscal year 2010. 

This would leave Massachusetts’ rainy-day fund with a projected balance 

of $571 million at the end of fiscal year 2010. According to budget officials 

in a few states it is too soon to tell whether their revenue shortfalls will 

require them to tap into their reserve funds, sometimes for a second time, 

for their current fiscal year. New York and Texas, as well as the District of 

Columbia, specifically decided not to use their rainy-day funds to fill 

budget gaps—in fiscal year 2009-2010 for New York, in fiscal years 2009-

2010 and 2010-2011 for the District or in biennium 2010-2011 for Texas. 

The reasons for this decision varied—the District, for example, chose not 

to use the reserves because according to officials, local law requires 

repayment within a short time frame. The Texas Governor’s Office 

explained that it did not anticipate a need to use the rainy-day fund in their 

fiscal year 2010-2011 budget, adding that the fund is not a readily available 

option because approval for its use requires a supermajority vote of the 

state legislature. Arizona, Ohio, Florida, Michigan, and New Jersey have 

depleted, or nearly depleted, their formal rainy-day funds. However, while 

New Jersey used its entire rainy-day reserve to help close a $735 million 

budget gap for fiscal year 2009, the state also plans to set aside $500 

million for fiscal year 2010. New Jersey state budget officials explained 

that rather than continue to fund their rainy-day fund, which has restricted 

uses, they plan to maintain the $500 million in a “free balance” account 

that budget officials can use for any purpose without restrictions. 

Page 125 GAO-09-1016 Recovery Act
 

States recover administrative costs for federal grant programs pursuant to 

OMB Circular A-87 guidelines.103 OMB also issued Memorandum 09-18 

which applies A-87 guidelines to recouping central administrative costs 

related to Recovery Act programs.104 States generally recover central 

administrative costs associated with federal grant programs, including the 

Recovery Act, after expenses are incurred.105 OMB guidance does not 

provide additional funds for these costs, rather, it permits central costs to 

be recovered from program funds. To recover administrative costs, states 

submit a State-Wide Cost Allocation Plan (SWCAP)106 annually to the 

Division of Cost Allocation (DCA) of the U.S. Department of Health and 

Human Services (HHS). With respect to Recovery Act central 

administrative costs, states are expected to update their SWCAP to include 

the costs of administering Recovery Act programs, as indicated in OMB 

Memorandum M-09-18. The OMB memorandum indicates that states can 

recover central administrative costs up to 0.5 percent of the total Recovery 

Act funds received by the state. 

States Expressed Concerns 

Regarding the Feasibility of 

Recovering Central 

Administrative Costs and Have 

Proposed Alternate Methods 

The guidance also identifies two alternatives by which states can recover 

central administrative costs for Recovery Act programs. 

• Allocated cost method: States can use budgeted or estimated costs for 

Recovery Act administrative costs in the SWCAP submission, and costs 

must not total more than 0.5 percent of total Recovery Act funds received 

by the state. States must justify the services billed and the basis for the 

amounts estimated. Reconciliation between actual costs and claimed costs 

 

103OMB Circular, No. A-87, Cost Principles for State, Local, and Indian Tribal 

Governments (CFR, Part 225). OMB Circular No. A-87 established principles for 

determining the allowable administrative costs incurred by state, local and federally 

recognized Indian tribal governments. 

104OMB Memorandum, M-09-18, Payments to State Grantees for Administrative Costs of 

Recovery Act Activities (May 11, 2009). This memorandum clarifies and encourages states 

to utilize existing flexibilities to recover administrative costs related to carrying out 

Recovery Act programs and activities in a more timely manner. 

105Other entities, such as colleges and universities, are able to recover administrative costs 

in an up-front manner pursuant to principles established by OMB Circular, No. A-21, Cost 

Principles for Educational Institutions (2 CFR, Part 220). 

106The statewide cost allocation plan is a required document that identifies, accumulates, 

and allocates; or develops billing rates based on the allowable costs of services (e.g., 

accounting, purchasing, computer services, motor pools, fringe benefits, etc) provided by a 

governmental unit to its departments and agencies. 

Page 126 GAO-09-1016 Recovery Act
 

will be adjusted in the subsequent year review of the SWCAP by HHS. 

• Billed services method: States can submit a methodology for identifying, 

recording, and charging administrative costs within the SWCAP and must 

detail the services provided and billing rates. Once approved, the 

methodology can be used to charge administrative program costs to state 

agencies that would recover these costs through billing the Recovery Act 

programs. Costs must not total more than 0.5 percent of total Recovery 

Act funds received by the state. 

As shown in table 18, nine states and the District reported that they are 

moving forward with the administrative cost recovery process described 

in the OMB guidance. One state reported plans to absorb administrative 

costs. Iowa officials reported that the state had to absorb administrative 

costs because Recovery Act funds had already been allocated to programs 

through the state budget process and it was not possible to re-allocate 

funds for administrative purposes without state legislative approval. At 

least four states, Florida, Illinois, New York, and North Carolina are 

undecided about what they will do while four states, Arizona, California, 

Colorado, and Massachusetts have proposed alternative methods to HHS, 

discussed later in this section. 

Table 18: State Approaches to Recouping Recovery Act Administrative Costs 

Using OMB 

alternatives 

Absorbing 

costs Undecided 

Proposing 

alternative to OMB 

methods 

Arizona, District of 

Columbia, Colorado, 

Georgia, 

Massachusetts, 

Michigan, New 

Jersey, Ohio, 

Pennsylvania, Texas 

Iowa Florida, Illinois, New 

York, North Carolina 

Arizona, California, 

Colorado, 

Massachusetts 

Source: GAO analysis of interviews with state officials. 

Note: Some state officials indicated they are utilizing more than one approach for example, using 

OMB alternatives and proposing alternative methods to HHS, therefore they are identified in the table 

in both categories. 

Due to state officials’ uncertainty regarding the central administrative cost 

recovery methods outlined in OMB’s initial guidance, at least two states, 

Massachusetts and California, had concerns regarding which Recovery Act 

programs could be billed or charged to cover central administrative 

activities such as oversight and reporting. For instance, state officials said 

Page 127 GAO-09-1016 Recovery Act
 

it was unclear whether some programs, such as Medicaid FMAP or 

competitive grant awards, could contribute toward the funding of these 

central administrative activities. OMB subsequently issued a FAQ on its 

Web site to clarify the process for recovering administrative costs.107 This 

FAQ clarifies that all Recovery Act funds coming to the state as a prime 

recipient are eligible to be charged for central administrative costs unless 

otherwise subject to specific limitations or restrictions on central 

administrative cost recovery. 108 However, the FAQ does not explicitly state 

which programs are excluded when calculating the 0.5 percent for central 

administrative costs for Recovery Act programs. 

NASACT submitted a Proposal 

to Allow Waivers of Some 

Provisions of the SWCAP 

Process on Behalf of States; 

HHS Final Approval is 

Dependent on OMB 

The National Association of State Auditors, Comptrollers, and Treasurers 

(NASACT) wrote a letter to OMB on August 7 to clarify states’ 

responsibilities and propose a waiver of certain requirements of OMB 

Circular A-87, which governs the SWCAP process.109 NASACT outlined two 

proposals. First, NASACT proposed waiving the requirement that states 

must depreciate equipment over the life of the equipment.110 Second, 

NASACT proposed waiving the requirement that reimbursement be after 

the funds are expended rather than prior to the expenditures. 

As stated in the letter, Recovery Act capital assets are needed primarily to 

fulfill reporting and compliance with Recovery Act mandates. NASACT’s 

concern is that Recovery Act assets, primarily information technology, are 

needed for the Recovery Act period, which is shorter than the depreciation 

life cycle for these assets. In addition, according to the letter, Recovery 

Act funds have a substantial impact on state budgets and require a 

commitment of additional state resources for oversight and 

implementation. Timely reimbursement for these administrative costs is 

particularly essential for states during a time of fiscal stress. 

 

107See, http://www.whitehouse.gov/omb/recovery_faqs/. 

108According to OMB Memorandum M-09-21, Implementing Guidance for the Reports on 

Use of Funds Pursuant to the American Recovery and Reinvestment Act (June 22, 2009), 

the prime recipients are non-federal entities that receive Recovery Act funding as federal 

awards in the form of grants, loans, or cooperative agreements directly from the federal 

government. 

109The National Association of State Auditors, Comptrollers and Treasurers (NASACT) is an 

organization of state auditors, comptrollers and treasurers in the 50 states, the District of 

Columbia, and U.S. territories who deal with the financial management of state 

government. 

110Depreciation reflects the use of the asset(s) during specific operating periods in order to 

match costs with related revenues in measuring income or determining the costs of 

carrying out program activities. 

Page 128 GAO-09-1016 Recovery Act
 

At least four of the states we spoke with—Arizona, California, Colorado, 

and Massachusetts—expressed support for these proposals. Arizona and 

California were concerned that they would not be able to recover the full 

costs of depreciable equipment dedicated to Recovery Act purposes, since 

the equipment is expected to last longer than is needed for Recovery Act 

reporting periods. Many states, Arizona, California, Colorado, Illinois, 

Massachusetts, Mississippi, New York and Texas, also expressed 

frustration with using the traditional cost allocation method, whereby 

states estimate costs for each type of administrative cost using a separate 

methodology for each. California and Massachusetts proposed two 

alternate cost allocation methods to allow states to estimate costs and 

reconcile the differences later, and to allow states to allocate based on 

budget, respectively. Massachusetts’ proposal, which mirrors the NASACT 

proposal, was submitted as part of its SWCAP addendum. State officials 

told us that HHS gave provisional approval of the proposal but stated that 

final approval is contingent on OMB approval of the waiver requested by 

NASACT. HHS is designated by OMB as the cognizant federal agency for 

reviewing, negotiating and approving cost allocation plans. According to 

HHS officials, HHS does not have the authority to grant Recovery Act 

central administrative cost waivers which are covered by OMB 

memorandums and circulars. OMB staff said they are continuing to review 

the NASACT waiver request. 

Administrative cost reimbursement proposals: State fiscal relief is 

one of the purposes of the Recovery Act. During a time when states are 

grappling with unprecedented levels of declining state revenues and fiscal 

stress, states continue to seek relief from additional pressures created by 

requirements to implement and comply with the Recovery Act. States play 

a central role in the prudent, timely and transparent expenditure of 

Recovery Act funds. To fulfill this role properly, states often take on 

additional fiscal and administrative burdens. These additional costs can 

exacerbate states’ existing fiscal stress. Therefore it is critical for state 

governments to quickly and effectively build the necessary capacities to 

meet their reporting requirements and responsibilities under the Recovery 

Act. In order to achieve the delicate balance between robust oversight and 

the smooth flow of funds to Recovery Act programs, states may need 

timely reimbursement for these activities. 

Concluding Observation and 

Recommendation 

Recommendation: To the extent that the Director of OMB has the 

authority to consider mechanisms to provide additional flexibilities to 

support state and local officials charged with carrying out Recovery Act 

responsibilities, it is important to expedite consideration of alternative 

administrative cost reimbursement proposals. 

Page 129 GAO-09-1016 Recovery Act
 

In addition to the cross-cutting recommendations to the Office of 

Management and Budget that follow, we have made recommendations to 

the Secretaries of Education, Housing and Urban Development, Labor, and 

Transportation within the body of the report. Recommendations are for 

Education’s State Fiscal Stabilization Fund; HUD’s Public Housing Capital 

Fund; Labor’s Workforce Investment Act (WIA) Youth Program; and 

Transportation’s Transit Capital Assistance and federal highways 

programs. The discussion on federal highways also includes an earlier 

recommendation on highway projects in economically distressed areas 

that has been implemented since our last report. 

Crosscutting 

Recommendations 

Accountability and 

Transparency 

Recipients of Recovery Act funding face a number of implementation 

challenges. The act includes new programs and significant increases in 

funds out of normal cycles and processes. There is an expectation that 

many programs and projects will be delivered faster so as to inject funds 

into the economy, and the administration has indicated its intent to ensure 

transparency and accountability over the use of Recovery Act funds. 

Recipient financial tracking and reporting: OMB’s guidance calls for 

the tracking of funds by the prime recipient, recipient vendors, and 

subrecipients receiving payments. OMB’s guidance also allows that “prime 

recipients may delegate certain reporting requirements to subrecipients.” 

Either the prime or subrecipient must report the D-U-N-S number (or an 

acceptable alternative) for any vendor or subrecipient receiving payments 

greater than $25,000. In addition, the prime recipient must report what was 

purchased and the amount, as well as a total number and amount for 

subawards of less than $25,000. By reporting the D-U-N-S number, OMB 

guidance provides a way to identify subrecipients by project, but this 

alone does not ensure data quality. 

The approach to tracking funds is generally consistent with the Federal 

Funding Accountability and Transparency Act (FFATA) requirements. 

Like the Recovery Act, the FFATA requires a publicly available Web site—

USAspending.gov—to report financial information about entities awarded 

federal funds. Yet, significant questions have been raised about the 

reliability of the data on USAspending.gov, primarily because what is 

reported by the prime recipients is dependent on the unknown data quality 

and reporting capabilities of their subrecipients. 

Page 130 GAO-09-1016 Recovery Act
 

These concerns also pertain to recipient financial reporting and its federal 

reporting vehicle, www.federalreporting.gov. OMB guidance does not 

explicitly mandate a methodology for conducting quality reviews. Rather, 

federal agencies are directed to identify material omissions and significant 

reporting errors to “ensure consistency” in the conduct of data quality 

reviews. Although recipients and federal agency reviewers are required to 

perform data quality checks, none are required to certify or approve data 

for publication. 

Recommendation: In our July 2009 report we recommended that to 

strengthen the effort to track the use of funds, the Director of OMB should 

(1) clarify what constitutes appropriate quality control and reconciliation 

by prime recipients, especially for subrecipient data, and (2) specify who 

should best provide formal certification and approval of the data reported. 

Status of recommendation: Although OMB clarified that the prime 

recipient is responsible for www.federalreporting.gov data in its June 22 

guidance, no statement of assurance or certification will be required of 

prime recipients on the quality of subrecipient data. Moreover, federal 

agencies are expected to perform data quality checks, but they are not 

required to certify or approve data for publication. We continue to believe 

that there needs to be clearer accountability for the data submitted and 

during the subsequent federal review process. 

Agency comments and our evaluation: OMB agreed with the 

recommendation in concept but questioned the cost/benefit of data 

certification given the tight reporting time frames for recipients and 

federal agency reviewers. OMB staff stated that grant recipients are 

already expected to comply with data requirements appropriate to the 

terms and conditions of a grant. Furthermore, OMB will be monitoring the 

results of the quarterly recipient reports for data quality issues and would 

want to determine whether these issues are persistent problems before 

concluding that certification is needed. 

We agree that OMB will need time to assess the data quality of recipient 

reports and that what it proposes to do is an important first step. We also 

recognize that there may be more than one way to ensure data quality and 

that a global requirement may not be the best approach. We will continue 

to monitor the situation. 

Reporting on Impact States and localities are expected to report quarterly on a number of 

measures, including the use of funds and an estimate of the number of jobs 

Page 131 GAO-09-1016 Recovery Act
 

created and the number of jobs retained as required by Section 1512 of the 

Recovery Act. In addition to statutory requirements OMB has directed 

federal agencies to collect performance information and to assess program 

accomplishments. 

Section 1512 recipient reporting: Under the Recovery Act, 

responsibility for reporting on jobs created and retained falls to nonfederal 

recipients of Recovery Act funds. As such, states and localities have a 

critical role in identifying the degree to which Recovery Act goals are 

achieved. The unprecedented public disclosure on the use of these funds 

required by the act and the expectation that information will be updated 

quarterly to the federal government through a newly created system, 

www.federalreporting.gov, have raised concerns for reporting officials. 

Recommendation: In our July 2009 report, we recommend that OMB 

work with federal agencies to provide program-specific examples to 

increase reporting consistency and to seek opportunities to educate state 

and local officials through Web- or telephone-based information sessions. 

Finally, we recommended that OMB and federal agencies clarify which 

new or existing performance measures should be used and data collected 

to demonstrate the impact of Recovery Act funding.111

Status of recommendation: In recent weeks, federal agencies have 

issued guidance that expands on the OMB June 22 governmentwide 

recipient reporting guidance and provided education and training 

opportunities for state and local program officials. Agency-specific 

guidance includes frequently asked questions—FAQs—and tip sheets. 

Additionally, agencies are expected to provide examples of recipient 

reports for their programs, which is consistent with what we 

recommended. We have not yet assessed the sufficiency of this additional 

guidance. 

 

111According to OMB guidance, rather than establishing a new council, agencies are 

encouraged to leverage their existing Senior Management Councils to oversee Recovery 

Act performance across the agency, including risk management. The Senior Management 

Council should be composed of the Chief Financial Officer, Senior Procurement Executive, 

Chief Human Capital Officer, Chief Information Officer, Performance Improvement Officer, 

and managers of programmatic offices. The agency’s Senior Accountable Official should 

also participate and assume a leadership role. Agencies should also consider having their 

Office of General Counsel and Office of Inspector General serve in advisory roles on the 

Senior Management Council. 

Page 132 GAO-09-1016 Recovery Act
 

In addition to the federal agency efforts, OMB has issued FAQs on 

Recovery Act reporting requirements. The June 22 guidance and 

subsequent actions by OMB are responsive to much of what we said in our 

April 2009 report. OMB is also preparing to deploy regional federal 

employees to serve as liaisons to state and local recipients in large 

population centers. The objective is to provide on-site assistance and, as 

necessary, direct questions to appropriate federal officials in Washington, 

D.C. OMB plans to establish a call center for entities that do not have an 

on-site federal liaison. 

Communications and 

Guidance 

Since enactment of the Recovery Act in February 2009, OMB has issued 

three sets of guidance—on February 18, April 3, and June 22, 2009112—to, 

among other things, assist recipients of federal Recovery Act funds in 

complying with reporting requirements. OMB plans to respond as needed 

to questions that arise through FAQs and other forms of communication, 

including outreach efforts with the Recovery Accountability and 

Transparency Board for the first quarterly recipient report. Federal 

agencies are responsible for program-specific Recovery Act guidance. 

Funding notification and program guidance: State officials expressed 

concerns regarding communication on the release of Recovery Act funds 

and their inability to determine when to expect federal agency program 

guidance. Once funds are released, there is no easily accessible, real-time 

procedure for ensuring that appropriate officials in states and localities 

are notified. Because half of the estimated spending programs in the 

Recovery Act will be administered by nonfederal entities, states wish to be 

notified when funds are made available to them for their use as well as 

when funding is received by other recipients within their state that are not 

state agencies. 

OMB does not have a master timeline for issuing federal agency guidance. 

OMB’s preferred approach is to issue guidance incrementally. This 

approach potentially produces a more timely response and allows for 

 

112OMB Memorandum M-09-15, Updated Implementing Guidance for the American 

Recovery and Reinvestment Act of 2009 (Apr. 3, 2009). This guidance supplements, 

amends, and clarifies the initial guidance, OMB Memorandum M-09-10, Initial 

Implementing Guidance for the American Recovery and Reinvestment Act of 2009 (Feb. 

18, 2009). OMB Memorandum M-09-21, Implementing Guidance for the Reports on Use of 

Funds Pursuant to the American Recovery and Reinvestment Act of 2009 (June 22, 2009). 

Page 133 GAO-09-1016 Recovery Act
 

midcourse corrections; however, this approach also creates uncertainty 

among state and local recipients responsible for implementing programs. 

We continue to believe that OMB can strike a better balance between 

developing timely and responsive guidance and providing a longer range 

timeline that gives some structure to states’ and localities’ planning efforts. 

Recommendation: In our April report, we recommended that to foster 

timely and efficient communications, the Director of OMB should develop 

an approach that provides dependable notification to (1) prime recipients 

in states and localities when funds are made available for their use, (2) 

states—where the state is not the primary recipient of funds but has a 

statewide interest in this information—and (3) all nonfederal recipients on 

planned releases of federal agency guidance and, if known, whether 

additional guidance or modifications are recommended. 

Status of recommendation: OMB has made important progress in 

notifying recipients when Recovery Act funds are available, 

communicating the status of these funds at the federal level through 

agency Weekly Financial Activity reports, and disseminating Recovery 

Act guidance broadly while actively seeking public and stakeholder input. 

Beginning August 28, OMB has taken the additional step of requiring 

federal agencies to notify recovery coordinators in states, the District of 

Columbia, commonwealths, and territories within 48 hours of an award to 

a grantee or contractor in their jurisdiction. This latest effort may provide 

the real-time notification we recommend. We will continue to monitor the 

situation and will report on the effectiveness of OMB’s approach in a 

future report. 

We continue to recommend the addition of a master schedule for 

anticipated new or revised federal Recovery Act program guidance and a 

more structured, centralized approach to making this information 

available, such as what is provided at www.recovery.gov on recipient 

reporting. 

We are sending copies of this report to the Office of Management and 

Budget and to the Departments of Education, Labor, Housing and Urban 

Development, and Transportation. In addition, we are sending sections of 

the report to the officials in the 16 states and the District covered in our 

review. The report will be available at no charge on the GAO Web site at 

http://www.gao.gov. 

Page 134 GAO-09-1016 Recovery Act
 

If you or your staffs have any questions about this report, please contact 

me at (202) 512-5500. Contact points for our Offices of Congressional 

Relations and Public Affairs may be found on the last page of this report. 

GAO staff who made major contributions to this report are listed in 

Gene L. Doda

appendix IV. 

ro 

Acting Comptroller General of the United States

Page 135 GAO-09-1016 Recovery Act
 

Addressees 

The Honorable Robert C. Byrd 

President Pro Tempore of the Senate 

The Honorable Harry Reid 

Majority Leader 

United States Senate 

The Honorable Mitch McConnell 

Republican Leader 

United States Senate 

The Honorable Nancy Pelosi 

Speaker of the House of Representatives 

The Honorable Steny Hoyer 

Majority Leader 

House of Representatives 

The Honorable John Boehner 

Minority Leader 

House of Representatives 

The Honorable Daniel K. Inouye 

Chairman 

The Honorable Thad Cochran 

Vice Chairman 

Committee on Appropriations 

United States Senate 

The Honorable Dave Obey 

Chairman 

The Honorable Jerry Lewis 

Ranking Member 

Committee on Appropriations 

House of Representatives 

Page 136 GAO-09-1016 Recovery Act
 

The Honorable Joseph I. Lieberman 

Chairman 

The Honorable Susan M. Collins 

Ranking Member 

Committee on Homeland Security and Governmental Affairs 

United States Senate 

The Honorable Edolphus Towns 

Chairman 

The Honorable Darrell E. Issa 

Ranking Member 

Committee on Oversight and Government Reform 

House of Representatives 

Page 137 GAO-09-1016 Recovery Act
Appendix I: 

Methodology 

Objectives, Scope, and 

Page 138 GAO-09-1016 

Appendix I: Objectives, Scope, and 

Methodology 

This appendix describes our objectives, scope, and methodology (OSM) 

for this second of our bimonthly reviews on the Recovery Act. A detailed 

description of the criteria used to select the core group of 16 states and the 

District of Columbia (District) and programs we reviewed is found in 

appendix I of our April 2009 Recovery Act bimonthly report.1

The Recovery Act specifies several roles for GAO, including conducting 

bimonthly reviews of selected states’ and localities’ use of funds made 

available under the act. As a result, our objectives for this report were to 

assess (1) selected states’ and localities’ uses of and planning for Recovery 

Act funds, (2) the approaches taken by the selected states and localities to 

ensure accountability for Recovery Act funds, and (3) states’ plans to 

evaluate the impact of the Recovery Act funds they have received to date. 

Objectives and Scope 

Our teams visited the 16 selected states, the District, and a non-probability 

sample of 168 localities during July and August 2009.2

 As described in our 

previous Recovery Act report’s OSM, our teams met again with a variety of 

state and local officials from executive-level and program offices. During 

discussions with state and local officials, teams used a series of program 

review and semistructured interview guides that addressed state plans for 

management, tracking, and reporting of Recovery Act funds and activities. 

We also reviewed state constitutions, statutes, legislative proposals, and 

other state legal materials for this report. Where attributed, we relied on 

state officials and other state sources for description and interpretation of 

state legal materials. Appendix II details the states and localities visited by 

GAO. Criteria used to select localities within our selected states follow. 

States’ and Localities’ Uses 

of Recovery Act Funds 

Using criteria described in our earlier bimonthly reports, we selected the 

following streams of Recovery Act funding flowing to states and localities 

for review during this report: increased Medicaid Federal Medical 

Assistance Percentage (FMAP) grant awards; the Federal-Aid Highway 

Surface Transportation Program; the State Fiscal Stabilization Fund 

 

1

GAO, Recovery Act: As Initial Implementation Unfolds in States and Localities, 

Continued Attention to Accountability Issues Is Essential, GAO-09-580 (Washington, D.C.: 

Apr. 23, 2009). 

2

States selected for our longitudinal analysis are Arizona, California, Colorado, Florida, 

Georgia, Illinois, Iowa, Massachusetts, Michigan, Mississippi, New Jersey, New York, North 

Carolina, Ohio, Pennsylvania, and Texas. 

Recovery Act
Appendix I: Objectives, Scope, and 

Methodology 

(SFSF); Title I, Part A of the Elementary and Secondary Education Act of 

1965 (ESEA); Parts B and C of the Individuals with Disabilities Education 

Act (IDEA); the Workforce Investment Act (WIA) Youth program; the 

Public Housing Capital Fund; the Transit Capital Assistance Program, and 

the Weatherization Assistance Program. We also reviewed how Recovery 

Act funds are being used by states to stabilize their budgets. In addition, 

we analyzed www.recovery.gov data on federal spending. 

Medicaid Federal Medical 

Assistance Percentage 

For the increased FMAP grant awards, we obtained increased FMAP draw 

down figures for each state in our sample and the District from the 

Centers for Medicare & Medicaid Services (CMS). To examine Medicaid 

enrollment, changes to states’ Medicaid programs, states’ efforts to comply 

with the provisions of the Recovery Act, and related information, we relied 

on our web-based inquiry, asking the 16 states and the District to provide 

new information as well as to update information they had previously 

provided to us. We also spoke with CMS officials regarding CMS oversight 

of increased FMAP grant awards and funds drawn down by states, and 

guidance to states on Recovery Act provisions. 

Federal-Aid Highway 

Surface Transportation 

Program 

For highway infrastructure investment, we reviewed status reports and 

guidance to the states and discussed these with the U.S. Department of 

Transportation (DOT) and Federal Highway Administration (FHWA) 

officials. We obtained data from FHWA on obligations, reimbursements, 

and types of projects funded with Recovery Act highway infrastructure 

funds nationally and for the District and each of the 16 states selected for 

our last Recovery Act report. From state DOT officials, we obtained 

information on the status of projects and contracts, including the number 

of projects planned, out for bid, awarded and completed. We interviewed 

contracting and state highway officials for two highway projects in each 

selected state, and collected information to assess how states manage and 

oversee the significant additional amounts of funding they receive for 

Recovery Act projects. 

We interviewed officials from departments of transportation and 

metropolitan planning organizations in four states—Arizona, 

Massachusetts, New Jersey, and Ohio—to determine what plans the states 

have for using Recovery Act funds in metropolitan areas. We selected 

these four states because they had the lowest obligation rates for 

suballocated areas among the states we reviewed. To obtain information 

on the designation of Economically Distressed Areas, we interviewed 

officials from the U.S. Department of Transportation and the Economic 

Page 139 GAO-09-1016 Recovery Act
Appendix I: Objectives, Scope, and 

Methodology 

Development Administration (EDA) within the U.S. Department of 

Commerce. 

SFSF, ESEA Title I, and 

IDEA 

To understand how the U.S. Department of Education (Education) is 

implementing SFSF, ESEA Title I, and IDEA under the Recovery Act and 

monitoring states’ use of Recovery Act funds, we reviewed relevant laws, 

guidance, and communications to the states and interviewed Education 

officials. For SFSF, Title I, and IDEA, we obtained data from Education on 

the amount of funds made available to the 16 states and the District of 

Columbia covered by our review and the amount of funds these states 

have drawn down from their accounts with Education. Also, from these 

states we obtained data on local education agencies’ (LEAs) expenditures 

of SFSF, Title I, and IDEA Recovery Act funds. To learn about 

expenditures of SFSF funds by institutions of higher education (IHEs), we 

obtained expenditure data from 6 states covered by our review— Arizona, 

Colorado, Illinois, Iowa, North Carolina, and Ohio. We reviewed relevant 

documents, spoke with state officials, or visited local areas to learn about 

specific issues related to Recovery Act funds for education programs in 

Arizona, California, Colorado, the District of Columbia, Illinois, Iowa, 

Massachusetts, Mississippi, New Jersey, North Carolina, and Ohio. 

WIA We reviewed the Recovery Act-funded WIA Youth program in 10 of our 16 

states (California, Florida, Georgia, Illinois, Massachusetts, Michigan, New 

York, Ohio, Pennsylvania, and Texas). We primarily focused on the results 

of local efforts to provide summer youth employment activities. To learn 

about program implementation and operation, the use and oversight of 

funds, and the challenges faced, we interviewed local workforce 

development officials in all 10 states for a total of 21 local areas. We also 

designed and implemented an email survey to gather information about 

state expenditures and spending targets, the number of expected and 

actual participants and their characteristics, monitoring activities and 

safeguards, and the measurement of post-program outcomes related to 

WIA summer youth work activities. We sent our survey to state workforce 

development officials in all 10 states and achieved a 100 percent response 

rate. We obtained and reviewed state portions of monitoring plans. We 

also reviewed relevant documents obtained from state and local officials. 

In addition, we supplemented our work in the 10 states by analyzing 

national data on the characteristics of youth participating in Recovery Actfunded WIA youth activities and the extent to which funds have been 

drawn down. We also reviewed Labor’s guidance to states and local areas 

on Recovery Act funds. 

Page 140 GAO-09-1016 Recovery Act
Appendix I: Objectives, Scope, and 

Methodology 

Public Housing Capital 

Fund 

For Public Housing, we obtained data from HUD’s Electronic Line of 

Credit Control System (ELOCCS) on the amount of Recovery Act funds 

that have been obligated and drawn down by each housing agency in the 

country, and calculated rates of obligating and drawing down funds using 

these data. We reviewed statements made by officials at selected housing 

agencies during earlier interviews with GAO and the plans for Recovery 

Act funds submitted to HUD by selected housing agencies in order to 

understand the nature of Recovery Act projects and to help explain 

patterns in rates of obligating and drawing down Recovery Act funds. To 

obtain the current status of HUD’s Capital Fund Recovery Competition, we 

interviewed agency officials and analyzed data on number of applications 

available on HUD’s web site. We also reviewed agency documents, laws, 

and regulations applicable to the competition. To learn about HUD’s 

initiatives on recipient reporting, we interviewed knowledgeable officials 

about the Department’s plans to develop reporting solutions to enable 

Recovery Act grant recipients to meet the requirements of the law. To gain 

knowledge of reporting requirements, we reviewed relevant 

documentation on recipient reporting from the Office of Management and 

Budget. We also interviewed officials from public housing industry groups 

to get their views on the competitive grant application process and the 

recipient reporting requirements. We obtained information from HUD’s 

Monitoring and Planning System (MAPS) as of June 10, 2009 to identify 

housing agencies with open Single Audit findings and determine the 

amount of Recovery Act funds that have been allocated to such housing 

agencies. We also interviewed HUD officials to understand their 

procedures for monitoring housing agency use of Recovery Act funds and 

identify specific actions that are being taken to close open findings. 

We assessed the reliability of the data by (1) interviewing agency officials 

knowledgeable about the data, and (2) examining data elements used in 

our work by comparing actual with anticipated values and with published 

data. For the ELOCCS data, we obtained explanations on inconsistencies 

we found in the data from agency officials. For the MAPS data, we 

obtained written explanations of the procedures HUD undertakes to 

determine the accuracy of the data. We determined that the data were 

sufficiently reliable for the purposes of this report. 

Transit Capital Assistance 

Program 

For Recovery Act public transit investment, we focused on the Federal 

Transit Administration’s (FTA) Transit Capital Assistance Program. Based 

on Recovery Act funds apportioned to urbanized and nonurbanized areas, 

we chose to focus our work on a geographically dispersed mix of 

urbanized and nonurbanized areas in eight states—California, Colorado, 

Page 141 GAO-09-1016 Recovery Act
Appendix I: Objectives, Scope, and 

Methodology 

Georgia, Illinois, Massachusetts, New Jersey, New York, and 

Pennsylvania—and the District of Columbia. We reviewed status reports 

and guidance to the states and discussed these with U.S. Department of 

Transportation (DOT) and FTA officials. To determine the current status 

of transit funding, we obtained data from FTA on obligations and 

unobligated balances for Recovery Act grants nationally and for each of 

our selected urbanized and nonurbanized areas, and the numbers and 

types of projects funded. We reviewed information from selected 

urbanized and nonurbanized areas to include how projects were chosen, 

how funds were used and how progress was reported and we compared 

that to project schedules and milestones, when available. To determine 

how transit agencies and states are ensuring the accountability of funds 

and addressing reporting requirements, we reviewed the guidance each 

state uses to meet reporting requirements, including reporting on project 

status, subcontracts and estimated jobs created. 

Weatherization Assistance 

Program 

For the Weatherization Assistance Program, we reviewed relevant 

regulations and federal guidance and interviewed Department of Energy 

officials who administer the program at the federal level. We also 

coordinated activities with officials from the Department’s Office of 

Inspector General. In addition, we collected information from 14 states. 

We conducted semi-structured interviews of officials in the states’ energy 

agencies that administer the weatherization program. We collected data 

about each state’s total allocation for weatherization under the Recovery 

Act, as well as the allocation already provided to the states. We asked DOE 

officials about the status of state energy plan reviews and met with 

Department of Labor officials to discuss the status of their prevailing wage 

survey for weatherization workers. Finally, we reviewed the state 

weatherization plans to determine how each state intends to allocate their 

funds and the outcomes they expect. 

State Budget Stabilization To further understand how states and the District continue to use 

Recovery Act funds to stabilize government budgets we reviewed enacted 

and proposed state budgets and revenue estimates for state fiscal years 

2008-2009 and 2009-2010. We interviewed state budget and legislative 

officials to determine how states are using Recovery Act funds to avoid 

reductions in essential services, using “rainy day” funds, closing budget 

gaps and developing exit strategies to plan for the end of Recovery Act 

funding. In addition, we interviewed state and federal officials and 

analyzed relevant federal guidance to determine how states and the 

Page 142 GAO-09-1016 Recovery Act
Appendix I: Objectives, Scope, and 

Methodology 

District are recouping Recovery Act centralized administrative overhead 

costs. 

Assessing Safeguards and 

Internal Controls 

To determine how states are planning for the recipient reporting 

requirements of the Recovery Act, the teams for the 16 states and the 

District asked cognizant officials to describe the responsibility for 

recipient reporting, guidance that has been issued to state agencies and 

subrecipients, monitoring plans, and policies and procedures that have 

been developed for recipient reporting. We also reviewed relevant 

recipient reporting guidance issued by OMB. For single audit, we reviewed 

the OMB guidance and discussed with relevant OMB staff the Single Audit 

reports and guidance. We also discussed Single Audit risks and review of 

early design of internal control with State Auditors. In addition, we 

analyzed how OMB was addressing the recommendations related to the 

Single Audit in the April and July 2009 Recovery Act reports. 

We collected funding data from www.recovery.gov and federal agencies 

administering Recovery Act programs for the purpose of providing 

background information. We used funding data from www.recovery.gov—

which is overseen by the Recovery Accountability and Transparency 

Board—because it is the official source for Recovery Act spending 

information. We collected data on states’ and localities’ uses and tracking 

of Recovery Act funds during interviews and follow-up meetings with state 

officials. Based on our limited examination of this information thus far, we 

consider these data sufficiently reliable with attribution to official sources 

for the purposes of providing background information on Recovery Act 

funding for this report. Our sample of selected states and localities is not a 

random selection and therefore cannot be generalized to the total 

population of state and local governments. 

Data and Data 

Reliability 

We conducted this performance audit from July 3rd, 2009, to September 

18th, 2009, in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives. 

Page 143 GAO-09-1016 Recovery Act
Appendix II: Comments from the Department 

of Labor 

Page 144 GAO-09-1016 

Appendix II: Comments from the Department 

of Labor 

Recovery Act
Appendix II: Comments from the Department 

of Labor 

Page 145 GAO-09-1016 Recovery Act
Appendix II: Comments from the Department 

of Labor 

Page 146 GAO-09-1016 Recovery Act
Appendix III: Local Entities Visited by GAO in Appendix III: Local Entities Visited by GAO in Selected States and the District of Columbia 

Selected States and the District of Columbia 

Table 19: Location of Highway Projects Visited by GAO 

States and the 

District of Columbia City/location Name 

Florida Chipley Florida Department of Transportation 

Lake City Florida Department of Transportation 

Georgia Atlanta Georgia Department of Transportation 

Lawrenceville Gwinnett County Department of Transportation 

Illinois Chicago Chicago Department of Transportation 

Grundy County Illinois Department of Transportation 

Atlantic Cass County Engineer’s Office 

Council Bluffs Iowa Department of Transportation-District 4 

Des Moines Polk County Public Works Department 

Iowa 

Sioux City Iowa Department of Transportation-District 3 

Massachusetts Boston Boston Region Metropolitan Planning Organization 

Taunton Southeastern Massachusetts Metropolitan Planning Organization 

Michigan Flint Genesee County Road Commission 

Covington US 49 from N of Seminary 

Gulfport Gulf Regional Planning Commission 

Hattiesburg Hattiesburg-Petal-Forrest-Lamar Metropolitan Planning Organization 

Jackson Central Mississippi Planning and Development District 

Panola Benson-Herron Road Bridge Reconstruction 

Mississippi 

Panola Mt. Level Road Bridge Reconstruction 

New York Albany Albany County 

Between the Town of Verona 

and the City of Rome 

Oneida County 

Edenton North Carolina Department of Transportation Highway Division 1 

Raleigh Federal Highway Administration-North Carolina Division 

Raleigh North Carolina Department of Transportation 

North Carolina 

Wilson North Carolina Department of Transportation Highway Division 4 

Cincinnati Ohio-Kentucky-Indiana Regional Council of Governments (OKI) 

Cleveland Northeast Ohio Areawide Coordinating Agency (NOACA) 

Columbus Mid-Ohio Regional Planning Commission (MORPC) 

Ohio 

Dayton Miami Valley Regional Planning Commission (MVRPC) 

Pennsylvania Bedford Bedford County 

Chester Chester County 

Source: GAO. 

Page 147 GAO-09-1016 Recovery Act
Appendix III: Local Entities Visited by GAO in 

Selected States and the District of Columbia 

Table 20: Location of Transit Projects Visited by GAO 

States and the 

District of Columbia City/county Name 

California Los Angeles Los Angeles County Metropolitan Transportation Authority 

Los Angeles Southern California Association of Governments 

Orange Orange County Transportation Authority 

Stockton San Joaquin Council of Governments 

Stockton San Joaquin Regional Rail Commission 

Stockton San Joaquin Regional Transit District 

Colorado Denver RTD-Denver 

Summit County Summit Stage 

Georgia Atlanta Metropolitan Atlanta Rapid Transit Authority (MARTA) 

Lawrenceville Gwinnett County Transit 

Illinois Chicago Chicago Metropolitan Agency For Planning 

Chicago Chicago Transit Authority 

Chicago Metra 

Massachusetts Boston Massachusetts Bay Transportation Authority 

Springfield Valley Transit Authority 

New York Fort Edward Adirondack/Glens Falls Transportation Council 

New York Metropolitan Transportation Authority 

New York New York Metropolitan Transportation Council 

Queensbury Greater Glens Falls Transit 

Pennsylvania Butler Butler Transit Authority 

Philadelphia Delaware Valley Regional Planning Commission 

Philadelphia Southeastern Pennsylvania Transportation Authority 

Pittsburgh Port Authority of Allegheny County 

Pittsburgh Southwestern Pennsylvania Commission 

Source: GAO. 

Page 148 GAO-09-1016 Recovery Act
Appendix III: Local Entities Visited by GAO in 

Selected States and the District of Columbia 

Table 21: Educational Institutions Visited by GAO (to Review Use of State Fiscal Stabilization Fund) 

States and the 

District of Columbia City Name 

Arizona Tempe Arizona State University 

Tempe Maricopa Community College 

Washington District of Columbia Public Schools 

Washington Friendship Public Charter School 

District of Columbia 

Washington William E. Doar, Jr. Public Charter School 

Iowa Ames Iowa State University 

Creston Southwestern Community College 

North Carolina Hertford Perquimans County Schools 

Lincolnton Lincoln County Schools 

Ohio Wilberforce Central State University 

Source: GAO. 

Table 22: School Districts Visited by GAO (Local School Districts: Title I-LEA, IDEA) 

States and the 

District of Columbia City Name 

Washington District of Columbia Public Schools 

Washington Friendship Public Charter School 

District of Columbia 

Washington William E. Doar, Jr. Public Charter School 

Illinois Chicago Chicago Public Schools 

Detroit Detroit Federation of Teachers 

Detroit Detroit Public Schools 

Lansing MI Association of School Boards 

Lansing MI Education Association 

Michigan 

Wayne Wayne County Regional Educational Service Agency 

Brandon Rankin County Public Schools 

Greenville Greenville Public Schools 

Mississippi 

Jackson Jackson Public School District 

Source: GAO. 

Page 149 GAO-09-1016 Recovery Act
Appendix III: Local Entities Visited by GAO in 

Selected States and the District of Columbia 

Table 23: Workforce Investment Act Youth Programs Visited by GAO 

States and the 

District of Columbia City/county Name 

Los Angeles Boyle Heights Technology Youth Center 

Los Angeles Clean & Green 

Los Angeles Los Angeles Community Development Department 

Los Angeles LA Conservation Corps 

Los Angeles Million Trees LA 

San Francisco African American Art & Culture Complex 

San Francisco Bayview Opera House/Urban YMCA 

San Francisco Larkin Street Youth Services 

San Francisco San Francisco Office of Economic and Workforce Development 

San Francisco TJ Maxx 

California 

San Francisco Vietnamese Youth Development Center 

Florida Broward Workforce One, Employment Solutions 

Hillsborough Tampa Bay WorkForce Alliance 

Atlanta Atlanta Regional Workforce Board 

Atlanta Ashton Staffing, Inc 

Augusta Richmond/Burke Job Training Authority, Inc 

Duluth CorVel Healthcare Corporation 

Riverdale Hearts to Nourish Hope 

Savannah Coastal Workforce Services 

Savannah The Paxen Group 

Savannah Savannah Impact Program 

Georgia 

Savannah Telamon Corporation 

Chicago Central States Ser -Jobs for Progress, Inc. 

Chicago Chicago Department of Family Support Services 

Chicago Chicago Workforce Board 

Chicago Museum of Science and Industry 

Kankakee Community Foundation of Kankakee River Valley 

Kankakee Grundy-Livingston-Kankakee Workforce Board 

Kankakee Kankakee Community College 

Illinois 

Kankakee Kankakee Community Resource Center 

Massachusetts Lawrence Merrimack Valley Workforce Investment Board 

Worcester Central Massachusetts Regional Employment Board 

Detroit CVS/pharmacy 

Detroit Detroit Workforce Development Department 

Michigan 

Detroit Young Detroiter Magazine 

Page 150 GAO-09-1016 Recovery Act
Appendix III: Local Entities Visited by GAO in 

Selected States and the District of Columbia 

States and the 

District of Columbia City/county Name 

Lansing Eaglevison Ministries 

Lansing Inghan County School Districts 

Lansing Sparrow Health System 

Lansing Spartan Internet Consulting Corporation 

Rome Resource Center for Independent Living 

Utica Oneida County Workforce Development 

Utica Mohawk Valley Community College 

New York 

Utica Utica Municipal Housing Authority 

Columbus The Center for Automotive Research (CAR) 

Columbus Central Ohio Workforce Investment Corporation (COWIC) 

Columbus Centro Esperanza Latina 

Columbus Columbus State Community College Center for Workforce Development 

Columbus Godman Guild Association 

Columbus The Publishing Group Ltd. 

Dayton Allstate Insurance Company 

Dayton Area 7 Workforce Investment Board 

Dayon Encore Consignments & More 

Dayton Montgomery County Department of Job and Family Services (MCDJFS) 

Ohio 

Marysville Union County Department of Job and Family Services 

Pennsylvania Harrisburg South Central Workforce Investment Board 

Philadelphia Philadelphia Workforce Investment Board 

Texas Arlington North Central Workforce Development Board 

Houston Gulf Coast Workforce Development Board 

Source: GAO. 

Table 24: Weatherization Programs Visited by GAO 

States and the 

District of Columbia City Name 

Flagstaff Northern Arizona Council of Governments (NACOG) 

Phoenix Arizona Department of Commerce (ADOC) Energy Office 

Phoenix City of Phoenix, Neighborhood Services Department 

Arizona 

Phoenix FSL Home Improvements Southwest Building Science Training Center 

Colorado Denver Arapahoe County 

Grand Junction Housing Resources of Western Colorado 

Florida Live Oak Suwannee River Economic Council, Inc. 

Page 151 GAO-09-1016 Recovery Act
Appendix III: Local Entities Visited by GAO in 

Selected States and the District of Columbia 

States and the 

District of Columbia City Name 

Iowa Des Moines Polk County Public Works Department 

Harlan West Central Community Action Agency 

D’Lo South Central Community Action Agency 

Greenville Warren Washington Issaquena Sharkey Community Action Agency 

Jackson Mississippi Department of Human Services - Division of Community 

Services 

Jackson Mississippi Department of Human Services - Division of Program Integrity 

Mississippi 

Meridian Multi-County Community Service Agency 

North Carolina Raleigh Department of Health and Human Services Office of Economic 

Opportunity 

New Jersey Burlington Burlington County Community Action Program 

Trenton New Jersey Housing Mortgage and Finance Agency 

New York Centereach Community Development Corporation of Long Island 

Syracuse People’s Equal Action and Community Effort, Inc. 

Ohio Columbus Mid-Ohio Regional Planning Commission (MORPC) 

Dayton Community Action Partnership of the Greater Dayton Area 

Source: GAO. 

Table 25: Localities Visited by GAO to Assess Other Recovery Act Programs and Issues 

States and the 

District of Columbia City Name 

District of Columbia Washington District of Columbia Housing Authority 

Michigan Flint City of Flint 

Bethel Bethel 

Hendersonville Hendersonville 

Raleigh North Carolina Office of Economic Recovery and Investment 

Williamston Williamston 

North Carolina 

Woodfin Woodfin 

Source: GAO. 

Page 152 GAO-09-1016 Recovery Act
Appendix IV: 

A

GAO Contacts and Staff 

cknowledgments 

Page 153 GAO-09-1016 

Appendix IV: GAO Contacts and Staff 

Acknowledgments 

J. Christopher Mihm, Managing Director for Strategic Issues, (202) 512-

6806 or mihmj@gao.gov

For issues related to WIA, SFSF, and other education programs: Cynthia 

Fagnoni, Managing Director of Education, Workforce, and Income 

Security, (202) 512-7215 or fagnonic@gao.gov

For issues related to Medicaid programs: Dr. Marjorie Kanof, Managing 

Director of Health Care, (202) 512-7114 or kanofm@gao.gov

For issues related to highways, transit, and other transportation programs: 

Katherine A. Siggerud, Managing Director of Physical Infrastructure, (202) 

512-2834 or siggerudk@gao.gov

For issues related to energy and weatherization: Patricia Dalton, Managing 

Director of Natural Resources and Environment, (202) 512- 3841 or 

daltonp@gao.gov

For issues related to public housing: Richard J. Hillman, Managing 

Director of Financial Markets and Community Investment, (202) 512-9073 

or hillmanr@gao.gov

For issues related to internal controls and Single Audits: Jeanette Franzel, 

Managing Director of Financial Management and Assurance, (202) 512-

9471 or franzelj@gao.gov

For issues related to contracting and procurement: Paul Francis, Managing 

Director of Acquisition Sourcing Management, (202) 512-2811 or 

francisp@gao.gov

The following staff contributed to this report: Stanley Czerwinski, Denise 

Fantone, Susan Irving, and Yvonne Jones, (Directors); Thomas James, 

James McTigue, and Michelle Sager, (Assistant Directors); Sandra Beattie 

(Analyst-in-Charge); and Allison Abrams, David Alexander, Judith 

Ambrose, Peter Anderson, Lydia Araya, Darreisha Bates, Thomas Beall, 

Jessica Botsford, Anthony Bova, Cheron Brooks, Karen Burke, Richard 

Cambosos, Ralph Campbell Jr., Virginia Chanley, Tina Cheng, Marcus 

Corbin, Sarah Cornetto, Robert Cramer, Michael Derr, Helen Desaulniers, 

Ruth “Eli” DeVan, Kevin Dooley, Holly Dye, Abe Dymond, James Fuquay, 

Doreen Feldman, Alice Feldesman, Michele Fejfar, Shannon Finnegan, 

Alexander Galuten, Ellen Grady, Vicky Green, Brandon Haller, Anita 

Hamilton, Geoffrey Hamilton, Jackie Hamilton, Tracy Harris, Barbara 

GAO Contacts 

Staff 

Acknowledgments 

Recovery Act
Appendix IV: GAO Contacts and Staff 

Acknowledgments 

Hills, David Hooper, Bert Japikse, Stuart Kaufman, Karen Keegan, Nancy 

Kingsbury, Judith Kordahl, Hannah Laufe, Jean K. Lee, Amertha Liles, John 

McGrail, Sarah McGrath, Jean McSween, Donna Miller, Kevin Milne, Marc 

Molino, Susan Offutt, Josh Ormond, Sarah Prendergast, Brenda 

Rabinowitz, Carl Ramirez, James Rebbe, Aubrey Ruge, Sidney Schwartz, 

Jeremy Sebest, Jena Sinkfield, John Smale Jr., Kathryn Smith, Michael 

Springer, George Stalcup, Jonathan Stehle, Andrew J. Stephens, Gloria 

Sutton, Barbara Timmerman, Crystal Wesco, and Kimberly Young. 

The names of GAO staff contributing to information contained in the 

sections on the selected program are as follows: Program Contributors 

Education—SFSF, IDEA, Title I Cornelia M. Ashby, Ed Bodine, Amy Buck, William Colvin, 

Rachel Frisk, Bryon Gordon, Sonya Harmeyer, Jason Palmer, 

Kathy Peyman, Michelle Verbrugge, Charles Willson, Jean 

McSween, Doreen S. Feldman, Alex Galuten, and James M. 

Rebbe 

Medicaid Susan Anthony, Emily Beller, Ted Burik, Julianne Flowers, 

Martha Kelly, JoAnn Martinez, Vic Miller, and Carolyn Yocom 

Public Housing Don Brown, Nina Horowitz, Don Kiggins, May Lee, John Lord, 

Paul Schmidt, and Matt Scire 

Safeguarding/Single Audit Marcia Buchanan, Eric Holbrook, Kim McGatlin, Susan 

Ragland, and Melanie Swift 

State Budget Stabilization Sandra Beattie, Anthony Bova, Stanley J. Czerwinski, Shannon 

Finnegan, Sarah Prendergast, and Michelle Sager. 

Transportation/highway and transit programs A. Nicole Clowers, Steve Cohen, Catherine Colwell, Gary 

Guggolz, Heather Halliwell, Greg Hanna, Delwen Jones, Les 

Locke, Tim Schindler, Raymond Sendejas, Tina Won Sherman, 

and Susan Zimmerman 

Weatherization Ric Cheston, Mark Gaffigan, David Marroni, Angela Miles, 

Stuart Ryba, and Jason Trentacoste 

WIA Summer Youth Program Jamie Allentuck, Dianne Blank, Carolyn Blocker, Edward 

Bodine, Anna Bonelli, Rachael Frisk, Raun Lazier, Claire Li, 

Paul Schearf, and Andy Sherrill 

Page 154 GAO-09-1016 Recovery Act
Appendix IV: GAO Contacts and Staff 

Acknowledgments 

Contributors to the 

Selected States and 

the District 

Appendices 

The names of GAO staff contributing to the selected states and the District 

appendixes are as follows: 

Arizona Rebecca Bolnick, Lisa Brownson, Aisha Cabrer, Steven Calvo, Charles Jeszeck, Eileen Larence, 

Steven Rabinowitz, Jeff Schmerling, and Ann Walker 

California Paul Aussendorf, Linda Calbom, Joonho Choi, Michelle Everett, Chad Gorman, Richard Griswold, Don 

Hunts, Delwen Jones, Al Larpenteur, Susan Lawless, Brooke Leary, Heather MacLeod, Eddie 

Uyekawa, Lacy Vong, and Randy Williamson 

Colorado Paul Begnaud, Steve Gaty, Kathy Hale, Susan Iott, Jennifer Leone, Brian Lepore, Robin Nazarro, Tony 

Padilla, Lesley Rinner, Kay Harnish-Ladd, Kathleen Richardson, and Mary Welch 

District of Columbia Laurel Beedon, Sunny Chang, Marisol Cruz, Nagla’a El-Hodiri, John Hansen, William O. Jenkins, Jr., 

Linda Miller, Justin Monroe, Melissa Schermerhorn, Mark Tremba, and Carolyn Yocom 

Florida Amy Anderson, Susan Ashoff, Fannie Bivins, Patrick di Battista, Rachel Frisk, Lisa Galvan-Trevino, 

Kevin Kumanga, Frank Minore, Brenda Ross, Cherie’ Starck, and James Whitcomb 

Georgia Alicia Puente Cackley, Chase Cook, Nadine Garrick, Erica Harrison, Marc Molino, Daniel Newman, 

Barbara Roesmann, Terri Rivera Russell, Paige Smith, David Shoemaker, and Robyn Trotter 

Illinois Leslie Aronovitz, Cynthia Bascetta, Rick Calhoon, Dean Campbell, Robert Ciszweski, Tarek 

Mahmassani, Paul Schmidt, Roberta Rickey, and Rosemary Torres Lerma 

Iowa Tom Cook, James Cooksey, Dan Egan, Christine Frye, Belva Martin, Marietta Mayfield, Ronald Maxon, 

Mark Ryan, Lisa Shames, and Carol Herrnstadt Shulman 

Massachusetts Stanley J. Czerwinski, Ramona L. Burton, Nancy J. Donovan, Kathleen M. Drennan, Laurie Ekstrand, 

Keith C. O’Brien, Carol Patey, Salvatore F. Sorbello Jr., and Robert Yetvin 

Michigan Manuel Buentello, Leland Cogliani, Ranya Elias, Kevin Finnerty, Jeff Isaacs, Henry Malone, Revae 

Moran, Robert Owens, Susan Ragland, Melanie Swift, and Mark Ward 

Mississippi James Elgas, Barbara Haynes, John K. Needham, Ellen Phelps Ranen, Norman J. Rabkin, Carrie 

Rogers, Erin Stockdale, and Ryan Stott 

New Jersey Gene Aloise, Diana Glod, Tarunkant Mithani, Vincent Morello, Tahra Nichols, Nitin Rao, Raymond 

Sendejas, Gary Shepard, Cheri Truett, and David Wise 

New York Jeremiah Donoghue, Colin Fallon, Christopher Farrell, Susan Fleming, Emily Larson, Dave Maurer, 

Tiffany Mostert, Summer Pachman, Frank Puttallaz, Barbara Shields, Ronald Stouffer, and Yee Wong 

North Carolina Cornelia Ashby, Sandra Baxter, Carleen Bennett, Bonnie Derby, Terrell Dorn, Steve Fox, Bryon 

Gordon, Fred Harrison, Leslie Locke, Stephanie Moriarty, Anthony Patterson, and Scott Spicer 

Ohio William Bricking, Matthew Drerup, Cynthia M. Fagnoni, Laura Jezewski, Bill J. Keller, Sanford Reigle, 

David C. Trimble, Myra Watts Butler, Lindsay Welter, Charles Willson, and Doris Yanger 

Pennsylvania Waylon Catrett, Mark Gaffigan, Brian Hartman, John Healey, Phillip Herr, Richard Jorgenson, Richard 

Mayfield, Andrea E. Richardson, MaryLynn Sergent, and Laurie F. Thurber 

Texas Carol Anderson-Guthrie, Fred Berry, Ron Berteotti, Victoria De Leon, Wendy Dye, K. Eric Essig, Ken 

Howard, Michael O’Neill, Daniel Silva , and Lorelei St. James 

Page 155 GAO-09-1016 Recovery Act (450780) 
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E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470 

Ralph Dawn, Managing Director, dawnr@gao.gov, (202) 512-4400 

U.S. Government Accountability Office, 441 G Street NW, Room 7125 

Washington, DC 20548 

To Report Fraud, 

Waste, and Abuse in 

Federal Programs 

Congressional 

Relations 

Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800 

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, DC 20548 

Public Affairs 

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