Recovery Act: Funding Used for Transportation Infrastructure Projects, but Some Requirements Proved Challenging
Published: 2011-06-29T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: This report responds to two GAO mandates under the American Recovery and Reinvestment Act of 2009 (Recovery Act). It is the latest report on the uses of and accountability for Recovery Act funds in selected states and localities, focusing on the $48.1 billion provided to the Department of Transportation (DOT) to invest in transportation infrastructure. This report also examines the quality of recipients' reports about the jobs created and retained with Recovery Act transportation funds. This report addresses the (1) status, use, and outcomes of Recovery Act transportation funding nationwide and in selected states; (2) actions taken by federal, state, and other agencies to monitor and ensure accountability for those funds; (3) changes in the quality of jobs data reported by Recovery Act recipients of transportation funds over time; and (4) challenges faced and lessons learned from DOT and recipients. GAO analyzed DOT and recipient reported data; reviewed federal legislation, guidance, and reports; reviewed prior work and other studies; and interviewed DOT, state, and local officials.
section_title: What GAO Found
paragraphs: As of May 31, 2011, nearly $45 billion (about 95 percent) of Recovery Act transportation funds had been obligated for over 15,000 projects nationwide, and more than $28 billion had been expended. Recipients continue to report using Recovery Act funds to improve the nation's transportation infrastructure. Highway funds have been primarily used for pavement improvement projects, and transit funds have been primarily used to upgrade transit facilities and purchase buses. Recovery Act funds have also been used to rehabilitate airport runways and improve Amtrak's infrastructure. The Recovery Act helped fund transportation jobs, but long-term benefits are unclear. For example, according to recipient reported data, transportation projects supported between approximately 31,460 and 65,110 full-time equivalents (FTE) quarterly from October 2009 through March 2011. Officials reported other benefits, including improved coordination among federal, state, and local officials. However, the impact of Recovery Act investments in transportation is unknown, and GAO has recommended that DOT determine the data needed to assess the impact of these investments. Federal, state, and local oversight entities continue their efforts to ensure the appropriate use of Recovery Act transportation funds, and recent reviews revealed no major concerns. The DOT Inspector General found that DOT generally complied with Recovery Act aviation, highway, and rail program requirements. Similarly, state and local oversight entities' performance reviews and audits generally did not find problems with the use of Recovery Act transportation funds. GAO's analysis of Recovery.gov data reported by transportation grant recipients showed that the number of FTEs reported, number of recipients filing reports, and portion of recipients reporting any FTEs decreased over the past two reporting quarters as an increasing number of projects approached completion or were awaiting financial closeout. The Federal Highway Administration performs automated checks to help ensure the validity of recipient reported data and observed fewer data quality issues than in previous quarters but does not plan to use the data internally. Certain Recovery Act provisions proved challenging. For example, DOT and states faced numerous challenges in implementing the maintenance-of-effort requirement, which required states to maintain their planned level of spending or be ineligible to participate in the August 2011 redistribution of obligation authority under the Federal-Aid Highway Program. In January 2011, DOT reported that 29 states met the requirement while 21 states did not because of reductions in dedicated revenues for transportation, among other reasons. The economically distressed area provision also proved difficult to implement because of changing economic conditions. With regard to the high speed intercity passenger rail and Transportation Investment Generating Economic Recovery (TIGER) grant programs, GAO found that while DOT generally followed recommended grant-making practices, DOT could have better documented its award decisions. GAO updates the status of agencies' efforts to implement its previous recommendations but is making no new recommendations in this report. DOT officials generally agreed with GAO's findings and provided technical comments, which were incorporated as appropriate.

section_title: Letter
paragraphs: The nation’s transportation infrastructure plays a vital role in U.S.  economic activity. In response to what is generally believed to be the  country’s worst economic downturn since the Great Depression, Congress  enacted the American Recovery and Reinvestment Act of 2009 (Recovery  Act). The Recovery Act seeks to, among other things, preserve and create  jobs, promote economic recovery, and invest in transportation and other  infrastructure to provide long-term economic benefits. We have noted  that, given the nation’s long-term fiscal challenges, an economic stimulus  package should be timely, targeted, and temporary. The Recovery Act  provided more than $48 billion for transportation investments in early  2009 and stipulated that most funds be obligated by September 30, 2010.  The act targeted the majority of those funds to be channeled through  existing aviation, highway, rail, and transit programs. Some funds were  provided for newly funded competitive grant programs, including the  Federal Railroad Administration’s (FRA) high speed intercity passenger  rail program and the Transportation Investment Generating Economic  Recovery (TIGER) grant program, which is administered by the Office of  the Secretary of Transportation.
The Recovery Act requires that we conduct bimonthly reviews of how  Recovery Act funds are being used by selected states and localities. The  Recovery Act also requires us to report and comment quarterly on  estimates of job creation and retention as reported by recipients. In this  report, we focus on the use of transportation funds and the quality of  recipient reports. Specifically, we examined the (1) status, use, and  outcomes of Recovery Act transportation funding nationwide and in  selected states; (2) actions taken by federal, state, and other agencies to  monitor and ensure accountability of Recovery Act transportation funds;  (3) changes in the quality of jobs data reported by Recovery Act recipients  of transportation funds over time; and (4) challenges faced and lessons  learned from the Department of Transportation (DOT) and recipients. To  address these objectives, we reviewed relevant federal laws and  regulations, and federal agency guidance. We also analyzed DOT data on  Recovery Act programs and expenditures as of May 31, 2011, and  determined that the data were sufficiently reliable for our purposes. We  interviewed program officials in DOT’s Federal Aviation Administration  (FAA), Federal Highway Administration (FHWA), Federal Transit  Administration (FTA), and Maritime Administration (MARAD), and we  drew on two of our recent reports that discuss the high speed intercity  passenger rail and TIGER grant programs. We also conducted interviews  with FHWA division offices and state officials, including representatives of  state audit agencies, in California, Indiana, Massachusetts, Texas, Virginia,  and Washington. We visited Recovery Act-funded projects in selected  states. We chose these states based on a number of criteria, including  whether we had followed them in our prior Recovery Act work, the total  Recovery Act highway funding apportioned to those states, the average  obligation amount per highway project, as well as highway project status  in those states, and geographic dispersion. During meetings with federal,  state, and local officials, we discussed expected outcomes from the  expenditure of Recovery Act funds, and challenges and lessons learned  based on their experiences implementing the Recovery Act. In addition,  we assessed Recovery Act transportation grantees’ recipient reports for  the quarter ending March 31, 2011, for completeness and accuracy and  found them sufficiently reliable for the purposes of this report. We also  analyzed those transportation grantees’ reported full-time equivalent  (FTE) jobs data from October 1, 2009, through March 31, 2011. See  appendix I for more information on our scope and methodology.
Our oversight of programs funded by the Recovery Act has resulted in  more than 100 related products with numerous recommendations since we  began reporting on the Recovery Act. This report updates agency actions  in response to recommendations from previous bimonthly and recipient  reporting reviews that have not been fully implemented (referred to as  open recommendations), including our prior recommendations regarding  the use of Recovery Act transportation funds (see app. II).
We conducted this work from September 2010 through June 2011, in  accordance with generally accepted government auditing standards. Those  standards require that we plan and perform the audit to obtain sufficient,  appropriate evidence to provide a reasonable basis for our findings and  conclusions based on our audit objectives. We believe that the evidence  obtained provides a reasonable basis for our findings and conclusions  based on our audit objectives.
subsections: section_title: Background
paragraphs: The vast majority of the Recovery Act funding for transportation programs  went to FHWA, FRA, and FTA for highway, road, bridge, rail, and transit  projects. More than half of all Recovery Act transportation funds were  designated for the construction, rehabilitation, and repair of highways,  roads, and bridges (see fig. 1). The remaining funds were allocated among  other DOT operating administrations.
DOT administered most Recovery Act funds through existing transportation  programs. For example, highway funds were distributed under rules  governing the Federal-Aid Highway Program generally and the Surface  Transportation Program in particular. As a result, officials at state  departments of transportation were familiar with project eligibility and  other federal requirements. Similarly, transit funds were primarily  distributed through established transit programs, and project sponsors  (typically transit agencies) were familiar with federal grant application  processes. FAA distributed airport funds through the established Airport  Improvement Program structure, and MARAD awarded grants through its  existing Assistance to Small Shipyards Program. DOT established new grant  processes to award high speed intercity passenger rail and TIGER grants.  For these programs, DOT published selection criteria, solicited and  reviewed applications, and awarded grants to applicants that it judged best  met the criteria and complied with legislative and regulatory requirements.
The Recovery Act provided 100 percent federal funding for most  programs, which is a departure from the typical federally funded  transportation programs. On the other hand, the Recovery Act did not  alter the 75 percent of project cost the federal government would typically  pay under the Assistance to Small Shipyards program administered by  MARAD.
The Recovery Act also included short deadlines for obligating most  transportation funds, and it required preference be given to projects that  could be started and completed expeditiously. Obligating funds in a timely  manner is an important feature of the Recovery Act, as an economic  stimulus package should, as we have previously reported, include projects  that can be undertaken quickly enough to provide a timely stimulus to the  economy. For example, Recovery Act highway and transit funds were to  be obligated within 1 year of the date of apportionment and highway  projects which could be completed within 3 years were to be given  priority. After the March 2010 1-year obligation deadline for highway  funds, states requested that FHWA deobligate $1.25 million of these funds.  We reported that deobligations from March 2 to June 7, 2010, were  requested primarily because contracts were awarded for less than the  original cost estimates. All of these funds were obligated by the  September 2010 deadline. All TIGER funds must be obligated by  September 30, 2011, and all high speed intercity passenger rail funds must  be obligated by September 30, 2012.
The Recovery Act also introduced new requirements for existing programs  to help ensure that funds add to states’ and localities’ overall economic  activity, and are targeted to areas of greatest need. For example, the  Recovery Act required state governors to certify that their states would  maintain their planned levels of spending for the types of transportation  projects funded by the act, from the date of enactment—February 17,  2009—through September 30, 2010. The Recovery Act also required that  states give priority to highway projects in economically distressed areas.
State and local agencies, contractors, and others that receive Recovery Act  funds are also required to submit quarterly reports on the number of jobs  created or retained, among other data. These job calculations are based on  the total hours worked divided by the number of hours in a full-time  schedule, expressed in FTEs—but they do not account for the total  employment arising from the expenditure of Recovery Act transportation  funds. That is, the data recipients report do not include employment at  suppliers (indirect jobs) or in the local community (induced jobs). In  addition to reporting quarterly on the numbers of jobs created, states and  other recipients are required to submit periodic reports on the amount of  funds obligated and expended and the number of projects put out to bid,  awarded, or for which work has begun or been completed, among other  things. DOT is required to collect and compile this information for its  reports to Congress that began in May 2009. Because it had not previously  collected and reported this type of information, FHWA established the  Recovery Act Data System (RADS) to allow for better oversight and  tracking of Recovery Act transportation projects. FHWA uses RADS to  compile data from states and existing DOT databases and generates reports  to assist states in meeting their Recovery Act reporting requirements.
section_title: Most Recovery Act Transportation Funds Have Been Obligated and Expenditures for Infrastructure Continue to Increase, but Long-Term Outcomes Are Largely Unknown
paragraphs: According to DOT data, as of May 31, 2011, DOT had obligated nearly $45  billion (about 95 percent) on over 15,000 projects and had expended more  than $28 billion (about 63 percent) of the $48.1 billion it received under the  Recovery Act (see table 1). More than 9,200 of the approximately 15,100  transportation projects have been completed, including more than 8,100  highway projects and most of the aviation projects.
The rate of expenditure for Recovery Act transportation funds has varied  among programs and states, for several reasons, according to federal and  state officials:    First, obligation deadlines for newly funded competitive grant programs  such as high speed intercity passenger rail and TIGER are later, so as of  May 31, 2011, a much smaller percentage of those program funds had been  obligated and expended.
Second, as we have previously reported, the obligation and subsequent  expenditure of highway funds suballocated for metropolitan, regional, and  local use have lagged behind rates for state projects in some states. FHWA  data as of May 31, 2011, indicated that this trend continued for  reimbursements in 24 states, including two of the states we visited— Virginia and Texas. According to federal and state transportation officials,  federal reimbursement can only occur after costs are incurred; however,  localities varied in their approach to billing for reimbursement. For  example, in California some localities choose to seek reimbursement for  project costs after project completion in an effort to reduce the  administrative costs of frequent invoicing. In comparison, localities in  Indiana and Washington State bill regularly as expenses are incurred.
Third, according to FHWA and state officials, northern states typically  tend to have a reduced period of construction activity during the winter.
Finally, large or new infrastructure projects may require additional  reviews, such as environmental clearances, prolonging project time  frames.
States and other recipients continue to report using Recovery Act funds to  improve the condition of the nation’s transportation infrastructure, as well  as invest in new infrastructure. For example, according to DOT data, 68  percent of highway funds have been used for pavement improvement  projects, such as resurfacing, reconstruction, and rehabilitation of existing  roadways, and almost 75 percent of transit funds have been used for  upgrading existing facilities and purchasing or rehabilitating buses (see  fig. 2). According to FAA officials, Recovery Act funding was used to  rehabilitate and reconstruct airport runways and taxiways, as well as to  upgrade or purchase air navigation infrastructure such as air traffic  control towers, engine generators, back-up batteries, and circuit breakers.  The Recovery Act grant provided to Amtrak has been used to make  infrastructure improvements and return cars and locomotives to service.
New bridge construction ($0.5 billion)
Operating assistance ($0.2 billion)
Bridge improvement ($1.2 billion)
Rail car purchase and rehab ($0.3 billion)
Bridge replacement ($1.4 billion)
New construction ($1.8 billion)
Preventive maintenance ($0.8 billion)
Other capital expenses ($1.0 billion)
Other ($3.3 billion)
Vehicle purchase and rehab ($2.0 billion)
Pavement widening ($4.7 billion)
Pavement improvement: resurface ($6.1 billion)
Transit infrastructure ($4.5 billion)
Pavement improvement: reconstruction/rehabilitation ($7.1 billion)
The highway category “other” includes safety projects, such as improving safety at railroad grade  crossings, engineering, right-of-way purchases, and transportation enhancement projects, such as  pedestrian and bicycle facilities. Highway data are as of June , 2011.
Transit obligations include Recovery Act funds that were transferred from FHWA to FTA. “Transit  infrastructure” includes engineering and design, acuisition, construction, and rehabilitation and  renovation activities. “Other capital expenses” includes leases, training, finance costs, mobility  management project administration, and other capital programs. Usually, operating assistance is not  an eligible expense for transit agencies within urbanized areas with populations of 200,000 or more.  Most recipients did not use as high a percentage of funds for operating expenses, in part, because  funds had already been obligated to projects before the Supplemental Appropriations Act was  enacted, according to FTA officials. Transit data are as of May 6, 2011.
The high speed intercity passenger rail and TIGER programs were newly  funded grant programs, and the Recovery Act allowed additional time for  DOT to develop criteria, publish notices of funding availability, and award  grants. As a result, projects selected for high speed intercity passenger rail  and TIGER were announced about a year after enactment, and DOT has  been making progress obligating Recovery Act funds for these programs.  For example, DOT selected one intercity passenger rail project to  rehabilitate track and provide service from Portland to Brunswick, Maine,  at speeds up to 70 miles per hour. Another project was selected to initiate  the first part of California’s high speed rail system, which envisions service  at more than 200 miles per hour between Los Angeles, San Francisco, and  the Central Valley, and eventually San Diego. DOT TIGER grants funded  projects across different surface transportation modes, including  highways, transit, rail, and ports. For example, the California Green Trade  Corridor/Marine Highway Project is a collaborative effort of three regional  ports in California to develop and use a marine highway system as an  alternative to existing truck and rail infrastructure for transporting  consumer goods and agricultural products.
According to DOT data, a variety of Recovery Act projects have been  completed. For example, FHWA reported that many of the completed  highway projects involve pavement improvement. Completed transit  projects generally included preventive maintenance activities, some bus  purchases, and facility construction, according to FTA. Amtrak had also  completed a variety of projects, including station upgrades, right-of-way  improvements, communications and signaling systems installations, and  aging bridge replacement projects, among other things. While no high  speed intercity passenger rail projects had been completed as of May 31,  2011, 24 projects were under way, according to FRA. These projects,  which represent more than 70 percent of the allotted funding, include  track and signaling work to improve reliability and increase operating  speeds, improvements to stations, and the environmental analysis and  preliminary engineering required to advance projects to construction.
States we visited provided numerous examples of infrastructure  improvements and other projects funded by the Recovery Act (see fig. 3).
subsections: section_title: The Recovery Act Helped Fund Transportation Jobs, but Long-Term Benefits Are Unclear
paragraphs: Recovery Act funds helped pay for jobs across various transportation  modes. At a time when the construction industry was experiencing  historically high unemployment and many states could not afford to  maintain existing infrastructure, transportation officials we met with told  us that the Recovery Act helped to keep the transportation industry in  operation while allowing states to tackle some of their infrastructure  maintenance priorities. According to data filed by recipients, Recovery  Act transportation projects supported between 31,460 and 65,110 FTEs  each reporting quarter from October 1, 2009, through March 31, 2011.  Recipient-reported FTEs, however, cover only direct jobs funded by the  Recovery Act. They do not include the employment impact of suppliers  (indirect jobs) or on the local community (induced jobs). According to  DOT officials, the full impact on indirect and induced employment is likely  to be significant because of supply chain employment effects. In addition,  a certain amount of a project’s cost is typically for materials and  equipment, and the remainder pays for labor, reported as FTEs.
The number of transportation FTEs reported has declined over the past  two reporting quarters as construction work on projects has been  completed. On average, highway projects accounted for approximately 63  percent of the transportation FTEs reported from October 1, 2009, through  March 31, 2011. Transit and “other” transportation projects accounted for  the remaining approximately 37 percent of transportation FTEs. However,  the relatively low portion of FTEs reported for transportation projects  other than highways and transit may increase in future quarters as more  high speed intercity passenger rail and TIGER projects get under way.  Transportation recipients reported the highest total FTE count during the  quarter ending September 2010, owing to the large number of projects  under way at that time (see fig. 4). During the most recent reporting  quarter, which ended March 31, 2011, the number of transportation FTEs  reported reached its lowest point since recipient reporting began—at  about 31,460.
In addition to the number of jobs funded by Recovery Act transportation  funds, federal, state, and local officials describe the following other benefits   Better coordination and streamlined processes: DOT officials told us tha er at  the Recovery Act encouraged more efficient ways of working togeth the federal, state, and local levels to select projects. According to DOT  officials, the TIGER competitive grant program brought together vario modal operating administrations to evaluate grant applications and  consider multimodal projects. Generally, state officials told us that their  working relationships with FHWA division offices and localities have  improved while implementing Recovery Act programs, as has stat d  localities’ understanding of federal requirements. Some states improvetheir internal operational efficiency, including shortening their project review and approval processes. For example, th Department of Transportation (MassDOT) streamlined its 26-step bid  process from 120 days to 44 days by coordinating the review process  through regular meetings of key stakeholders.
Innovative communication practices: DOT also implemented new ways  to train and communicate with recipients. For instance, FHWA and FTA  have used webinars to distribute guidance and host question-and-answer  sessions to clarify program requirements. Officials said that the systems  they developed to communicate with states have been used to disseminate  guidance to states for non-Recovery Act programs and will continue to be  used in the future.
Accelerated projects that might have otherwise gone unfunded:  Transportation officials in several states we visited told us that Recovery  Act funds helped reduce backlogs of “shovel-ready” projects. For example, California funded its entire list of shovel-ready projects and began wor new construction projects. Other states reported being able to complete  projects that had been planned but lacked sufficient funding. Specifically,  Virginia started construction of an interchange on the Fairfax County  80s  parkway at Fair Lakes—a project that has been planned since the 19 when the parkway was first built; Massachusetts started construction of bike and pedestrian footb Dig project of the 1990s; and Washington State accelerated work to  provide congestion relief on I-405 and extend a high-occupancy-vehicle  lane on I-5 near Tacoma.  ridge that had been promised as part of the Big  However, the long-term impacts of Recovery Act investments in  transportation are unknown at this point. Some states have efforts unde way to report on Recovery Act benefits. For example, in 2011, state  transportation officials in Washington produced a report that document ed  the agency’s progress delivering Recovery Act projects since 2009; the  Texas Department of Transportation commissioned a study by the  University of Texas to assess the Recovery Act impacts; and MassDOT  officials established an Office of Performance Management and Inno to determine program goals; measure program performance against those  goals; and report publicly on progress to improve the effectiveness of  transportation design and construction, service delivery and policy  decision making. However, federal and state officials told us that  attributing transportation benefits to Recovery Act funds can be difficult,  particularly when projects are funded from multiple sources and historic  performance data are not available for particular projects.
We recommended that DOT ensure that the results of Recovery Act  are assessed and a determination is made about whether these projects  produced long-term benefits, but DOT has not committed to assessing the  long-term benefits of Recovery Act investments in transportation.  Specifically, in the near term, we recommended that FHWA and FTA  determine the types of data and performance measures needed to assess the impact of the Recovery Act and the specific authority they may need to  collect data and report on these measures. DOT officials told us that they  expect to be able to report on Recovery Act outputs, such as miles of roads  paved, bridges built or repaired, and transit vehicles purchased, which wi help assess the act’s impact. However, they said that limitations in DOll  data systems, the costs associated with conducting such an analysis, and the T’s  fact that Recovery Act funds represented only about 1 year of additional  funding for some transportation programs would make assessing the  benefits of Recovery Act projects difficult. We continue to believe, however,tions to measure performance to understand  that it is important for organiza the progress they are making toward their goals and to demonstrate results,  particularly when the funding totals above $48 billion and most funds were  to be spent relatively quickly.
For the Recovery Act high speed intercity passenger rail and TIGER grant  programs, DOT has set broad performance goals and required recipients to  identify potential project benefits. Specifically, FRA has outlined goals for  developing high speed intercity passenger rail service in its strategic plan  and national rail plan and evaluated grant proposals based on the po project benefits they listed in their applications. However, the identified  goals are broad—such as improving transportation safety and economic  competitiveness—and do not contain specific targets necessary to  determine how or when FRA will realize intended benefits. DOT also  incorporated performance measures tailored to each TIGER grant  awardee based on the project design and the capacity of the recipient to  collect and evaluate data. DOT is evaluating the best methods for  measuring objectives and collecting data and is working collaboratively  with applicants to weigh options for measuring performance. As many  TIGER projects are just being initiated, the effectiveness of these  measures will not be clear for several years.
section_title: Federal, State, and Local Auditors Continue to Review Use of Recovery Act Funds and No Major Issues Have Been Reported
paragraphs: Federal, state, and local oversight entities have continued their efforts to  ensure appropriate use of Recovery Act transportation funds, and recently  published reviews have not revealed major concerns. Since September 2010,  the DOT Office of Inspector General (OIG) has issued three reports on  Recovery Act aviation, highway, and rail programs. These reports generally  found that DOT had complied with Recovery Act requirements, and they  identified several areas for improvement (see table 2 for selected OIG  recommendations and DOT’s response). The OIG has ongoing Recovery Act  oversight work covering multiple transportation programs, including, for  example, audits of the high speed intercity passenger rail and TIGER  programs, as well as audits of transit and highway programs. Moreover, th OIG continues to investigate criminal and civil complaints related to  Recovery Act transportation funds. As of March 31, 2011, the OIG had 51  open Recovery Act investigations, including 19 cases of false statements,  e  claims, or certifications; 17 cases of disadvantaged business enterprise  fraud; and 1 case of corruption, among other allegations. According to the  Chairman of the Recovery Accountability and Transparency Bo has been an extremely low level of fraud involving Recovery Act funds. For  instance, in June 2011, he noted that less than half a percent of all reporte d  Recovery Act contracts, grants, and  investigations, and to date there have been 144 convictions involving a little  over $1.9 million of total Recovery Act funds for all programs, including  those in the transportation sector.
Reviews conducted by auditors in the states that we visited have, in most  cases, reported few significant problems with the use of Recovery Act  transportation funds. State auditors in Massachusetts, for example, found  no material weaknesses at MassDOT in its 2010 Single Audit. However, in  our review of Single Audit reports for selected states, we found that state  auditors identified some inconsistencies with state oversight of  subrecipients and some challenges ensuring that award documentation  met federal requirements (see table 3).
We also reviewed performance audit reports of Recovery Act  transportation programs in the states that we visited, and these reviews,  generally, focused on compliance with Recovery Act program  requirements. For example:    The Massachusetts Office of the State Auditor published several reports  that examined local transit agency controls over receipts and expenditures  of Recovery Act funds and subrecipient monitoring to ensure compliance  with reporting requirements. Based on these reviews, the State Auditor  found that each transit authority was generally in compliance with  applicable laws, rules, and regulations for the areas tested.
The California State Auditor’s evaluation of the state’s recipient reports on  jobs created and retained found that the California Department of  Transportation (Caltrans) did not ensure that complete jobs data were  reported for the quarter ending June 30, 2010, and did not monitor its  subrecipients to ensure that they reported the required data. Caltrans  officials told us that it is a challenge to ensure that all local agencies report  FTE data because of turnover at the local level and the challenges  associated with training local staff on the reporting requirements.
Finally, local auditors in states we visited that reviewed compliance with  Recovery Act requirements did not find problems with city use of  Recovery Act transportation funds. These reviews generally found that  cities had taken various oversight actions to monitor the use of Recovery  Act funds. For example, the city auditor of Dallas, Texas, reported in  February 2011, that the city had taken action to implement internal control  processes aimed at ensuring accountability and transparency of Recovery  Act funds. Further, the Dallas city auditor found that although the  recipients and uses of funds were reported clearly and in a timely manner,  other federal requirements proved challenging for the city and reports  were not always submitted accurately. The city auditor of Arlington,  Texas, also found that the city had generally complied with Recovery Act  quarterly reporting and accountability provisions and the city had  accurately calculated jobs created. In Virginia, the city auditor of Virginia  Beach examined the city’s Recovery Act expenditures for supporting  documentation and concluded that the sampled expenditures were  properly supported, reasonable, and applicable to the purpose of the  grants. Another performance audit published in September 2010 by the  Los Angeles Office of the Controller found that the Los Angeles  Department of Transportation made a good faith effort in establishing  processes to help ensure it meets Recovery Act requirements, but noted  areas that could be improved, such as streamlining contracting processes  to ensure that projects are started as quickly as possible and improving  processes for reporting and billing to Caltrans.
section_title: Analysis of Seventh Round Recipient Reporting Data Shows Data Quality Remains Relatively Stable
paragraphs: To meet our mandate to comment on recipient reports, we continued to  monitor recipient-reported data. For this report, we focused our review on  the quality of data reported by transportation grant recipients and efforts  made by FHWA to validate that data. Using transportation recipient data  from the seventh reporting period, which ended March 31, 2011, we  continued to check for errors or potential problems by repeating analyses  and edit checks reported in previous reports. We reviewed data associated  with 12,443 transportation recipient reports posted on Recovery.gov for  the seventh reporting quarter.
We found few inconsistencies, and we are generally satisfied with the  stability of the data quality. Additionally, our analysis of the data showed  that there was a decrease of 759 recipient reports, or about a 5.7 percent  drop from the previous quarter. Likewise, as described earlier, the total  number of FTEs reported has also decreased over the past two reporting  quarters. In the most recent quarter which ended March 31, 2011, for  example, the percentage of prime recipients of highway funds reporting  any FTEs dropped from approximately 51 percent to approximately 39  percent. DOT officials said that the decreases in the number of recipients  reporting any FTEs is likely due to several factors, including projects  being completed or functionally complete and awaiting financial closeout.  DOT officials noted that decreases in FTEs could also be due to such  factors as a winter shutdown of projects in colder climates. We also  observed a variety of patterns in the quarterly reporting of FTEs, including  consecutive quarters of no FTE reporting. For example, for the 2010  calendar year, approximately 13.5 percent of the highway recipients and  approximately 16.7 percent of the transit recipients that filed reports each  quarter did not report any FTEs during the year. According to DOT  officials, several additional factors that could extend reporting during  periods of low job activity include projects awaiting final invoice from  contractors, projects delayed in litigation, or recipients’ withholding of  final payments to cover periods of maintenance guarantees. They also  noted that projects need to be considered on an individual basis and that  recipients may use Recovery Act funds to purchase materials and use  other funding sources to pay for labor.
subsections: section_title: DOT Continues to Perform Automated Checks to Help Improve Data but Is Not Planning to Use Recipient- Reported Data Internally
paragraphs: Each quarter, FHWA performs quality assurance steps on the data that  recipients provide to FederalReporting.gov and officials reported that the  data quality continues to improve. Based on these reviews and their  interactions with recipients, FHWA officials reported that recipients now  understand the reporting process and each reporting period has gone  better than the previous one. One measure of recipients’ understanding of  the reporting process is in the number of noncompliant recipients.  According to information available on Recovery.gov, the number of DOT- related noncompliant recipients decreased from 37 in the quarter ending  September 30, 2010, to 13 in the quarter ending December 31, 2010, but it  increased in the most recent quarter to 19 noncompliant recipients.  FHWA officials told us that they routinely check for noncompliance, notify  noncompliant recipients of the projects that have not been reported, and  follow up with noncompliant recipients to obtain corrective action plans  and ensure that errors are corrected and subsequent reports are filed on  time.
As in previous quarters, FHWA performed a number of automated checks  to help ensure quality of highway and rail recipients’ Recovery Act data.  To support recipients’ data quality, FHWA asks recipients of highway and  rail Recovery Act funds to report each month into FHWA’s RADS system.  FHWA officials conduct two data verification steps in RADS to assess the  quality of data submitted by recipients, including automated data  verification and validation reports.
The automated data verification tests occur when state departments of  transportation upload monthly data into RADS. If a record does not satisfy  one of FHWA’s data verification rules, the state department of  transportation is provided with a brief message listing the record and what  data check failed. Data cannot be uploaded into RADS until the state  department of transportation corrects the error. Examples of data  verification rules include rules such as the federal project numbers must  be entered without dashes or parentheses, and total cost estimates cannot  be less than total Recovery Act estimates for the particular project.
The data validation report highlights projects or awards that fail certain  verification rules, such as whether the federal project number is in  FHWA’s Financial Management Information System, but not in RADS.  FHWA also applies data checks based on assumptions about expenditures  reported and FTEs reported.
FHWA officials reported they also check data quality for nearly 70 data  fields each quarter by comparing the data in each recipient report against  the corresponding RADS data. According to FHWA guidance, data that do  not correspond to the recipient report are flagged for comment and  review. Specifically, RADS runs automated quality checks to ensure that  data provided by states into RADS match what the states are providing to  FederalReporting.gov. If inconsistencies are found, FHWA  representatives work with state transportation officials to resolve  discrepancies by requiring states to amend or justify state-reported data.  Some state transportation officials told us that the number of errors  detected in their reports decreased as the reporting system was refined  and guidance issued.
Finally, according to DOT officials, recipient-reported FTE data provide  increased transparency on the use of transportation program funds, but  DOT does not plan to use recipient-reported data internally for a variety of  reasons. For example, recipient- reported data are only valid on a quarterly  basis and cannot be used for monthly or cumulative analysis. In addition,  agency officials told us that they prefer to use RADS data for most internal  analysis because the RADS data are reported monthly and are more  detailed than the recipient-reported data.
section_title: Recovery Act Requirements Proved Challenging for DOT and Some States, Leading to Several Lessons Learned
paragraphs: Federal, state, and local transportation officials we contacted reported  that while Recovery Act transportation funds provided many positive  outcomes, they also provided lessons learned that may be relevant as  Congress considers the next surface transportation reauthorization.
subsections: section_title: Maintenance-of-Effort and Economically Distressed Area Requirements Proved Challenging
paragraphs: Certain Recovery Act provisions not typically required under existing DOT  programs proved challenging for some states to meet. Our ongoing and  past work indicates that it may have been difficult for states to meet these  requirements for a number of reasons, including rapidly changing state  economic conditions and confusion about how to interpret and apply the  new requirements.
Maintenance of effort. We have reported that there were numerous  challenges for DOT and states in implementing the transportation  maintenance-of-effort provision in the Recovery Act. This provision  required the governor of each state to certify that the state would maintain  its planned level of transportation spending from February 17, 2009,  through September 30, 2010, to help ensure that federal funds would be  used in addition to, rather than in place of, state funds and, thus, increase  overall spending. A January 2011 preliminary DOT report indicated that 29  states met their planned levels of expenditure, and 21 states did not. States  had a monetary incentive to meet their certified planned level of spending  in each transportation program area funded by the Recovery Act because  those that fail would not be eligible to participate in the August 2011  redistribution of obligation authority under the Federal-Aid Highway  Program. States had until April 15, 2011, to verify their actual  expenditures for transportation programs covered by the Recovery Act.  DOT is reviewing this information to determine if any more states met  their planned levels of spending.
The DOT preliminary report summarized reasons states did not meet their  certified planned spending levels, such as experiencing a reduction in  dedicated revenues for transportation due to a decline in state revenues or  a lower-than-expected level of approved transportation funding in the  state budget. The preliminary report also identified a number of  challenges DOT encountered in implementing the provision, such as  insufficient statutory definitions of such terms as what constitutes “state  funding” or how well DOT guidance on calculating planned expenditures  would work in the many different contexts in which it would have to  operate. As a result, many problems came to light only after DOT had  issued initial guidance and states had submitted their first certifications.  DOT issued guidance seven times during the first year after the act was  signed to clarify how states were to calculate their planned or actual  expenditures for their maintenance-of-effort certifications. The last  guidance—issued February 9, 2010—communicated DOT’s decision that  the maintenance-of-effort requirement would be applied to each of the  program areas funded by the Recovery Act, rather than cumulatively for  all the programs. The implication of this decision is that fewer states met  the requirement.
DOT invested a significant amount of time and work to ensure consistency  across states on how compliance with the maintenance-of-effort provision  would be certified and reported. As a result, DOT is well-positioned to  understand lessons learned—what worked, what did not, and what could  be improved in the future. DOT and state officials told us that while the  maintenance-of-effort requirement can be useful for ensuring continued  investment in transportation, more flexibility to allow for differences in  states and programs, and to allow adjustments for unexpected changes to  states’ economic conditions, should be considered for future provisions.  For example, for the education maintenance-of-effort requirement, the  Recovery Act allows the Secretary of Education to waive state  maintenance-of-effort requirements under certain circumstances and  allows states to choose the basis they use to measure maintenance of  effort. The maintenance-of-effort requirement for transportation  programs proved difficult for states to apply across various transportation  programs because of varying and complex revenue sources to fund the  programs. Many states did not have an existing means to identify planned  transportation expenditures for a specific period, and their financial and  accounting systems did not capture that data. Therefore, according to DOT  and some state officials, a more narrowly focused requirement applying  only to programs administered by state DOTs or to programs that typically  receive state funding could help address the maintenance-of-effort  challenges.
Consideration of economically distressed areas. Our previous reports  have identified challenges DOT faced in implementing the Recovery Act  requirement that states give priority to highway projects located in  economically distressed areas. For example, while an economically  distressed area is statutorily defined, we found that there was substantial  variation in how some states identified economically distressed areas and  the extent to which some states prioritized projects in those areas. We  reported instances of states developing their own eligibility requirements  for economically distressed areas using data or criteria not specified in the  Public Works and Economic Development Act. Three states—Arizona,  California, and Illinois—developed their own eligibility requirements or  interpreted the special-needs criterion in a way that overstated the number  of eligible counties, and thus the amount of funds, directed to  economically distressed areas. Officials in these three states told us that  they did so to respond to rapidly changing economic conditions. In May  2010, we recommended that DOT advise states to correct their reporting  on economically distressed area designations, and in July 2010 FHWA  instructed its division offices to advise states with identified errors to  revise their economically distressed area designations. In September 2010,  we recommended that DOT make these data publicly available to ensure  that Congress and the public have accurate information on the extent to  which Recovery Act funds were directed to areas most severely affected  by the recession and the extent to which states prioritized these areas in  selecting projects for funding. In March 2011, DOT posted an accounting  of the extent to which states directed Recovery Act transportation funds  to projects located in economically distressed areas on its Web site, and  we are in the process of assessing these data.
According to officials in most states we visited, state transportation  departments considered the requirement to prioritize projects in  economically distressed areas in addition to other immediate and long- term transportation goals, as the Recovery Act required. For example,  officials in Washington State said that they considered federally  recognized economically distressed areas as one of several criteria when  selecting projects. Other criteria included state economic data and  projects that would be ready to proceed in a short amount of time.  However, state officials were also uncertain what the economically  distressed area requirement was intended to accomplish, such as whether  it was intended to provide jobs to people living in those areas or to deliver  new infrastructure to those areas. The economically distressed area  provision proved difficult to implement because of changing economic  conditions and the difficulty of targeting assistance to economically  distressed areas, and it is unclear that it achieved its intended goal.
section_title: Obligation Deadlines Ensured That Projects Were Identified Quickly, but Likely Influenced the Types of Projects Selected in Some States
paragraphs: We found that the Recovery Act requirement to obligate funds quickly  likely influenced the types of projects selected for funding in some states.  State and local officials we interviewed noted that the primary factor  considered in project selection was to meet Recovery Act deadlines for  obligating funds, which likely limited the types of projects that were  selected for funding. Federal and state officials also noted the tension  between the purposes of the Recovery Act, which included preserving and  creating jobs and promoting economic recovery, and investing in  infrastructure to provide long-term economic benefits, among other  Recovery Act goals. For example, the Recovery Act provided a relatively  quick infusion of federal funding for highway and transit programs, but as  we noted earlier, the majority of projects selected for highway and transit  funding were pavement rehabilitation and bus purchases. State and local  officials told us that to meet the act’s obligation deadlines they prioritized  projects that had already progressed significantly through the project  development and design process and could move to construction. In some  cases, state officials told us that this prohibited other, potentially-higher  priority projects from being selected for funding. As a result, many  Recovery Act highway projects selected for funding did not require  extensive environmental clearances, were quick to design, and were  quickly obligated, bid, and completed. Several states told us that their mix  of highway projects would likely have been different had the obligation  deadlines been longer. For example, officials in California told us that had  the Recovery Act timelines been longer they would have likely pursued  more large-scale projects. According to Texas transportation officials,  projects that had already progressed significantly through the project  development process were preferred. However, transportation officials in  Virginia and Washington State said that the Recovery Act funding allowed  their states to select projects that would meet the obligation time frames  while also addressing state priorities, such as investing in infrastructure  with potential long-term economic impacts and addressing preservation  and safety needs.
section_title: Better Documentation Could Reduce Challenges to the Integrity of Selection Decisions for High Speed Intercity Passenger Rail and TIGER Grant Programs
paragraphs: We have reported that allocating federal funding for surface transportation  based on performance in general, and directing some portion of federal  funds on a competitive basis to projects of national or regional  significance in particular, can more effectively address certain challenges  facing the nation’s surface transportation programs. In our recent reports  on the high speed intercity passenger rail and TIGER programs, we found  that while DOT generally followed recommended grantmaking practices,  DOT could have documented more information about its award  decisions. Both the high speed intercity passenger rail and TIGER  programs represent important steps toward investing in projects of  regional and national significance through a merit-based, competitive  process. We noted a natural tension between providing funds based on  merit and performance and providing funds on a formula basis to achieve  equity among the states. A formula approach can potentially result in  projects of national or regional significance that cross state lines and  involve more than one transportation mode not competing well at the state  level for funds. Given that the Recovery Act was intended to create and  preserve jobs and promote economic recovery nationwide, Congress  believed it important that TIGER grant funding be geographically  dispersed. As we noted in our recent report discussing the TIGER grant  program, when Congress considers future DOT discretionary grant  programs, it may wish to consider balancing the goals of merit-based  project selection with geographic distribution of funds and limit, as  appropriate, the influence of geographic considerations.
section_title: Agency Comments
paragraphs: We provided a draft of this report to DOT for review and comment. DOT  generally agreed with our findings and provided technical comments,  which we incorporated as appropriate.
We are sending copies of this report to congressional committees with  responsibilities for transportation issues, the Secretary of Transportation,  and the Director of the Office of Management and Budget. The report will  also be available at no charge on the GAO Web site at http://www.gao.gov.
If you or your staffs have any questions about this report, please contact  me at (202) 512-2834 or herrp@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made major contributions to this report are  listed in appendix III.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: The objectives of this report were to determine the (1) status, use, and  outcomes of the American Recovery and Reinvestment Act of 2009  (Recovery Act) transportation funding nationwide and in selected states;  (2) actions taken by federal, state, and local agencies to monitor and  ensure accountability of Recovery Act transportation funds; (3) changes in  the quality of jobs data reported by Recovery Act recipients of  transportation funds over time; and (4) challenges faced and lessons  learned from the Department of Transportation (DOT) and recipients.
To address these objectives, we obtained and analyzed data provided to us  from the Federal Aviation Administration (FAA), Federal Highway  Administration (FHWA), Federal Transit Administration (FTA), and  Maritime Administration (MARAD), as well as data we obtained from the  operating administrations’ Recovery Act Web sites. For the highway and  transit programs, these data included the amount of funds obligated and  the amount reimbursed by FHWA and FTA through May 31, 2011. These  data also included funds awarded by project type, outlays for all regular  Federal-Aid Highway Program funds through September 2010, and  maintenance-of-effort certification data. For the aviation programs, FAA  provided a listing of airport improvement and facilities and equipment  grants, including award data, project amount, project description, and  project completion dates. For the small shipyard grants, MARAD provided  us with data for each grant, including award amount, project description,  amount obligated, and outlays to date. We assessed the reliability of the  program data we used by reviewing DOT documentation and Inspector  General reports on DOT’s financial management system and interviewing  knowledgeable DOT officials about the quality of the data and controls in  place to ensure data accuracy. We determined the data were sufficiently  reliable for our purposes.
In addition, to familiarize ourselves with all the transportation programs  and track their ongoing status, we reviewed program documentation, both  publicly available online and internal documents provided by the agencies;  reviewed prior GAO reports on the Recovery Act transportation programs;  and reviewed reports published by the DOT Office of Inspector General  (OIG). We also interviewed DOT officials from FAA, FHWA, FTA, MARAD,  and the Office of the Secretary who were involved in managing Recovery  Act programs. During these interviews, we discussed the status of  expenditures, challenges facing states or recipients in spending the funds,  and the expected impacts from the funds. We also met with  representatives from the American Association of State Highway and  Transportation Officials.
We conducted site visits to six states: California, Indiana, Massachusetts,  Texas, Virginia and Washington. In each of the states, we met with  representatives of the FHWA division office, state department of  transportation, and a local metropolitan planning organization. We also  visited Recovery Act transportation projects in each state, except Virginia.  In several of these states, we met with officials representing Governors’  offices overseeing Recovery Act-funded programs. Our criteria for selecting  these states included total FHWA funding available, number of projects  selected and average obligation per project. Our selected states represent  about 25 percent, or $6.9 billion of the $27.5 billion, available to states for  Recovery Act highway investments, and we selected states with a range of  allotted funding, including four that were above the national average and  two that were below it. We also considered the Recovery Act highway  project status and selected states with a range of underway and completed  projects. In selecting our state sample, we also considered geographic  dispersion and a mix of more and less populous states, as well as obtaining  a mixture of states GAO had previously tracked as part of our prior  Recovery Act oversight (California, Massachusetts, and Texas) and states  that we had not visited previously to discuss Recovery Act transportation  issues (Indiana, Virginia, Washington). This selection of states enabled us to  maintain continuity on issues that GAO had previously reported on, such as  economically distressed areas, and to speak with transportation officials  who were able to provide fresh perspectives on the lessons learned from the  Recovery Act transportation experience in their state.
To determine the actions, if any, federal, state, and local oversight entities  were taking to monitor and ensure accountability of Recovery Act  transportation funds, we reviewed OIG reports on various Recovery Act  transportation topics and interviewed OIG staff to learn more about their  findings and coordinate our audit work. In each of the six states we  visited, we contacted state auditors to learn about any efforts at the state  level to monitor Recovery Act transportation funding. In those states  where the state auditor had conducted performance audits on Recovery  Act transportation programs, we interviewed state audit representatives to  better understand their ongoing oversight work, challenges faced by  recipients in using funds and transportation-related audit findings, and any  lessons learned. We also reviewed Single Audit reports for fiscal year 2010  in each of our six sample states. At the local level, we reviewed reports  prepared by local government auditors for the six states we visited. We  obtained these reports from the Association of Local Government  Auditors’ Web site.
The recipient reporting section of this report responds to the Recovery  Act’s mandate that we comment on the estimates of jobs created or  retained by direct recipients of Recovery Act funds. For our review of the  seventh submission of recipient reports, covering the period January 1 to  March 31, 2011, we continued our monitoring of errors or potential  problems by repeating many of the analyses and edit checks reported in  our six prior reviews covering the period February 2009 through  December 31, 2010. To examine how the quality of jobs data reported by  recipients of Recovery Act transportation funds has changed over time, we  compared the seven quarters of recipient reporting data that were publicly  available at Recovery.gov on April 30, 2011. We performed edit checks  and other analyses on the transportation recipient-reported data which  included matching DOT-provided funding data from the Financial  Management Information System with recipient-reported funding data and  reviewing FTE reporting patterns. Our match showed a high degree of  agreement between DOT recipient funding information and the  information reported by recipients directly to FederalReporting.gov.
We also examined the reliability of recipient-reported data, and we  reviewed FHWA’s efforts to ensure reliability of the recipient-reported  data by comparing it with data contained in DOT’s Recovery Act Data  System (RADS). Our assessment activities included reviewing  documentation of system processes, conducting logic tests for key  variables, and assessing data for out-of-range values. We reviewed agency  documentation for the RADS and FHWA’s guidance for validating  recipient-reported data in that system. We also reviewed a February 2010  OIG report assessing the Recovery Act recipient data oversight at DOT and  other agencies. In general, we consider the data used to be sufficiently  reliable for purposes of this report. The results of our FTE analyses are  limited to the transportation programs and time periods reviewed and are  not generalizable to FTE reporting for any other program.
To update the status of open recommendations from previous bimonthly  and recipient report reviews, we obtained information from agency  officials on actions taken in response to recommendations.
We conducted this performance audit from September 2010 to June 2011  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: Status of Prior Open Recommendations and Matters for Congressional Consideration
paragraphs: In this appendix, we update the status of agencies’ efforts to implement  the 26 open recommendations, and 2 newly implemented  recommendations from our previous bimonthly and recipient reporting  reviews. Recommendations that were listed as implemented or closed in a  prior report are not repeated here. Lastly, we address the status of our  Matters for Congressional Consideration.
subsections: section_title: Department of Energy
subsections: section_title: Open Recommendations
paragraphs: Given the concerns we have raised about whether program requirements  were being met, we recommended in May 2010 that the Department of  Energy (DOE), in conjunction with both state and local weatherization  agencies, develop and clarify weatherization program guidance that    clarifies the specific methodology for calculating the average cost per  home weatherized to ensure that the maximum average cost limit is  applied as intended.    accelerates current DOE efforts to develop national standards for  weatherization training, certification, and accreditation, which is currently  expected to take 2 years to complete.    develops a best practice guide for key internal controls that should be  present at the local weatherization agency level to ensure compliance with  key program requirements.    sets time frames for development and implementation of state monitoring  programs.  revisits the various methodologies used in determining the weatherization  work that should be performed based on the consideration of cost- effectiveness and develops standard methodologies that ensure that  priority is given to the most cost-effective weatherization work. To  validate any methodologies created, this effort should include the  development of standards for accurately measuring the long-term energy  savings resulting from weatherization work conducted.
In addition, given that state and local agencies have felt pressure to meet a  large increase in production targets while effectively meeting program  requirements and have experienced some confusion over production  targets, funding obligations, and associated consequences for not meeting  production and funding goals, we recommended that DOE clarify its  production targets, funding deadlines, and associated consequences while  providing a balanced emphasis on the importance of meeting program  requirements.
DOE generally concurred with these recommendations and has made  some progress on implementing them. For example, to clarify the  methodology for calculating the average cost per home, DOE has  developed draft guidance to help grantees develop consistency in their  average cost per unit calculations. The guidance further clarifies the  general cost categories that are included in the average cost per home.  DOE anticipates issuance of the guidance in June 2011.
DOE has also taken steps to address our recommendation that it develop  and clarify guidance to generate a best practice guide for key internal  controls. DOE distributed a memorandum dated May 13, 2011 to grantees  reminding them of their responsibilities to ensure compliance with  internal controls and the consequences of failing to do so. This memo is  currently under internal review and DOE anticipates it will be released in  May 2011.
section_title: Open Recommendations
paragraphs: To better ensure that Energy Efficiency and Conservation Block Grant  (EECBG) funds are used to meet Recovery Act and program goals, we  recommended in April 2011 that DOE, take the following actions:    Explore a means to capture information on the monitoring processes of all  recipients to make certain that recipients have effective monitoring  practices.
Solicit information from recipients regarding the methodology they used  to calculate their energy-related impact metrics and verify that recipients  who use DOE’s estimation tool use the most recent version when  calculating these metrics.
DOE generally concurred with these recommendations, stating that  “implementing the report’s recommendations will help ensure that the  Program continues to be well managed and executed.” DOE also provided  additional information on steps it has initiated or planned to implement. In  particular, with respect to our first recommendation, DOE elaborated on  additional monitoring practices it performs over high dollar value grant  recipients, such as its reliance on audit results obtained in accordance  with the Single Audit Act and its update to the EECBG program  requirements in the Compliance Supplement to OMB Circular No. A-133.  However, these monitoring practices only focus on larger grant recipients,  and we believe that the program could be more effectively monitored if  DOE captured information on the monitoring practices of all recipients.  With respect to our second recommendation, DOE officials said that in  order to provide a reasonable estimate of energy savings, the program  currently reviews energy process and impact metrics submitted each  quarter for reasonableness, works with grantees to correct unreasonable  metrics, and works with grantees through closeout to refine metrics. In  addition, DOE officials said that they plan to take a scientific approach to  overall program evaluation during the formal evaluation process at the  conclusion of the program, which will occur in December 2012. However,  DOE has not yet identified any specific plans to solicit information from  recipients regarding the methodology they used to calculate their energy- related impact metrics or to verify that recipients who use DOE’s  estimation tool use the most recent version when calculating.
section_title: Environmental Protection Agency
subsections: section_title: Newly Implemented Recommendation
paragraphs: We recommended that the Environmental Protection Agency (EPA)  Administrator work with the states to implement specific oversight  procedures to monitor and ensure subrecipients’ compliance with the  provisions of the Recovery Act-funded Clean Water and Drinking Water  State Revolving Fund (SRF) program.
In part in response to our recommendation, EPA provided additional  guidance to the states regarding their oversight responsibilities, with an  emphasis on enhancing site-specific inspections. Specifically, in June 2010,  the agency developed and issued an oversight plan outline for Recovery  Act projects that provides guidance on the frequency, content, and  documentation related to regional reviews of state Recovery Act programs  and regional and state reviews of specific Recovery Act projects. We found  that EPA regions have reviewed all 50 states’ Clean and Drinking Water  SRF programs at least once since the Recovery Act was enacted, and have  generally carried out the oversight instructions in EPA’s plan. For  example, regional officials reviewed files with state documents and  information to ensure proper controls over Davis-Bacon, Buy American,  and other Recovery Act requirements. Regional staff also visited one  drinking water project in every state, but did not meet this goal for clean  water projects due to time and budget constraints. We also found that EPA  headquarters officials have been reviewing the regions’ performance  evaluation reports for states, and the officials said that they implemented a  60-day time frame for completing these reports. In the nine states that we  reviewed in this report, program officials described their site visits to  projects and the use of the EPA inspection checklist (or state equivalent),  according to EPA’s oversight plan. State officials told us that they visit  their Recovery Act projects at least once during construction and  sometimes more frequently depending on the complexity of the project.  We consider these agency actions to have addressed our recommendation.
section_title: Department of Health and Human Services: Office of Head Start
subsections: section_title: Open Recommendation
paragraphs: To oversee the extent to which grantees are meeting the program goal of  providing services to children and families and to better track the  initiation of services under the Recovery Act, we recommended that the  Director of the Office of Head Start (OHS) should collect data on the  extent to which children and pregnant women actually receive services  from Head Start and Early Head Start grantees.
The Department of Health and Human Services (HHS) disagreed with our  recommendation. OHS officials stated that attendance data are adequately  examined in triennial or yearly on-site reviews and in periodic risk  management meetings. Because these reviews and meetings do not collect  or report data on service provision, we continue to believe that tracking  services to children and families is an important measure of the work  undertaken by Head Start and Early Head Start service providers.
section_title: Open Recommendation
paragraphs: To help ensure that grantees report consistent enrollment figures, we  recommended that the Director of OHS should better communicate a  consistent definition of “enrollment” to grantees for monthly and yearly  reporting and begin verifying grantees’ definition of “enrollment” during  triennial reviews.
OHS issued informal guidance on its Web site clarifying monthly reporting  requirements to make them consistent with annual enrollment reporting.  While this guidance directs grantees to include in enrollment counts all  children and pregnant mothers who have received a specified minimum of  services, it could be further clarified by specifying that counts should  include only those children and pregnant mothers. According to HHS  officials, OHS is considering further regulatory clarification.
section_title: Open Recommendation
paragraphs: To provide grantees consistent information on how and when they will be  expected to obligate and expend federal funds, we recommended that the  Director of OHS should clearly communicate its policy to grantees for  carrying over or extending the use of Recovery Act funds from one fiscal  year into the next.
HHS indicated that OHS will issue guidance to grantees on obligation and  expenditure requirements, as well as improve efforts to effectively  communicate the mechanisms in place for grantees to meet the  requirements for obligation and expenditure of funds.
section_title: Open Recommendation
paragraphs: To better consider known risks in scoping and staffing required reviews of  Recovery Act grantees, we recommended that the Director of OHS should  direct OHS regional offices to consistently perform and document Risk  Management Meetings and incorporate known risks, including financial  management risks, into the process for staffing and conducting reviews.
HHS reported that OHS is reviewing the risk management process to  ensure it is consistently performed and documented in its centralized data  system and that it has taken related steps, such as requiring the Grant  Officer to identify known or suspected risks prior to an on-site review.
section_title: Newly Implemented Recommendation
paragraphs: To facilitate understanding of whether regional decisions regarding  waivers of the program’s matching requirement are consistent with  Recovery Act grantees’ needs across regions, we recommended that the  Director of OHS should regularly review waivers of the nonfederal  matching requirement and associated justifications.
HHS reports that it has taken actions to address our recommendation. For  example, HHS reports that OHS has conducted a review of waivers of the  nonfederal matching requirement and tracked all waivers in the Web- based data system. HHS further reports that OHS has determined that they  are reasonably consistent across regions.
section_title: Department of Housing and Urban Development
subsections: section_title: Open Recommendation
paragraphs: Because the absence of third-party investors reduces the amount of overall  scrutiny Tax Credit Assistance Program (TCAP) projects would receive  and the Department of Housing and Urban Development (HUD) is  currently not aware of how many projects lacked third-party investors, we  recommended that HUD should develop a risk-based plan for its role in  overseeing TCAP projects that recognizes the level of oversight provided  by others.
HUD responded to our recommendation by saying it will identify projects  that are not funded by the HOME Investment Partnerships Program  (HOME) funds and projects that have a nominal tax credit award.  However, HUD said it will not be able to identify these projects until it  could access the data needed to perform the analysis, and it does not  receive access to those data until after projects have been completed.  HUD currently has not taken any action on this recommendation because  it only has data on the small percentage of projects completed to date. It is  too early in the process to be able to identify projects that lack third-party  investors. The agency will take action once they are able to collect the  necessary information from the project owners and the state housing  finance agencies.
section_title: Department of Labor
subsections: section_title: Open Recommendations
paragraphs: To enhance the Department of Labor’s (Labor) ability to manage its  Recovery Act and regular Workforce Investment Act (WIA) formula grants  and to build on its efforts to improve the accuracy and consistency of  financial reporting, we recommended that the Secretary of Labor take the  following actions:    To determine the extent and nature of reporting inconsistencies across the  states and better target technical assistance, conduct a one-time  assessment of financial reports that examines whether each state’s  reported data on obligations meet Labor’s requirements.
To enhance state accountability and to facilitate their progress in making  reporting improvements, routinely review states’ reporting on obligations  during regular state comprehensive reviews.
Labor agreed with both of our recommendations and has begun to take  some actions to implement them. To determine the extent of reporting  inconsistencies, Labor awarded a contract in September 2010 to perform  an assessment of state financial reports to determine if the data reported  are accurate and reflect Labor’s guidance on reporting of obligations and  expenditures. Since then, Labor has completed interviews with all states  and is preparing a report of the findings. To enhance states’ accountability  and facilitate their progress in making improvements in reporting, Labor  has drafted guidance on the definitions of key financial terms such as  “obligations,” which is currently in final clearance. After the guidance is  issued, Labor plans to conduct a systemwide webinar and interactive  training on this topic to reinforce how accrued expenditures and  obligations are to be reported.
section_title: Open Recommendation
paragraphs: Our September 2009 bimonthly report identified a need for additional  federal guidance in defining green jobs and we made the following  recommendation to the Secretary of Labor:    To better support state and local efforts to provide youth with  employment and training in green jobs, provide additional guidance about  the nature of these jobs and the strategies that could be used to prepare  youth for careers in green industries.
Labor agreed with our recommendation and has begun to take several  actions to implement it. Labor’s Bureau of Labor Statistics has developed a  definition of green jobs which was finalized and published in the Federal  Register on September 21, 2010. In addition, Labor continues to host a  Green Jobs Community of Practice, an online virtual community available  to all interested parties. As part of this effort, in December 2010, Labor  hosted its first Recovery Act Grantee Technical Assistance Institute, which  focused on critical success factors for achieving the goals of the grants  and sustaining the impact into the future. The department also hosted a  symposium on April 28-29, 2011, with the green jobs state Labor Market  Information Improvement grantees. Symposium participants shared recent  research findings, including efforts to measure green jobs, occupations,  and training in their states. In addition, the department released a new  career exploration tool called “mynextmove” (www.mynextmove.gov) in  February 2011. This Web site includes the Occupational Information  Network (O*NET) green leaf symbol to highlight green occupations.  Furthermore, Labor’s implementation study of the Recovery Act-funded  green jobs training grants is still ongoing. The interim report is expected in  late 2011.
section_title: Executive Office of the President: Office of Management and Budget
subsections: section_title: Open Recommendation
paragraphs: To leverage Single Audits as an effective oversight tool for Recovery Act  programs, we recommended that the Director of the Office of Management  and Budget (OMB)  1.  provide more direct focus on Recovery Act programs through the  Single Audit to help ensure that smaller programs with higher risk have  audit coverage in the area of internal controls and compliance;  2.  take additional efforts to provide more timely reporting on internal  controls for Recovery Act programs for 2010 and beyond;  3.  evaluate options for providing relief related to audit requirements for  low-risk programs to balance new audit responsibilities associated  with the Recovery Act;  4. issue Single Audit guidance in a timely manner so that auditors can  efficiently plan their audit work;  5. issue the OMB Circular No. A-133 Compliance Supplement no later  than March 31 of each year;  6.  explore alternatives to help ensure that federal awarding agencies  provide their management decisions on the corrective action plans in a  timely manner; and  7.  shorten the timeframes required for issuing management decisions by  federal agencies to grant recipients.  (1) To provide more direct focus on Recovery Act programs through the  Single Audit to help ensure that smaller programs with higher risk have  audit coverage in the area of internal controls and compliance, the OMB  Circular No. A-133, Audits of States, Local Governments, and Non-Profit  Organizations 2010 Compliance Supplement (Compliance Supplement)  required all federal programs with expenditures of Recovery Act awards to  be considered as programs with higher risk when performing standard  risk-based tests for selecting programs to be audited. The auditor’s  determination of the programs to be audited is based upon an evaluation  of the risks of noncompliance occurring that could be material to an  individual major program. The Compliance Supplement has been the  primary mechanism that OMB has used to provide Recovery Act  requirements and guidance to auditors. One presumption underlying the  guidance is that smaller programs with Recovery Act expenditures could  be audited as major programs when using a risk-based audit approach.  The most significant risks are associated with newer programs that may  not yet have the internal controls and accounting systems in place to help  ensure that Recovery Act funds are distributed and used in accordance  with program regulations and objectives. Since Recovery Act spending is  projected to continue through 2016, we believe that it is essential that  OMB provide direction in Single Audit guidance to help to ensure that  smaller programs with higher risk are not automatically excluded from  receiving audit coverage based on their size and standard Single Audit Act  requirements.
In May 2011, we spoke with OMB officials and reemphasized our concern  that future Single Audit guidance provide instruction that helps to ensure  that smaller programs with higher risk have audit coverage in the area of  internal controls and compliance. OMB officials agreed and stated that  such guidance is included in the 2011 Compliance Supplement which was  to be issued by March 31, 2011. On June 1, 2011, OMB issued the 2011  Compliance Supplement which contains language regarding the higher- risk status of Recovery Act programs, requirements for separate reporting  of findings, and a list of Recovery Act programs to aid the auditors. We  will continue to monitor OMB’s efforts to provide more direct focus on  Recovery Act programs through the Single Audit to help ensure that  smaller programs with higher risk have audit coverage in the area of  internal controls and compliance.  (2) To address the recommendation for taking additional efforts to  encourage more timely reporting on internal controls for Recovery Act  programs for 2010 and beyond, OMB commenced a second voluntary  Single Audit Internal Control Project (project) in August 2010 for states  that received Recovery Act funds in fiscal year 2010. Fourteen states  volunteered to participate in the second project. One of the project’s goals  is to achieve more timely communication of internal control deficiencies  for higher-risk Recovery Act programs so that corrective action can be  taken more quickly. Specifically, the project encourages participating  auditors to identify and communicate deficiencies in internal control to  program management 3 months sooner than the 9-month time frame  currently required under OMB Circular No. A-133. Auditors were to  communicate these through interim internal control reports by December  31, 2010. The project also requires that program management provide a  corrective action plan aimed at correcting any deficiencies 2 months  earlier than required under statute to the federal awarding agency. Upon  receiving the corrective action plan, the federal awarding agency has 90  days to provide a written decision to the cognizant federal agency for audit  detailing any concerns it may have with the plan. Each participating state  was to select a minimum of four Recovery Act programs for inclusion in  the project.
We assessed the results of the first OMB Single Audit Internal Control  Project for fiscal year 2009 and found that it was helpful in communicating  internal control deficiencies earlier than required under statute. We  reported that 16 states participated in the first project and that the states  selected at least two Recovery Act programs for the project. We also  reported that the project’s dependence on voluntary participation limited  its scope and coverage and that voluntary participation may also bias the  project’s results by excluding from analysis states or auditors with  practices that cannot accommodate the project’s requirement for early  reporting of control deficiencies. Overall, we concluded that although the  project’s coverage could have been more comprehensive, the analysis of  the project’s results provided meaningful information to OMB for better  oversight of the Recovery Act programs selected and information for  making future improvements to the Single Audit guidance.
OMB’s second Single Audit Internal Control Project is in progress and its  planned completion date is June 2011. OMB plans to assess the project’s  results after its completion date. The 14 participating states have met the  milestones for submitting interim internal control reports by December 31,  2010 and their corrective action plans by January 31, 2011. By April 30,  2011, the federal awarding agencies were to provide their interim  management decisions to the cognizant agency for audit. We discussed the  preliminary status of these interim management decisions with OMB  officials and, as of May 24, 2011, only 1 of the 10 federal awarding agencies  had submitted some management decisions on the auditees’ corrective  action plans as required by the project’s guidelines. On May 24, 2011,  officials from the cognizant agency for audit, HHS, reemphasized to the  federal awarding agencies their responsibilities for providing management  decisions in accordance with the project’s due dates. In our review of the  2009 project, we noted similar concerns that federal awarding agencies  submitted management decisions on proposed corrective actions in an  untimely manner and made recommendations in this area, which are  discussed later in this report. We will continue to monitor the status of  OMB’s efforts to implement this recommendation and believe that OMB  needs to continue taking steps to encourage timelier reporting on internal  controls through Single Audits for Recovery Act programs.  (3) We previously recommended that OMB evaluate options for providing  relief related to audit requirements for low-risk programs to balance new  audit responsibilities associated with the Recovery Act. OMB officials have  stated that they are aware of the increase in workload for state auditors  who perform Single Audits due to the additional funding to Recovery Act  programs and corresponding increases in programs being subject to audit  requirements. OMB officials stated that they solicited suggestions from  state auditors to gain further insights to develop measures for providing  audit relief. However, OMB has not yet put in place a viable alternative  that would provide relief to all state auditors that conduct Single Audits.  For state auditors that are participating in the second OMB Single Audit  Internal Control Project, OMB has provided some audit relief by modifying  the requirements under Circular No. A-133 to reduce the number of low- risk programs to be included in some project participants’ risk assessment  requirements.
OMB is taking initiatives to examine the Single Audit process. OMB  officials have stated that they have created a workgroup which combines  the Executive Order 13520—Reducing Improper Payments Section 4 (b)  Single Audit Recommendations Workgroup (Single Audit Workgroup), and  the Circular No. A-87—Cost Principles for State, Local, and Indian Tribal  Governments Workgroup (Circular No. A-87 Workgroup). The Single Audit  Workgroup is comprised of representatives from the federal audit  community; federal agency management officials involved in overseeing  the Single Audit process and programs subject to that process;  representatives from the state audit community; and staff from OMB. OMB  officials tasked the Single Audit Workgroup with developing  recommendations to improve the effectiveness of Single Audits of  nonfederal entities that expend federal funds in order to help identify and  reduce improper payments. In June 2010, the Single Audit Workgroup  developed recommendations, some of which are targeted toward  providing audit relief to auditors who conduct audits of grantees and  grants that are under the requirements of the Single Audit Act. OMB  officials stated that the recommendations warrant further study and that  the workgroup is continuing its work on the recommendations. OMB  officials also stated that the Circular No. A-87 Workgroup has also made  recommendations which could impact Single Audits and that the  workgroups have been collaborating to ensure that the recommendations  relating to Single Audit improvements are compatible and could improve  the Single Audit process. The combined workgroups plan to issue a report  to OMB by August 29, 2011. We will continue to monitor OMB’s progress  to achieve this objective.  (4) (5) With regard to issuing Single Audit guidance in a timely manner,  and specifically the OMB Circular No. A-133 Compliance Supplement, we  previously reported that OMB officials intended to issue the 2011  Compliance Supplement by March 31, 2011. In December 2010, OMB  provided to the American Institute of Certified Public Accounts (AICPA) a  draft of the 2011 Compliance Supplement which the AICPA published on  its Web site. In January 2011, OMB officials reported that the production of  the 2011 Compliance Supplement was on schedule for issuance by March  31, 2011. OMB issued the 2011 Compliance Supplement on June 1, 2011.  We spoke with OMB officials regarding the reasons for the delay of this  important guidance to auditors. OMB officials stated that its efforts were  refocused toward priorities relating to the expiration of several continuing  resolutions that temporarily funded the federal government for fiscal year  2011, and the Department Of Defense And Full-Year Continuing  Appropriations Act, 2011, which was passed by the Congress in April 2011,  averting a governmentwide shutdown. OMB officials stated that, as a  result, although they had taken steps to issue the 2011 Compliance  Supplement by the end of March, such as starting the process earlier in  2010 and giving agencies strict deadlines for program submissions, they  were only able to issue it on June 1, 2011. We will continue to monitor  OMB’s progress to achieve this objective.  (6) (7) In October 2010, OMB officials stated that, based on their  assessment of the results of the project, they had discussed alternatives  for helping to ensure that federal awarding agencies provide their  management decisions on the corrective action plans in a timely manner,  including possibly shortening the time frames required for federal agencies  to provide their management decisions to grant recipients. However,  OMB officials have yet to decide on the course of action that they will  pursue to implement this recommendation. OMB officials acknowledged  that the results of the 2009 OMB Single Audit Internal Control Project  confirmed that this issue continues to be a challenge. They stated that they  have met individually with several federal awarding agencies that were  late in providing their management decisions in the 2009 project to discuss  the measures that the agencies will take to improve the timeliness of their  management decisions. Earlier in this report, we discussed that  preliminary observations of the results of the second project have  identified that several federal awarding agencies’ management decisions  on the corrective actions that were due April 30, 2011, have also not been  issued in a timely manner.
In March 2010, OMB issued guidance under memo M-10-14, item 7,  (http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_20 10/m1014.pdf) that called for federal awarding agencies to review reports  prepared by the Federal Audit Clearinghouse regarding Single Audit  findings and submit summaries of the highest-risk audit findings by major  Recovery Act program, as well as other relevant information on the federal  awarding agency’s actions regarding these areas. In May 2011, we  reviewed selected reports prepared by federal awarding agencies that  were titled Use of Single Audit to Oversee Recipient’s Recovery Act  Funding. These reports were required by memo M-10-14 for reports from  the Federal Audit Clearinghouse for fiscal year 2009. The reports were  developed for entities where the auditor issued a qualified, adverse, or  disclaimer audit opinion. The reports identified items such as (1)  significant risks to the respective program that was audited; (2) material  weaknesses, instances of noncompliance, and audit findings that put the  program at risk; (3) actions taken by the agency; and (4) actions planned  by the agency. OMB officials have stated that they plan to use this  information to identify trends that may require clarification or additional  guidance in the Compliance Supplement.
OMB officials also stated that they are working on a metrics project with  the Recovery Accountability and Transparency Board to develop metrics  for determining how federal awarding agencies are to use information  available in the Single Audit and which can serve as performance  measures. We attended a presentation of the OMB Workgroup that is  working with the Recovery Accountability and Transparency Board in  developing the metrics project in May 2011 and note that it is making  progress. OMB officials have stated that the metrics could be applied at  the agency level, by program, to allow for analysis of Single Audit findings,  along with other uses to be determined. One goal of the metrics project is  to increase the effectiveness and timeliness of federal awarding agencies’  actions to resolve single audit findings. We will continue to monitor the  progress of these efforts to determine the extent that they improve the  timeliness of federal agencies’ actions to resolve audit findings so that  risks to Recovery Act funds are reduced and internal controls in Recovery  Act programs are strengthened.
section_title: Department of Transportation
subsections: section_title: Open Recommendations
paragraphs: To ensure that Congress and the public have accurate information on the  extent to which the goals of the Recovery Act are being met, we  recommended that the Secretary of Transportation direct FHWA to take  the following two actions:    Develop additional rules and data checks in the Recovery Act Data  System, so that these data will accurately identify contract milestones  such as award dates and amounts, and provide guidance to states to revise  existing contract data.
Make publicly available—within 60 days after the September 30, 2010,  obligation deadline—an accurate accounting and analysis of the extent to  which states directed funds to economically distressed areas, including  corrections to the data initially provided to Congress in December 2009.
In its response, DOT stated that it implemented measures to further  improve data quality in the Recovery Act Data System, including additional  data quality checks, as well as providing states with additional training and  guidance to improve the quality of data entered into the system. DOT also  stated that as part of its efforts to respond to our draft September 2010  report in which we made this recommendation on economically distressed  areas, it completed a comprehensive review of projects in these areas,  which it provided to GAO for that report. DOT recently posted an  accounting of the extent to which states directed Recovery Act  transportation funds to projects located in economically distressed areas  on its Web site, and we are in the process of assessing these data.
section_title: Open Recommendation
paragraphs: To better understand the impact of Recovery Act investments in  transportation, we believe that the Secretary of Transportation should  ensure that the results of these projects are assessed and a determination  made about whether these investments produced long-term benefits.  Specifically, in the near term, we recommended that the Secretary direct  FHWA and FTA to determine the types of data and performance measures  they would need to assess the impact of the Recovery Act and the specific  authority they may need to collect data and report on these measures.
In its response, DOT noted that it expected to be able to report on  Recovery Act outputs, such as the miles of road paved, bridges repaired,  and transit vehicles purchased, but not on outcomes, such as reductions in  travel time, nor did it commit to assessing whether transportation  investments produced long-term benefits. DOT further explained that  limitations in its data systems, coupled with the magnitude of Recovery  Act funds relative to overall annual federal investment in transportation,  would make assessing the benefits of Recovery Act funds difficult. DOT  indicated that, with these limitations in mind, it is examining its existing  data availability and, as necessary, would seek additional data collection  authority from Congress if it became apparent that such authority was  needed. DOT plans to take some steps to assess its data needs, but it has  not committed to assessing the long-term benefits of Recovery Act  investments in transportation infrastructure. We are therefore keeping our  recommendation on this matter open.
section_title: Matters for Congressional Consideration
subsections: section_title: Matter
paragraphs: To the extent that appropriate adjustments to the Single Audit process are  not accomplished under the current Single Audit structure, Congress  should consider amending the Single Audit Act or enacting new legislation  that provides for more timely internal control reporting, as well as audit  coverage for smaller Recovery Act programs with high risk.
We continue to believe that Congress should consider changes related to  the Single Audit process.
section_title: Matter
paragraphs: To the extent that additional coverage is needed to achieve accountability  over Recovery Act programs, Congress should consider mechanisms to  provide additional resources to support those charged with carrying out  the Single Audit Act and related audits.
We continue to believe that Congress should consider changes related to  the Single Audit process.
section_title: Matter
paragraphs: To provide housing finance agencies (HFA) with greater tools for enforcing  program compliance, in the event the Section 1602 Program is extended for  another year, Congress may want to consider directing the Department of  the Treasury to permit HFAs the flexibility to disburse Section 1602  Program funds as interest-bearing loans that allow for repayment.
We continue to believe that Congress should consider directing the  Department of the Treasury to permit HFAs the flexibility to disburse  Section 1602 Program funds as interest-bearing loans that allow for  repayment.
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Thomas Beall, Jonathan Carver,  Andrew Ching, John Healey, Sharon Hogan, Thomas James, Bert Japikse,  Delwen Jones, Heather MacLeod, SaraAnn Moessbauer, Josh Ormond,  Carol Patey, Beverly Ross, Jonathan Stehle, and Pamela Vines made key  contributions to this report.