Recovery Act: Status of States' and Localities' Use of Funds and Efforts to Ensure Accountability
Published: 2009-12-10T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: This report is the fourth in a series responding to a mandate under the American Recovery and Reinvestment Act of 2009 (Recovery Act). As of November 27, 2009, $69.1 billion, or about one quarter of the approximately $280 billion of total Recovery Act funds for programs administered by states and localities, had been paid out. The largest programs were the Medicaid Federal Medical Assistance Percentage (FMAP), the State Fiscal Stabilization Fund (SFSF), and highways. The Government Accountability Office's (GAO) work continues to focus on 16 states and the District of Columbia (District).
section_title: What GAO Found
paragraphs: Of their increased FMAP grant awards for federal fiscal year 2009, the 16 states and the District had drawn down about $22.3 billion, or 97 percent of the funds available, as of November 30, 2009. Through November 16, 2009, in the 16 states and the District, $11.9 billion (76 percent) of Recovery Act highway funds had been obligated for nearly 4,600 projects and $1.9 billion (16 percent) had been reimbursed. Nationally, $20.4 billion (77 percent) had been obligated for over 8,800 projects and $4.2 billion (20 percent) had been reimbursed. Almost half of Recovery Act obligations nationally have been for pavement improvements--resurfacing, rehabilitating, and reconstructing roadways. Of the $7.5 billion in Recovery Act formula funding made available nationally for transit projects, $6.7 billion (88 percent) had been obligated through November 5, 2009. Most of these obligations are being used to upgrade transit facilities, improving bus fleets and light rail systems, and conducting preventive maintenance. As of November 6, 2009, of the Recovery Act funds available to them, the 16 states and the District had drawn down about $8.4 billion (46 percent) in SFSF; $735 million (11 percent) in Elementary and Secondary Education Act Title I, Part A funds; and $755 million (10 percent) in Individuals with Disabilities Education Act (IDEA), Part B funds. GAO surveyed a sample of local educational agencies about their planned uses of Recovery Act funds and found (1) retaining jobs is the primary planned use, with 63 percent planning to use over 50 percent of their SFSF funds to retain jobs; (2) other planned uses include nonrecurring items such as equipment; and (3) most report placing great importance on educational goals and reform. The Department of Housing and Urban Development has entered into funding agreements with 3,121 public housing agencies and made available nearly all of the almost $3 billion in public housing formula grant funds provided under the Recovery Act. As of November 14, these agencies had reported obligating about half of the funds HUD had made available. Housing agencies GAO visited are using funds to replace roofs, windows, and floors; upgrade kitchens and baths, and renovate rental units. Regarding the Weatherization Assistance Program, nationally, the states reported that, as of September 30, 2009, they had spent about $113 million (2 percent) of the $5 billion in Recovery Act funding and had completed weatherizing about 7,300 (1 percent) of the 593,000 housing units planned for weatherization. The Recovery Act also included a $100 million appropriation for the Emergency Food and Shelter Program. Local recipient organizations in the 16 states and the District were awarded almost $66.2 million and plan to use the funds primarily for "other food" services such as food banks and pantries, food vouchers, and rent and mortgage assistance.

section_title: Letter
paragraphs: States’ and localities’ use of Recovery Act funds continues as the nation  responds to the most serious economic crisis since the Great Depression.  Congress and the administration crafted the American Recovery and  Reinvestment Act of 2009 (Recovery Act) with the broad purpose of  stimulating the economy. As of November 27, 2009, $69.1 billion, or about  one quarter of the approximately $280 billion in Recovery Act funds for  programs administered by states and localities, had been paid out.  Estimates show that the largest share of the funds is expected to be spent  in fiscal year 2010.
The Recovery Act specifies several roles for GAO, including conducting  bimonthly reviews of selected states’ and localities’ use of funds made  available under the act. This report, the fourth in response to the act’s  mandate, addresses the following: (1) selected states’ and localities’ uses  of Recovery Act funds, (2) the approaches taken by the selected states and  localities to ensure accountability for Recovery Act funds, and (3) states’  plans to evaluate the impact of the Recovery Act funds they received. The  report provides overall findings and discusses the status of actions in  response to the recommendations we made in our earlier reports. In  addition, our recent report on recipient reporting contained  recommendations to the Office of Management and Budget (OMB) to  address the data quality and reporting issues we identified. OMB agreed  with those recommendations and is taking action to address them.
As reported in our previous bimonthly Recovery Act reports, to address  these objectives, GAO selected a core group of 16 states and the District of  Columbia (District) that we will follow over the next few years. Individual  summaries for this core group are compiled into an electronic supplement,  GAO-10-232SP, and are also accessible through GAO’s Recovery Act page  at www.gao.gov/recovery/. Our reviews examine how Recovery Act funds  are being used and whether they are achieving the stated purposes of the  act. These purposes include  to preserve and create jobs and promote economic recovery;  to assist those most impacted by the recession;  to provide investments needed to increase economic efficiency by  spurring technological advances in science and health;  to invest in transportation, environmental protection, and other  infrastructure that will provide long-term economic benefits; and  to stabilize state and local government budgets, in order to minimize  and avoid reductions in essential services and counterproductive state  and local tax increases.
The states selected for our bimonthly reviews contain about 65 percent of  the U.S. population and are estimated to receive collectively about two- thirds of the intergovernmental federal assistance funds available through  the Recovery Act. We selected these states and the District on the basis of  federal outlay projections, percentage of the U.S. population represented,  unemployment rates and changes, and a mix of states’ poverty levels,  geographic coverage, and representation of both urban and rural areas.  For this report we visited a nonprobability sample of 155 local entities  within the 16 states and the District for our program reviews. These local  entities represented a range of types of local governments (cities and  counties) and program areas as shown below. The local governments also  varied by population sizes and economic conditions (unemployment rates  greater than or less than the state’s overall unemployment rate).
Our work for this report focused on selected federal programs primarily  because they have begun disbursing funds to states or have known or  potential risks. These programs are as follows:    Federal Medical Assistance Percentage (FMAP);    Federal-Aid Highway Surface Transportation Program;    Transit Capital Assistance Program;    Fixed Guideway Infrastructure Investment Program;    State Fiscal Stabilization Fund (SFSF);    Title I, Part A of the Elementary and Secondary Education Act of 1965  (ESEA), as amended;  Individuals with Disabilities Education Act (IDEA), as amended, Parts  B and C;    Public Housing Capital Fund;    Weatherization Assistance Program; and    Emergency Food and Shelter Program (EFSP).
The risks can include existing programs receiving significant amounts of  Recovery Act funds or new programs. We collected documents from and  conducted semistructured interviews with executive-level state and local  officials and staff from state offices, including governors’ offices, recovery  leads, state and local auditors, and controllers. In addition, our work  focused on federal, state, and local agencies administering the selected  programs receiving Recovery Act funds. We analyzed guidance and  interviewed officials from OMB. We also analyzed grant award amounts, as  well as relevant regulations and federal agency guidance on programs  selected for this review, and spoke with relevant program officials at the  the U.S. Departments of Education, Energy, Health and Human Services  (Centers for Medicare & Medicaid Services), Housing and Urban  Development (HUD), Homeland Security (Federal Emergency  Management Agency), and Transportation.
Where attributed to state officials, we did not review state legal materials  for this report but relied on state officials and other state sources for  description and interpretation of relevant state constitutions, statutes,  legislative proposals, and other state legal materials. The information  obtained from this review cannot be generalized to all states and localities  receiving Recovery Act funding. A detailed description of our scope and  methodology can be found in appendix I.
We conducted this performance audit from September 18, 2009, to  December 4, 2009, in accordance with generally accepted government  auditing standards. Those standards require that we plan and perform the  audit to obtain sufficient, appropriate evidence to provide a reasonable  basis for our findings and conclusions based on our audit objectives. We  believe that the evidence obtained provides a reasonable basis for our  findings and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: Our analysis of initial estimates of Recovery Act spending provided by the  Congressional Budget Office (CBO) suggested that about $49 billion would  be outlayed to states and localities by the federal government in fiscal year  2009, which ran through September 30, 2009. Actual federal Recovery Act  outlays reported on www.recovery.gov (Recovery.gov) show that about  $53 billion was outlayed to states and localities in fiscal year 2009, about  $4 billion more than estimated. Nonetheless, a greater amount of Recovery  Act funding is estimated to be outlayed in fiscal year 2010. For fiscal year  2010, as of November 27, 2009, the federal Treasury had paid out  approximately $16.2 billion to states and localities. Figure 2 shows the  original estimate of federal outlays to states and localities under the  Recovery Act compared with actual federal outlays as reported by federal  agencies on Recovery.gov.
As of November 27, 2009, the federal government had outlayed $69.1  billion in Recovery Act funds to state and local governments. As in figure  3, health, and education and training accounted for almost 85 percent of  Recovery Act outlays for programs administered by states and localities.  The largest programs within these areas were the FMAP, SFSF, and  highway spending. The distribution of total federal outlays to states and  localities by program is shown in figure 3.
As we reported on November 19, 2009, recipients GAO contacted appear  to have made good-faith efforts to ensure complete and accurate  reporting. However, GAO’s fieldwork and initial review and analysis of  recipient data from Recovery.gov indicate that there are a range of  significant reporting and quality issues that need to be addressed. Even if  the data quality issues are resolved, it is important to recognize that the  full-time equivalents (FTE) in recipient reports alone do not reflect the  total employment effects of the Recovery Act. As noted, these reports  solely reflect direct employment arising from the expenditure of less than  one third of Recovery Act funds. Therefore, both the data reported by  recipients and other macroeconomic data and methods are necessary to  gauge the overall employment effects of the stimulus. The Recovery Act  includes entitlements and tax provisions, which also have employment  effects. The employment effects in any state will vary with labor market  stress and fiscal condition.
section_title: States and Localities Continue Use of Recovery Act Funds as Their Fiscal Conditions Remain Challenging
subsections: section_title: Increased FMAP Continues to Help States Finance Their Growing Medicaid Programs, but Concerns about Longer- Term Sustainability Have Led States to Consider Future Program Reductions
paragraphs: Medicaid is a joint federal-state program that finances health care for  certain categories of low-income individuals, including children, families,  persons with disabilities, and persons who are elderly. The federal  government matches state spending for Medicaid services according to a  formula based on each state’s per capita income in relation to the national  average per capita income. The rate at which states are reimbursed for  Medicaid service expenditures is known as the Federal Medical Assistance  Percentage (FMAP), which may range from 50 percent to no more than 83  percent. The Recovery Act provides eligible states with an increased  FMAP for 27 months from October 1, 2008, to December 31, 2010. On  February 25, 2009, the Centers for Medicare & Medicaid Services (CMS)  made increased FMAP grant awards to states, and states may retroactively  claim reimbursement for expenditures that occurred prior to the effective  date of the Recovery Act. Generally, for fiscal year 2009 through the first  quarter of fiscal year 2011, the increased FMAP, which is calculated on a  quarterly basis, provides for (1) the maintenance of states’ prior year  FMAPs, (2) a general across-the-board increase of 6.2 percentage points in  states’ FMAPs, and (3) a further increase to the FMAPs for those states  that have a qualifying increase in unemployment rates.
For states to qualify for the increased FMAP available under the Recovery  Act, they must meet a number of requirements, including the following:    States generally may not apply eligibility standards, methodologies, or  procedures that are more restrictive than those in effect under their  state Medicaid programs on July 1, 2008.
States must comply with prompt payment requirements.
States cannot deposit or credit amounts attributable (either directly or  indirectly) to certain elements of the increased FMAP into any reserve  or rainy-day fund of the state.
States with political subdivisions—such as cities and counties—that  contribute to the nonfederal share of Medicaid spending cannot  require the subdivisions to pay a greater percentage of the nonfederal  share than would have been required on September 30, 2008.
subsections: section_title: Most States Report Using Increased FMAP to Maintain Services to Growing Medicaid Population
paragraphs: We previously reported that by the end of fiscal year 2009, the Recovery  Act had provided increased FMAP rates in the 16 states and the District  that averaged 10.57 percentage points higher than the original 2009 rates  established by the Department of Health and Human Services (HHS).  For  the first quarter of federal fiscal year 2010, qualifying increases in  unemployment rates or increases in base FMAP rates contributed to  higher increased FMAP rates for half of the sample states when compared  to the fourth quarter of fiscal year 2009. The increased FMAP for the first  quarter of fiscal year 2010 averaged 11.07 percentage points higher than  the original 2009 rate, with increases ranging from 9.02 percentage points  in Mississippi to 13 percentage points in Michigan. (See table 1.)
As in the first half of federal fiscal year 2009, overall Medicaid enrollment  for our sample of 16 states and the District continued to grow. For the  third and fourth quarters of federal fiscal year 2009, overall Medicaid  enrollment for our sample further increased by more than 3 percent.  While nearly all of the sample states and the District reported an  enrollment increase from April 2009 to September 2009—with the highest  number of programs experiencing an increase of 3 percent to 6 percent— the percentage change in enrollment varied widely, ranging from less than  1 percent in three states to about 10 percent in Arizona. (See figure 4.)  Similar to prior time periods, most of the enrollment increase was  attributable to children, a population group that is sensitive to economic  downturns.
States can continue to draw from their increased FMAP grant awards for  third and fourth quarter fiscal year 2009 expenditures until CMS finalizes  the grant awards for these quarters, a process the agency has not yet  completed. As of November 30, 2009, the 16 sample states and the  District had drawn down more than $22.26 billion from increased FMAP  grant awards, or nearly 97 percent of funds available for federal fiscal year  2009. (See table 2.) Nationally, the 50 states, the District, and several of the  largest U.S. insular areas combined have drawn down about $32.6 billion,  which represents just over 96 percent of the increased FMAP grants  awarded in fiscal year 2009. In addition, with the exception of  Pennsylvania, all of the sample states and the District have begun to draw  down funds from their increased FMAP grant awards for the first quarter  of federal fiscal year 2010. As of November 30, 2009, they have drawn  down about $3.58 billion, or almost 54 percent of funds available.
While the increased FMAP available under the Recovery Act is for state  expenditures for Medicaid services, the receipt of these funds may reduce  the funds that states would otherwise have to use for their Medicaid  programs, and states have reported using these freed-up funds for a variety  of purposes. Similar to their reported uses in fiscal year 2009, states and  the District most commonly reported using or planning to use these freed- up funds in fiscal year 2010 to cover increased Medicaid caseloads,  maintain Medicaid eligibility levels, and finance general state budget  needs. In addition, more than half of the states and the District reported  using these funds to maintain benefits and services and to maintain  payment rates for practitioners and institutional providers. Five states  reported using these funds to meet prompt pay requirements, and two  states and the District also reported using these funds to help finance their  State Children’s Health Insurance Program or other local or state public  health insurance programs. Although virtually all of the sample states and  the District reported using these funds for multiple purposes, two states— North Carolina and Ohio—reported that they plan to continue using freed- up funds exclusively to finance general state budget needs.
As we previously reported, 12 states indicated they made adjustments to  their Medicaid programs in order to comply with Recovery Act  requirements, including rescinding prior program changes or canceling  planned changes that conflicted with requirements. In our most recent  survey, three states reported making additional adjustments to comply  specifically with the act’s prompt pay requirement. For example, Florida  and Michigan reported making systems changes that allow them to track  their compliance with aspects of the prompt pay requirement. The sample  states previously identified the prompt pay requirement as the most  difficult for them in terms of compliance with the Recovery Act, and in  the most recent survey, four states reported they did not comply with this  requirement for 1 day. Nonetheless, most sample states and the District  indicated in the recent survey that CMS’s July 30, 2009, State Medicaid  Director’s letter provided them with sufficient information to facilitate  compliance.
Responses from the sample states and the District were more varied when  asked about whether the increased FMAP funds were sufficient to protect  and maintain their Medicaid programs during the economic downturn or  to provide fiscal relief to the state. While two states reported that the  amount of increased FMAP funds was sufficient to meet these purposes in  fiscal year 2010, six states reported that the amount of increased FMAP  was not sufficient. The remaining eight states and the District reported  that the funds were only somewhat sufficient to meet these purposes  during fiscal year 2010. Among the states that reported the amount of  increased FMAP was not sufficient or only somewhat sufficient, some  reported taking actions to reduce their Medicaid program spending. For  example, California cut certain optional Medicaid benefits, including adult  dental services, though an official said the state would have made  additional program reductions without the increased FMAP. Pennsylvania  reported reducing disproportionate share hospital payments and  eliminating pay-for-performance funds for some Medicaid managed care  organizations.
section_title: States Are Considering Reductions to Their Medicaid Programs As Concerns about Program Sustainability Persist
paragraphs: As for the longer term outlook for their Medicaid programs, the District  and all but one of the sample states reiterated their concerns about the  sustainability of their Medicaid programs after the increased FMAP funds  are no longer available, beginning in January 2011. When asked about the  factors driving their concerns, virtually all of the states and the District  cited the size of the increase in the state’s share of Medicaid payments  when the regular FMAP rate goes back into effect in January 2011—an  increase we estimate will range from 28 percent to 66.9 percent (an  average of 36.4 percent) compared with the first quarter 2010 increased  FMAP. (See table 3.) In addition, most of the sample states and the District  reported that projected enrollment increases and further declines in  economic conditions and tax revenues have also contributed to their  concerns about the longer-term sustainability of their programs.  Ultimately, the effect of states’ increased share in Medicaid payments will  vary depending on the extent of change in Medicaid enrollment within  their individual programs.
Due to these concerns, 11 states and the District reported that they were  considering reducing eligibility, benefits and services, or provider rates in  fiscal year 2011. Specifically, 5 states and the District reported they were  considering eligibility reductions; 8 states and the District reported  considering reductions to benefits and services; and 10 states and the  District reported considering reductions to provider payment rates. In  terms of federal action that would best address their concerns about  program sustainability, nearly all states and the District identified an  extension in the availability of the increased FMAP beyond December  2010. In addition, most states and the District identified greater flexibility  in the Recovery Act’s maintenance of eligibility requirement or prompt  payment requirement as actions that would also help address their  concerns.
section_title: Most Highway and Transit Recovery Act Funding Has Been Obligated
paragraphs: The majority of the approximately $35 billion that the Recovery Act  provided for highway infrastructure projects and public transportation has  been obligated nationwide and in the 16 states and the District of  Columbia (District) that are the focus of our review. For example, as of  November 16, 2009, $20.4 billion of the funds had been obligated for just  over 8,800 projects nationwide and $4.2 billion had been reimbursed. In  the 16 states and the District, $11.9 billion had been obligated for nearly  4,600 projects and $1.9 billion had been reimbursed. Almost half of  Recovery Act highway obligations nationally and in the 16 states and the  District have been for pavement improvements—including resurfacing,  rehabilitating, and reconstructing roadways.
For Recovery Act transit funds, we focused our review on the Transit  Capital Assistance Program and the Fixed Guideway Infrastructure  Investment program, which received approximately 91 percent of the  Recovery Act transit funds, and on seven selected states that received  funds from these programs. As of November 5, 2009, about $6.7 billion of  the Recovery Act’s Transit Capital Assistance Program and the Fixed  Guideway Infrastructure Investment program funds had been obligated  nationwide. Almost 88 percent of Recovery Act Transit Capital  Assistance Program obligations are being used for upgrading transi facilities, improving bus fleets, and conducting preventive main tenance.
subsections: section_title: Three Quarters of Highway Funds Have Been Obligated, and Reimbursements Are Increasing
paragraphs: The Recovery Act provides funding to states for restoration, repair, and  construction of highways and other activities allowed under the Federal- Aid Highway Surface Transportation Program and for other eligible  surface transportation projects. The Recovery Act requires that 30 percent  of these funds be suballocated, primarily based on population, for  metropolitan, regional, and local use. Highway funds are apportioned to  states through federal-aid highway program mechanisms, and states must  follow existing program requirements, which include ensuring the project  meets all environmental requirements associated with the National  Environmental Policy Act (NEPA), paying a prevailing wage consistent  with federal Davis-Bacon Act requirements, complying with goals to  ensure disadvantaged businesses are not discriminated against in the  awarding of construction contracts, and using American-made iron and  steel in accordance with Buy America program requirements. While the  maximum federal fund share of highway infrastructure investment  projects under the existing federal-aid highway program is generally 80  percent, under the Recovery Act, it is 100 percent.
In March 2009, $26.7 billion was apportioned to all 50 states and the  District for highway infrastructure and other eligible projects. Table 4  shows the funds apportioned and obligated nationwide and in selected  states as of November 16, 2009.
As of November 16, 2009, $4.2 billion had been reimbursed nationwide by  Federal Highway Administration (FHWA), including $1.9 billion  reimbursed to the 16 states and the District. These amounts represent 20  percent of the Recovery Act highway funding obligated nationwide and 16  percent of the funding obligated in the 16 states and the District. As we  reported in our September report, because it can take 2 or more months  for a state to bid and award the work to a contractor and have work begin  after funds have been obligated for specific projects, it may take months  before states request reimbursement from FHWA. However  reimbursements have increased considerably over time, from $10 million  in April to $4.2 billion in mid-November. Reimbursements have also  increased considerably since we last reported in September when $604  million had been reimbursed to the 16 states and the District and $1.4  the District and $1.4  billion had been reimbursed nationwide. This is shown in figure 5.  billion had been reimbursed nationwide. This is shown in figure 5.
While reimbursement rates have been increasing, wide differences exist  across states. Some differences we observed among the states were  related to the complexity of the types of projects states were undertaking  and the extent to which projects were being administered by local  governments. For example, Illinois and Iowa have the highest  reimbursement rates—36 percent and 53 percent of obligations,  respectively—far above the national average. Illinois and Iowa also have a  far larger percentage of funds devoted to resurfacing projects than other  states—as discussed in the next section, resurfacing projects can be  quickly obligated and bid. Florida and California have among the lowest  reimbursement rates, less than 2 percent and 4 percent of obligations,  respectively. As discussed in the next section, Florida is using Recovery  Act funds for more complex projects, such as constructing new roads and  bridges and adding lanes to existing highways. Florida officials also told us  that the pace of awarding contracts has been generally slower in areas  where large numbers of projects are being administered by local agencies  (see GAO-10-232SP). In California, state officials said that projects  administered by local agencies may take longer to reach the  reimbursement phase than state projects due to additional steps required  to approve local highway projects. For example, highway construction  contracts administrated by local agencies in California call for a local  public notice and review period, which can add nearly 6 weeks to the  process. In addition, California state officials stated that localities tend to  seek reimbursement in one lump sum at the end of a project, which can  contribute to reimbursement rates not matching levels of ongoing  construction.
section_title: States Continue to Dedicate Most Recovery Act Highway Funds for Pavement Projects, but Use of Funds May Vary Depending on State Transportation Goals
paragraphs: Almost half of Recovery Act highway obligations nationally have been for  pavement improvements—including resurfacing, rehabilitating, and  reconstructing roadways—consistent with the use of Recovery Act funds  in our previous reports. Specifically, $4.5 billion, or 22 percent, is being  used for road resurfacing projects, while $5.2 billion, or 26 percent, is  being used for reconstructing or rehabilitating deteriorated roads. As we  have reported, many state officials told us they selected a large percentage  of resurfacing and other pavement improvement projects because those  projects did not require extensive environmental clearances, were quick to  design, could be quickly obligated and bid, could employ people quickly,  and could be completed within 3 years. In addition to pavement  improvement, other projects that have significant funds obligated include  pavement widening (reconstruction that includes new capacity to existing  roads), with $3 billion (15 percent) obligated, and bridge replacement and  improvements, with $2 billion (10 percent) obligated. Construction of new  roads and bridges accounted for 6 percent and 3 percent of funds  obligated, respectively. Figure 6 shows obligations by the types of road  and bridge improvements being made.
The total distribution of project funds by improvement type among the 16  states and the District closely mirrors the distribution nationally— however, we noted wide differences in how funds were used in these  states. States have considerable latitude to select projects under both the  Recovery Act and the regular Federal-Aid Highway Program, and as a  result, states have adopted different strategies to use Recovery Act  funding to meet the states’ transportation goals and needs and promote  long-term investment in infrastructure. The following are some examples:  Illinois and Iowa have had a significant portion of their Recovery Act  funds obligated for resurfacing projects—63 percent and 59 percent of  funds, respectively, compared with 10 percent and 12 percent of funds  in Pennsylvania and Florida, respectively (the national average is 22  percent). Iowa officials told us that focusing on pavement projects  allowed them to advance a significant number of needed projects,  which will reduce the demand for these types of projects and free up  federal and state funding for larger, more complex projects in the near  future.
According to California officials, under a state law enacted in March  2009, 62.5 percent of funds went directly to local governments for  projects of their selection, while the remaining 37.5 percent is being  used mainly for state highway rehabilitation and maintenance projects  that, due to significant funding limitations, would not have otherwise  been funded. According to California officials, distributing a majority  of funds to localities allow a number of locally important projects to be  funded.
Mississippi used over half its Recovery Act funds for pavement  improvement projects and around 14 percent of funds for pavement  widening. The Executive Director of the state transportation  department told us the Recovery Act allowed Mississippi to undertake  needed projects and to enhance the safety and performance of the  state’s highway system. However, the Executive Director also said that  the act’s requirements that priority be given to projects that could be  completed in 3 years resulted in missed opportunities to address long  term needs, such as upgrading a state roadway to interstate highway  standards that would have likely had a more lasting impact on  Mississippi’s infrastructure and economic development.
In Florida, 36 percent of funds have been obligated for pavement- widening projects (compared with 15 percent nationally) and 23  percent for construction of new roads and bridges (compared with 9  percent nationally), while in Ohio, 32 percent of funds have been  obligated for new road and bridge construction.
Pennsylvania targeted Recovery Act funds to reduce the number of  structurally deficient bridges in the state. As of October 2009, 31  percent of funds in Pennsylvania were obligated for bridge  improvement and replacement (compared with 10 percent nationally),  in part because a significant percentage (about 26 percent, as of 2008)  of the state’s bridges are structurally deficient.
Massachusetts has used most of its Recovery Act funds to date for  pavement improvement projects, including 30 percent of funds for  resurfacing projects and 43 percent of funds for reconstructing or  rehabilitating deteriorated roads. Massachusetts officials told us that  the focus of its projects for reconstructing and rehabilitating roads, as  well as the focus of future project selections, is to select projects that  promote the state’s broader long-term economic development goals.  For example, according to Massachusetts officials, the Fall River  development park project supports an economic development project  and includes construction of a new highway interchange and new  access roadways to a proposed executive park. FHWA officials  expressed concern that Massachusetts may be pursuing ambitious  projects that run the risk of not meeting Recovery Act requirements  that all funds be obligated by March 2010.
section_title: States Are Taking Additional Steps to Meet Recovery Act Highway Requirements, Including the Obligation Deadline and the Economically Distressed Area and Maintenance of Effort Requirements
paragraphs: Recovery Act highway funding is apportioned under the rules governing  the Federal-Aid Highway Program generally and its Surface Transportation  Program in particular, and states have wide latitude and flexibility in  which projects are selected for federal funding. However, the Recovery  Act tempers that latitude with requirements that do not exist in the regular  program, including the following requirements:    States are required to ensure that all apportioned Recovery Act  funds—including suballocated funds—are obligated within 1 year  (before Mar. 2, 2010). The Secretary of Transportation is to withdraw  and redistribute to eligible states any amount that is not obligated  within this time frame. Any Recovery Act funds that are withdrawn  and redistributed are available for obligation until September 30,  2010.
Give priority to projects that can be completed within 3 years and to  projects located in economically distressed areas. Distressed areas are  defined by the Public Works and Economic Development Act of 1965,  as amended. According to this act, to qualify as an economically  distressed area, the area must (1) have a per capita income of 80  percent or less of the national average; (2) have an unemployment rate  that is, for the most recent 24-month period for which data are  available, at least 1 percent greater than the national average  unemployment rate; or (3) be an area the Secretary of Commerce  determines has experienced or is about to experience a “special need”  arising from actual or threatened severe unemployment or economic  adjustment problems resulting from severe short-or long-term changes  in economic conditions. In response to our recommendation, FHWA,  in consultation with the Department of Commerce, issued guidance on  August 24, 2009, that provided criteria for states to use for designating  special needs areas for the purpose of Recovery Act funding.
Certify that the state will maintain the level of spending for the types of  transportation projects funded by the Recovery Act that it planned to  spend the day the Recovery Act was enacted. As part of this  certification, the governor of each state is required to identify the  amount of funds the state plans to expend from state sources from  February 17, 2009, through September 30, 2010.
The first Recovery Act requirement is that states have to ensure that all  apportioned Recovery Act funds—including suballocated funds—are  obligated within 1 year. Over seventy-five percent of apportioned  Recovery Act highway funds had been obligated as of November 16, 2009,  both nationwide and among the 16 states and the District. Nine states and  the District have higher obligation rates than the national average,  including Iowa and the District—for which FHWA has obligated 96  percent and 86 percent of funds, respectively. Conversely, Arizona,  Massachusetts, Ohio, and Texas have obligation rates of between 52  percent and 62 percent of apportioned funds. Officials at FHWA and state  department of transportation officials in the states we reviewed generally  believe that these states are on track to meet the March 2010 1-year  deadline.
However, two factors may affect some states’ ability to meet the 1-year  requirement. First, many state and local governments are awarding  contracts for less than the original estimated cost. This allows states to  use the savings from lower contract awards for other projects, but  additional projects funded with deobligated funds must be identified  quickly. In order to use the savings resulting from the lower contract  awards, a state must request FHWA to deobligate the difference between  the official estimate and the contract award amount and then obligate  funds for a new project.
Our analysis of contract award data shows that for the 10 states and the  District, the majority of contracts are being awarded for less than the  original cost estimates. While there is a variation in the number of  contracts being awarded for lower than their original estimates, every  state we collected information from awarded at least half of its contracts  for less than the original cost estimates. Some states had an extremely  high number of contracts awarded at lower amounts. For example,  California, Georgia, and Texas awarded more than 90 percent of their  contracts for less than their cost estimates. We also found a significant  variation in both the average amount and the range of the savings from  contracts awarded at lower amounts. For example, in the District and  Georgia, such contracts averaged more than 30 percent less than original  state estimates, while in Colorado and Massachusetts, such contracts  averaged under 15 percent less than original state estimates. In addition,  there is also a significant range in individual projects, with the savings  ranging from less then 1 percent under estimates in a number of states to  almost 55 percent under estimates in New York and over 90 percent under  in Illinois.
Federal regulations require states to promptly review and adjust project  cost estimates on an ongoing basis and at key decision points, such as  when the bid is approved. Many state officials told us that their state has  already started the process of ensuring funds are deobligated and  obligated to other highway programs and projects by the 1-year deadline.  For example, in Colorado, officials are planning to use Recovery Act funds  that are being deobligated by FHWA for 5 new projects, while in  California, FHWA deobligated approximately $108.5 million and the state  has identified 16 new state projects for Recovery Act funding. FHWA  officials told us they recognize the need to develop a process to monitor  and ensure deobligation of Recovery Act funds from known savings before  the 1-year deadline.
A second factor that may affect some states’ ability to meet the 1-year  requirement is that obligations for projects in suballocated areas, while  increasing, are generally lagging behind obligations for statewide projects  in most states and lagging considerably behind in a few states. In the 16  states and the District, 79 percent of apportioned statewide funds had  been obligated as of October 31, 2009, while 65 percent of suballocated  funds had been obligated. Figure 7 shows obligations for statewide and  suballocated areas in the 16 states and the District.
As shown in figure 7, and as we reported in September 2009, FHWA has  obligated substantially fewer funds suballocated for metropolitan and  local areas in three states. While the national average for obligations of  Recovery Act funds for suballocated areas is 63 percent, as of October 31,  New Jersey, Massachusetts, and Arizona had obligation rates of 34  percent, 31 percent, and 18 percent of these funds, respectively. Officials  in these three states cited a number of reasons for this—including lack of  familiarity by local officials with federal requirements and increased staff  workload associated with Recovery Act projects—and reported they were  taking a number of actions to increase obligations, such as imposing  internal deadlines on local governments to identify and submit projects.  As of October 2009, Arizona had awarded four contracts (one more than it  had as of September 2009) representing $29 million of the $157 million of  suballocated funds. This represents 18 percent of suballocated funds—–a  decline from the 21 percent of suballocated funds that had been obligated  when we reported in September 2009. Arizona Department of  Transportation officials told us that although one new contract had been  awarded, the state’s total obligation of suballocated funds had declined  because some suballocated funds were deobligated after more contracts  were awarded for less than the estimated amount. Officials also told us  that if local governments are not able to advertise contracts for  construction in suballocated areas prior to the March 2010 deadline, the  state would use Recovery Act funds on “ready-to-go” statewide highway  projects in those areas. Similarly, officials in two localities told us that if  projects intended for Recovery Act funds were in danger of not having  funds obligated by the deadline, they would use those funds on projects  now slated to be funded with state dollars and use state funding for other  projects.
Although states are working to have all of their suballocated funds  obligated before March 2010, failure to do so will not prohibit them from  participating in the redistribution of Recovery Act funds after March 2,  2010. The Secretary of Transportation is to withdraw highway funds,  including suballocated funds, which are not obligated before March 2,  2010. States that have obligated all of the funds that were apportioned for  use by the state (those that were not suballocated) are eligible to  participate in this redistribution, regardless of whether all of the state’s  suballocated funds have been obligated. FHWA is in the process of  developing guidance on the redistribution of any Recovery Act funding  that remains unobligated one year after apportionment. According to DOT  officials, consistent with the Recovery Act, FHWA currently plans to  model this redistribution after the process used each year in the regular  federal-aid highway program to redistribute obligation authority, allowing  Recovery Act funds redistributed to the states to be available for any  qualified project in a state.
The second Recovery Act requirement is to give priority to projects that  are project to be completed in three years or are located in economically  distressed areas. In July and September 2009, we identified substantial  variation in the extent to which states prioritized projects in economically  distressed areas and how they identified these areas. For example, we  found instances of states developing their own eligibility requirements for  economically distressed areas using data or criteria not specified in the  Public Works and Economic Development Act. State officials told us they  did so to respond to rapidly changing economic conditions. In response to  our recommendation, FHWA, in consultation with the Department of  Commerce, issued guidance to the states in August 2009 on identifying and  giving priority to economically distressed areas and criteria to identify  “special need” economically distressed areas that do not meet the  statutory criteria in the Public Works Act. In its guidance, FHWA directed  states to maintain information as to how they identified, vetted, examined,  and selected projects located in economically distressed areas and to  provide FHWA’s division offices with documentation that demonstrates  satisfaction of the “special need” criteria. FHWA issued additional  questions and answers relating to economically distressed areas in  November 2009.
Widespread designations of special needs areas give added preference to  highway projects for Recovery Act funding; however, they also make it  more difficult to target Recovery Act highway funding to areas that have  been the most severely impacted by the economic downturn. Three of the  states we reviewed—Arizona, California, and Illinois—had each developed  and applied its own criteria for identifying economically distressed areas,  and in two of the three states, applying the new criteria increased the  number of areas considered distressed.  In California, the number of  counties considered distressed rose from 49 to all 58 counties, while in  Illinois, the number of distressed areas increased from 74 to 92 of the  state’s 102 counties. All 15 counties in Arizona were considered distressed  under the state’s original determination and remained so when the state  applied the revised criteria. FHWA officials told us they expected the  number of “special needs” distressed areas to increase when the new  guidance was applied. We plan to continue to monitor the states’  implementation of DOT’s economically distressed area guidance.
The third Recovery Act requirement is for states to certify that they will  maintain the level of state effort for programs covered by the Recovery  Act. As we reported in September 2009, most states revised the initial  explanatory or conditional certifications they submitted to DOT after  DOT’s April 22, 2009, guidance required states to recertify without  conditions. All states that submitted conditional certifications submitted a  second maintenance of effort certification to DOT without conditions, and  DOT concluded that the form of each state certification was consistent  with its April guidance. In June 2009, FHWA began to review each state’s  maintenance of effort calculation to determine whether the method of  calculation was consistent with DOT guidance and the amounts reported  by the states for planned expenditures for highway investment was  reasonable. For example, FHWA division offices evaluated, among other  things, whether the amount certified (1) covered the period from February  17, 2009, through September 30, 2010, and (2) included in-kind  contributions. FHWA division staff then determined whether the state  certification needed (1) no further action, (2) further assessment, or (3)  additional information. In addition, according to FHWA officials, their  assessments indicated that FHWA needed to clarify the types of projects  funded by the appropriations and the types of state expenditures that  should be included in the maintenance of effort certifications. As a result  of these findings, DOT issued guidance in June, July, and September 2009  and plans to issue additional guidance on these issues.
In August 2009, FHWA staff in headquarters reviewed the FHWA division  staff findings for each sate and proceeded to work with each FHWA  division office to make sure their states submit revised certifications that  will include the correct planned expenditures for highway investment— including aid to local agencies. FHWA officials said that of the 16 states  and the District that we reviewed for this study, they currently expect to  have 12 states submit revised certifications for state highway spending,  while an additional 2 states are currently under review and may have to  revise their certifications. DOT officials stated they have not determined  when they will require the states to submit their revised consolidated  certification. According to these officials, they want to ensure that the  states have enough guidance to ensure that all programs covered by the  Recovery Act maintenance of effort provisions have completed their  maintenance of effort assessments and that the states have enough  guidance to ensure that this is the last time that states have to amend their  certifications.
Most state officials we spoke with are committed to trying to meet their  maintenance of effort requirements, but some are concerned about  meeting the requirements. As we have previously reported, states face  drastic fiscal challenges. States’ fiscal year 2009 revenue collections fell  below fiscal year 2008 collections and revenue collections are expected to  continue their decline in fiscal 2010. Although the state officials we spoke  with are committed to trying to meet the maintenance of effort  requirements, officials from seven state departments of transportation told  us the current decline in state revenues creates major challenges in doing  so. For example, Iowa, North Carolina, and Pennsylvania transportation  officials said their departments may be more difficult to maintain their  levels of transportation spending if state gas tax and other revenues, which  are used to fund state highway and state-funded transportation projects,  decline. In addition, Georgia officials also stated that reduced state gas tax  revenues pose a challenge to meeting its certified level of effort. Lastly,  Mississippi and Ohio transportation officials stated that if their state  legislatures reduce their respective department’s budget for fiscal year  2010 or 2011, the department may have difficulty maintaining its certified  spending levels.
section_title: FTA Reports That the Majority of Transit Funds Have Been Obligated, with Most Funding Being Used for Transit Facilities, Bus Fleets, and Preventive Maintenance
paragraphs: The Recovery Act appropriated $8.4 billion to fund public transit  throughout the country mainly through three existing Federal Transit  Administration (FTA) grant programs, including the Transit Capital  Assistance Program and the Fixed Guideway Infrastructure Investment  program. The majority of the public transit funds—$6.9 billion (82  percent)—was apportioned for the Transit Capital Assistance Program,  with $6 billion designated for the urbanized area formula grant program  and $766 million designated for the nonurbanized area formula grant  program. Under the urbanized area formula grant program, Recovery Act  funds were apportioned to large and medium urbanized areas—which in  some cases include a metropolitan area that spans multiple states— throughout the country according to existing program formulas. Recovery  Act funds were also apportioned to states for small urbanized areas and  nonurbanized areas under the formula grant programs using the program’s  existing formula. Transit Capital Assistance Program funds may be used  for such activities as facilities renovation or construction, vehicle  replacements, preventive maintenance, and paratransit services. Up to 10  percent of apportioned Recovery Act Transit Capital Assistance funds may  also be used for operating expenses. The Fixed Guideway Infrastructure  Investment program was appropriated $750 million, of which $742.5  million was apportioned by formula directly to qualifying urbanized  areas. The funds may be used for any capital projects to maintain,  modernize, or improve fixed guideway systems. The maximum federal  fund share for projects under the Recovery Act’s Transit Capital  Assistance Program and the Fixed Guideway Infrastructure Investment  program is 100 percent; the federal share under the existing programs is  generally 80 percent.
As they work through the state and regional transportation planning  process, designated recipients of the apportioned funds—typically public  transit agencies and metropolitan planning organizations (MPO)—develop  a list of transit projects that project sponsors (typically transit agencies)  submit to FTA for Recovery Act funding. FTA reviews the project  sponsors’ grant applications to ensure that projects meet eligibility  requirements and then obligates Recovery Act funds by approving the  grant application. Project sponsors must follow the requirements of the  existing programs, which include ensuring the projects funded meet all  regulations and guidance pertaining to the Americans with Disabilities Act  (ADA), pay a prevailing wage consistent with federal Davis-Bacon Act  requirements, and comply with goals to ensure disadvantaged businesses  are not discriminated against in the awarding of contracts.
In March 2009, $6.9 billion was apportioned to states and urbanized areas  in all 50 states, the District, and five territories for transit projects and  eligible transit expenses under the Recovery Act’s Transit Capital  Assistance Program and $750 million was apportioned to qualifying  urbanized areas under the Recovery Act’s Fixed Guideway Infrastructure  Investment program. As of November 5, 2009, almost $6 billion of the  Transit Capital Assistance Program funds had been obligated nationwide  and $738 million of the Fixed Guideway Infrastructure Investment  program funds has been obligated nationwide.
Almost 88 percent of Recovery Act Transit Capital Assistance Program  obligations are being used for upgrading transit facilities, improving bus  fleets, and conducting preventive maintenance. As we reported in  September 2009, many transit agency officials told us they decided to use  Recovery Act funding for these types of projects since they are high- priority projects that support their agencies short- and long-term goals,  can be started quickly, improve safety, or would otherwise not have been  funded. This continues to be the case. In particular:    Transit infrastructure facilities: $2.8 billion, or 47 percent, of these  funds obligated nationally have been for transit infrastructure  construction projects and related activities, which range from large- scale projects, such as upgrading power substations, to a series of  smaller projects, such as installing enhanced bus shelters. For  example, in Pennsylvania, the Lehigh and Northampton Transportation  Authority will implement a new passenger information technology  system, install enhanced bus shelters and signage, and fund a new  maintenance facility. Elsewhere, in North Carolina, the Charlotte Area  Transit System will renovate its bus operating and maintenance  facilities. In addition, in California, the San Diego Association of  Governments plans to upgrade stations on a light-rail line and replace a  section of a railroad trestle bridge.
Bus fleets: $2 billion, or 33 percent, of Recovery Act Funds obligated  nationally have been for bus purchases or rehabilitation to replace  aging vehicles or expand an agency’s fleet. For example, in  Pennsylvania, the Lehigh and Northampton Transportation Authority  plans to purchase 5 heavy-duty hybrid buses and the Southeastern  Pennsylvania Transportation Authority plans to purchase 40 hybrid  buses. In Iowa, the state’s smaller transit agencies are combining bus  orders through the state’s department of transportation for 160  replacement buses and 20 buses to expand bus fleets in areas of  growth around the state. In Colorado, both the Regional  Transportation District in Denver and the Fort Collins-Transfort  agency plan to purchase 6 buses each.
Preventive maintenance: Another $515 million, or 9 percent, has been  obligated for preventive maintenance. FTA considers preventive  maintenance projects eligible capital expenditures under the Transit  Capital Assistance Program.
The remaining funds have been used for rail car purchases and  rehabilitation, leases, training, financing costs, and, in some limited cases,  operating expenses—all of which are eligible expenditures. In particular,  transit agencies reported using $5.2 million, or less than 1 percent, of the  Transit Capital Assistance Program funds obligated by FTA for operating  expenses. For example, the Des Moines transit agency has proposed to use  approximately $788,800 for operating expenses, such as costs associated  with personnel, facilities, and fuel.
Funds from the Recovery Act Fixed Guideway Infrastructure Investment  program may also be used for transit improvement projects, which could  include fixed guideway transit facilities and equipment. Recipients may  use the funding on any capital purpose to include purchasing of rolling  stock, improvements to rail tracks, signals and communications, and  preventive maintenance. For example, in New York, FTA approved a  $254.4 million grant from Recovery Act Fixed Guideway Infrastructure  Investment funds to Metropolitan Transportation Authority for a variety of  maintenance and safety improvement projects, including the Jackson  Avenue Vent Plant Rehabilitation project in Long Island City. In addition,  the northeastern Illinois’s Regional Transportation Authority is planning  on using $95.5 million that was obligated from the Fixed Guideway  Infrastructure Investment program to provide capital assistance for the  modernization of existing fixed guideway systems. Metra (a regional  commuter rail system that is part of the authority) plans to use these  funds, in part, to repair tracks and rehabilitate stations.
section_title: Some State Transit Officials and Bus Manufacturers Are Using Different Criteria to Measure Job Creation and Retention
paragraphs: As we reported in September, recipients of transit Recovery Act funds,  such as state departments of transportation and transit agencies, are  subject to multiple reporting requirements. First, under section 1201(c) of  the Recovery Act, recipients of transportation funds must submit periodic  reports to DOT on the amount of federal funds appropriated, allocated,  obligated, and reimbursed; the number of projects put out to bid, awarded,  or for which work has begun or been completed; and the number of direct  and indirect jobs created or sustained, among other things. DOT is  required to collect and compile this information for Congress, and it  issued its first report to Congress in May 2009. Second, under section 1512,  recipients of Recovery Act funds, including but not limited to  transportation funds, are to report quarterly on a number of measures,  such as the use of funds and the number of jobs created or retained.
To help recipients meet these reporting requirements, DOT and OMB have  provided training and guidance. For example, DOT, through FTA,  conducted a training session consisting of six webinars to provide  information on the 1201(c) reporting requirements, such as who should  submit these reports and what information is required. In addition, FTA  issued guidance in September 2009 that provided a variety of information,  including definitions of data elements. OMB also issued implementing  guidance for section 1512 recipient reporting. For example, on June 22,  2009, OMB issued guidance to dispel some confusion related to reporting  on jobs created and retained by providing, among other information,  additional detail on how to calculate the relevant numbers. Despite this  guidance, we reported in September that transit officials expressed  concerns and confusion about the reporting requirement, and therefore we  recommended that DOT continue its outreach to transit agencies to  identify common problems in accurately fulfilling reporting requirements  and provided additional guidance, as appropriate. In responding to our  recommendation, DOT said that it had conducted outreach, including  providing technical assistance, training and guidance, to recipients and  will continue to assess the need to provide additional information.
Through our ongoing audit work, we continued to find confusion among  recipients about how to calculate the numbers of jobs created and saved  that is required by DOT and OMB for their reporting requirements. First, a  number of transit agencies continue to express confusion about  calculating the number of jobs resulting from Recovery Act funding,  especially with regard to using Recovery Act funds for purchasing  equipment, such as new buses. For the section 1201(c) reporting  requirement, transit agencies are not to report any jobs created or  sustained from the purchase of buses. However, for the section 1512  recipient reporting requirement, transit agencies were required to report  jobs created or retained from bus purchases, as long as these purchases  were directly from the bus manufacturers and not from dealer lots. FTA  held an outreach session in September 2009 with representatives from bus  manufacturers and the American Public Transportation Association in an  effort to standardize 1512 reporting methods and clarify recipient  responsibilities under the federal recipient reporting requirements. FTA,  the represented manufacturers, and American Public Transportation  Association discussed a standardized methodology that was established by  the Office of Management and Budget for calculating the number of jobs  created or retained by a bus purchase with Recovery Act funds. Under the  agreed-upon methodology, bus manufacturers are to divide their total U.S.  employment by their total U.S. production to determine a standard “full- time equivalents” (FTE)-to-production ratio. The bus manufactures would  then multiple that FTE-to-production ratio by a standard full-time schedule  in order to provide transit agencies with a standard ‘direct job hours”-to- production ratio. This ratio is to include hours worked by administrative  and support staff, so that the ratio reflects total employment. Bus  manufacturers are to provide this ratio to the grantees, usually transit  agencies, which then the grantee can use to calculate the number of jobs  created or retained by a bus purchase. FTA officials told us that the  selected group of bus manufacturers and FTA agreed that this  methodology—which allows manufacturers to report on all purchases,  regardless of size—simplifies the job reporting process. According to  guidance, it is the responsibility of the transit agency to contact the  manufacturer and ask how many jobs were related to that order. The  manufacturers, in turn, are responsible for providing the transit agencies  with information on the jobs per bus ratio at the time when buses are  delivered. If the manufacturers cannot give the agencies a jobs estimate,  the transit agencies must develop their own estimate.
While representatives from the bus manufacturers we interviewed were  using the agreed-upon methodology, there were a number of different  issues that were highlighted.
Representatives from two bus manufacturers reported not knowing  about the FTA methodology and used their own measures for jobs  created or retained. For example, representatives from two  manufacturers told us that the labor-hours required to produce a bus  formed the basis for their calculation of FTEs and was then pro-rated  based upon the amount of production taking place in the United States  and the purchase amount funded by Recovery Act dollars.
One bus manufacturer representative said it was difficult to pro-rate  the jobs calculation by the proportion funded by the Recovery Act, as  the agreed-upon methodology requires, since they did not always  receive this information from the transit agencies.
According to FTA officials, the manufacturer is only responsible for  reporting the ratio of jobs created or retained per bus produced; the  purchasing transit agencies are responsible for the pro-rating and final  calculation of jobs created or retained. However, even bus  manufacturers that were otherwise aware of FTA guidance and  following FTA’s methodology would sometimes calculate the total  number of jobs created or retained by a purchase.
The second area of confusion we found involved the methodology  recipients were using to calculate full-time equivalents for the recipient  reporting requirements. As we reported in our November 2009 report on  recipient reporting, the data element on jobs created or retained expressed  in FTEs raised questions and concerns for some recipients. In section 5.2  of the June 22 guidance, OMB states that “the estimate of the number of  jobs required by the Recovery Act should be expressed as FTE, which is  calculated as the total hours worked in jobs retained divided by the  number of hours in a full-time schedule, as defined by the recipient.”
Further, “the FTE estimates must be reported cumulatively each calendar  quarter.” In addition to issuing guidance, OMB and DOT provided several  types of clarifying information to recipients as well as opportunities to  interact and ask questions or receive help with the reporting process.  However, FTE calculations varied depending on the period of  performance the recipient reported on, and we found examples where the  issue of a project period of performance created significant variation in  the FTE calculation. For example, in Pennsylvania, each of four transit  entities we interviewed used a different denominator to calculate the  number of full-time equivalent jobs they reported on their recipients  reports for the period ending September 30, 2009. Southeastern  Pennsylvania Transportation Authority in Philadelphia used 1,040 hours as  its denominator, since it had projects under way in two previous quarters.  Port Authority of Allegheny County prorated the hours based on the  contractors’ start date, as well as to reflect that hours worked from  September were not included due to lag time in invoice processing; Port  Authority used 1,127 hours for contractors starting before April, 867 hours  for contractors starting in the second quarter, and 347 hours for  contractors starting in the third quarter. Lehigh and Northampton  Transportation Authority in Allentown used 40 hours in the 1512 report  they tried to submit, but, due to some confusion about the need for  corrective action, the report was not filed. Finally, the Pennsylvania  Department of Transportation in the report for nonurbanized transit  agencies reported using 1,248 hours, which was prorated by multiplying 8  hours per workday times the 156 workdays between February 17 and  September 30, 2009. In several other of our selected states, this variation  across transit programs’ period of performance for the FTE calculation  also occurred. Our November report provided additional detail and  recommendations to address the problems and confusion associated with  how FTEs were calculated in the October recipient report.
section_title: As Many LEAs Are Facing Budget Cuts and Fiscal Pressures, Job Retention Is the Primary Planned Use of Education Recovery Act Funds
paragraphs: GAO’s review of states’ use of Recovery Act funds covers three programs  administered by the U.S. Department of Education (Education)—the State  Fiscal Stabilization Fund (SFSF); Title I, Part A of the Elementary and  Secondary Education Act of 1965 (ESEA), as amended; and the Individuals  with Disabilities Education Act (IDEA), as amended. As part of this  review, GAO surveyed a representative sample of local education agencies  (LEA)—generally, school districts—nationally and in 16 states and the  District of Columbia about their planned uses of Recovery Act funds for  each of these programs.
State Fiscal Stabilization Fund. The State Fiscal Stabilization Fund  (SFSF) included approximately $48.6 billion to award to states by  formula and up to $5 billion to award to states as competitive grants.  The Recovery Act created the SFSF in part to help state and local  governments stabilize their budgets by minimizing budgetary cuts in  education and other essential government services, such as public  safety. Stabilization funds for education distributed under the  Recovery Act must first be used to alleviate shortfalls in state support  for education to LEAs and public institutions of higher education  (IHE). States must use 81.8 percent of their SFSF formula grant funds  to support education (these funds are referred to as education  stabilization funds) and must use the remaining 18.2 percent for public  safety and other government services, which may include education  (these funds are referred to as government services funds). For the  initial award of SFSF formula grant funds, Education awarded at least  67 percent of the total amount allocated to each state, but states had  to submit an application to Education to receive the funds. The  application required each state to provide several assurances,  including that the state will meet maintenance-of-effort requirements  (or will be able to comply with the relevant waiver provisions) and that  it will implement strategies to advance four core areas of education  reform, as described by Education: (1) increase teacher effectiveness  and address inequities in the distribution of highly qualified teachers;  (2) establish a pre-K-through-college data system to track student  progress and foster improvement; (3) make progress toward rigorous  college- and career-ready standards and high-quality assessments that  are valid and reliable for all students, including students with limited  English proficiency and students with disabilities; and (4) provide  targeted, intensive support and effective interventions to turn around  schools identified for corrective action or restructuring. In addition,  states were required to make assurances concerning accountability,  transparency, reporting, and compliance with certain federal laws and  regulations. After maintaining state support for education at fiscal year  2006 levels, states must use education stabilization funds to restore  state funding to the greater of fiscal year 2008 or 2009 levels for state  support to LEAs and public IHEs. On November 12, 2009, Education  published final requirements for Phase II applications for SFSF, which  states must submit by January 11, 2010. The Department also  published additional guidance for Phase II applications in December  2009.  According to the Phase II application, in order to receive the  remainder of their SFSF allocation, states must agree to collect and  publicly report on over 30 indicators and descriptors related to the  four core areas of education reform described above. Additionally,  states generally must, among other things, provide confirmation that  they maintained support for education in 2009 at least at the level of  such support in fiscal year 2006 and reaffirm or provide updated  information that they will maintain state support in 2010 and 2011.   When distributing these funds to LEAs, states must use their primary  education funding formula, but they can determine how to allocate  funds to public IHEs. In general, LEAs have broad discretion in how  they can use education stabilization funds, but states have some ability  to direct IHEs in how to use these funds.
ESEA Title I, Part A. The Recovery Act provides $10 billion to help  LEAs educate disadvantaged youth by making additional funds  available beyond those regularly allocated through Title I, Part A of the  Elementary and Secondary Education Act of 1965 (ESEA), as  amended. The Recovery Act requires these additional funds to be  distributed through states to LEAs using existing federal funding  formulas, which target funds based on such factors as high  concentrations of students from families living in poverty. In using the  funds, LEAs are required to comply with applicable statutory and  regulatory requirements and must obligate 85 percent of the funds by  September 30, 2010. Education is advising LEAs to use the funds in  ways that will build the agencies’ long-term capacity to serve  disadvantaged youth, such as through providing professional  development to teachers.
IDEA, Parts B and C. The Recovery Act provided supplemental  funding for programs authorized by Parts B and C of the Individuals  with Disabilities Education Act (IDEA) as amended, the major federal  statute that supports early intervention and special education and  related services for children, and youth with disabilities. Part B  provides funds to ensure that preschool and school-age children with  disabilities have access to a free and appropriate public education and  is divided into two separate grant programs—Part B grants to states  (for school-age children) and Part B preschool grants. Part C funds  programs that provide early intervention and related services for  infants and toddlers with disabilities—or at risk of developing a  disability—and their families.
subsections: section_title: Even with Recovery Act Funds, a High Percentage of School Districts in Some States Are Facing Budget Cuts, but in Other States, Budget Increases Are More Common
paragraphs: Education funding in the United States primarily comes from state and  local governments. Prior to the influx of Recovery Act funding for  education from the federal government, LEAs, on average, derived about  48 percent of their fiscal year 2007 funding budget from state funds, 44  percent from local funds, and 9 percent from federal funds. These  percentages, however, likely shifted due to increased federal Recovery Act  funds and reductions in some state budgets for education. While the  federal role in financing public education has historically been a limited  one, the federal funds appropriated under the Recovery Act provide a  significant but temporary increase in federal support for education to  states and localities in part to help them address budget shortfalls.  According to CRS, the Recovery Act provided approximately $100 billion  for discretionary education programs—elementary, secondary, and  postsecondary—in fiscal year 2009, which, when combined with regular  appropriations, represents about a 235 percent increase in federal funding  compared to fiscal year 2008.
According to our survey, however, even with the current infusion of  Recovery Act funding for education programs, the budget condition of  LEAs across the country is mixed. Based on our national survey results,  we estimate that approximately the same amount of LEAs—17 percent— face decreases of 5 percent or more in total education funding as face  funding increases for the current school year. On the other hand, an  estimated 57 percent of LEAs reported smaller or no funding changes for  the current school year.
Changes to LEA budgets for the current school year varied substantially  depending on the source of the funding—federal, state, or local  government. Figure 9 shows the estimated percentage of LEAs nationally  that are facing budget fluctuations of 5 percent or more by funding source.  For the current school year, we estimate that 50 percent of LEAs  nationwide received such funding increases from the federal government.  By contrast, however, state funding cuts of 5 percent or more were  common for many LEAs across the country. According to our survey, an  estimated 41 percent of LEAs across the country are seeing state funding  cuts of 5 percent or more for education. By contrast, an estimated 6  percent of LEAs report similar decreases from the federal government for  the current school year. Regarding local funds, an estimated 9 percent of  LEAs reported increases of 5 percent or more and 17 percent reported  decreases of the same magnitude. For LEAs, a cut in state or local funds  may only be partially offset by an increase in federal funds because LEAs,  on average, receive a much higher proportion of their funds from state and  local governments than from the federal government.
While the national results of our survey show a mixed budgetary picture  for LEAs, sizable funding cuts to LEA overall budgets were concentrated  in a few of the states on which we are focusing our Recovery Act review— California, North Carolina, and Georgia (see fig. 10). In California, for  example, a majority of LEAs in the state—an estimated 67 percent—are  experiencing declines of 5 percent or more in their overall education  budgets this year. We previously reported that, in California, the state  legislature authorized substantial budget cuts in order to balance the fiscal  year 2009-2010 budget, with funding for education making up a large part  of the reduction—$6.5 billion was cut from K-12 and community college  funding in July alone. According to officials at Los Angeles Unified School  District—the largest LEA in the state—the LEA faces steep drops in state  revenue in education in fiscal year 2009-2010. In addition to California, we  estimate that nearly 40 percent of LEAs in both Georgia and North  Carolina face overall funding cuts of 5 percent or more, well above the  national average of 17 percent. According to the Department of Public  Instruction in North Carolina, the economic recession has resulted in  significant declines in state revenues for education, with federal Recovery  Act funding offsetting only a portion of the state cuts. For example, one  North Carolina LEA reported that the current year budget process was  difficult, with federal Recovery Act funding “softening the blow” of state  and local funding cuts but not completely compensating for the  reductions. In other states, however, many LEAs report total funding  increases for education of 5 percent or more for the current school year.  According to our survey, about 30 percent of LEAs in Texas, Mississippi,  and New Jersey reported total education funding increases of 5 percent or  more.
Our survey results indicate that much of the Recovery Act funds for  education are being used by LEAs to retain staff. An estimated 64 percent  of LEAs nationally reported giving very great or great importance to  retaining jobs when deciding how to spend Recovery Act funds. Because  employee-related expenditures are the largest category of school  expenditures—with salaries and benefits accounting for more than 80  percent of local school expenditures, according to Education’s most  recent estimates —it is understandable that LEAs would use some of  their Recovery Act funds for staff salaries. Also, given the fiscal  uncertainty and substantial budget shortfalls facing states, federal funds  authorized by the Recovery Act provide LEAs with additional support for  the retention of education staff. Overall, the impact of Recovery Act  education funds on job retention may be significant because K-12 public  school systems employ about 6.2 million staff, based on Education’s  estimates, and make up about 4 percent of the nation’s workforce.
Retaining Jobs Was LEAs’ Top Use for Recovery Act Funds across  Three Education Programs  Job retention was the top planned use for Recovery Act funds for LEAs  across the three federal Education programs GAO reviewed. Figure 11  shows the national results of the estimated percentages of LEAs that  reported planning to use more than 50 percent of their Recovery Act funds  under SFSF, IDEA, Part B, and ESEA Title I, Part A to retain and create  education jobs. An estimated 63 percent of LEAs, the highest percentage  among the 3 programs we reviewed, plan to use Recovery Act SFSF funds  to retain jobs. In contrast, an estimated 25 percent and 19 percent of LEAs  said they planned to use over half of their Recovery Act funds on job  retention under ESEA Title I, Part A and IDEA, Part B, respectively.  Overall, the percentages of LEAs that reported planning to use Recovery  Act funds to create jobs were lower than the percentages planning to  retain jobs, with an estimated 11 percent under ESEA Title I, 7 percent  under IDEA, and 3 percent under SFSF planning to create jobs.
State education officials reported a variety of factors that may help explain  why LEAs reported planning to use Recovery Act funds to retain jobs. In  particular, officials noted that SFSF funds provided flexibility in how they  could be used. For example, one state education official noted that LEAs  have more flexibility in spending SFSF funds for general education  expenses because ESEA Title I and IDEA programs target special  populations---disadvantaged youth and students with disabilities,  respectively. This official said that because funding levels for general  education programs in his state have decreased while federal funding  levels for ESEA Title I and IDEA programs have increased, LEAs have  used SFSF funds to shore up funding for general education and, in  particular, preserve jobs.
The percentage of LEAs reporting they planned to use over 50 percent of  their Recovery Act education funds to retain jobs varied considerably by  state. In particular, Georgia, Michigan, Florida, New Jersey, New York and  North Carolina were among the states with the highest percentages of  LEAs that reported planning to use over half their SFSF funds for job  retention (see fig. 12). North Carolina, Iowa, New York, Georgia, Florida  and Michigan were among the states with the highest percentages of LEAs  that reported they planned to use over half of their ESEA Title I or IDEA  Recovery Act funds for this purpose (see fig. 12).
LEA officials described the use of Recovery Act funds to retain staff in the  context of decreasing state and local education funds. For example,  education officials in New York City told us that Recovery Act funds  helped the city reduce a total education budget gap of nearly $1.46 billion  to $400 million for the current school year and avoid teacher layoffs. In the  small, rural school district of Jasper-Troupsburg in upstate New York,  district officials told us they were facing a budget gap of $250,000. They  said they would use 95 percent of their Recovery Act funds to retain jobs.  Without these funds, the district would have been forced to cut teachers’  salaries and reduce work hours, as well as lay off 8 to 10 teachers out of 60  teachers, according to LEA officials. Similarly in Charlotte-Mecklenburg,  North Carolina, LEA officials told us that Recovery Act funds allowed the  district to compensate for reductions in state aid and local funds and that  a large portion of these funds enabled the district to retain education jobs.  In another LEA in Arizona, officials explained that with Recovery Act  funds, they were able to offer contracts to all teachers who were returning,  but without these funds the extent to which they would have had to  reduce staff positions is unclear. They speculated that, absent Recovery  Act funds, other cost-cutting measures might have included decreasing  staff salaries and benefits.
Some LEAs used Recovery Act funds to hire new staff. When planning how  to spend Recovery Act funds, an estimated 17 percent of LEAs nationally  reported creating jobs as of very great or great importance during the  decision-making process. Officials at the Arlington Elementary School  District, a rural LEA in Arizona containing a single school, said that IDEA  Recovery Act funds would help the district add a special education teacher  to the one they currently have. They said the timing of the Recovery Act  funds was important to their district because of the addition of three new  students with disabilities to the school. Without the IDEA Recovery Act  funds they received, they said they would have had to draw funds away  from general education needs, which would have meant combining classes  and eliminating a position. Similarly, in Weldon City Schools in North  Carolina, officials reported that IDEA Recovery Act funds allowed the LEA  to create teaching and teaching assistant positions for severely  emotionally disturbed students. Without these funds, officials said they  would have had to lay off two special education staff and would have been  unable to provide the intensive support for students with disabilities.  Education officials in some states said they are concerned about funding  cliffs if LEAs use Recovery Act funds to create new positions. For  example, an official at one LEA in New York state said district officials are  concerned that using Recovery Act Title I funds may lead to a funding cliff  and that the district may be unable to retain teachers hired with those  funds once they expire.
About a Third of LEAs Expected to Lose Jobs, Even with SFSF  Funds  An estimated 32 percent of LEAs nationally expected to lose jobs, even  with SFSF funds, but the percentage of LEAs expecting to lose jobs  varies by state. (See fig. 13.) Among the states with higher percentages of  LEAs expecting job losses even with SFSF funds were Georgia, Florida,  North Carolina, and California. According to our analysis, in all of these  states except for Florida, the proportion of LEAs that experienced  decreases of 5 percent or more in total education funding from last year  was larger than the national average of 17 percent. For example, in  Georgia 65 percent of LEAs reported that they expected to lose jobs even  with SFSF funds, and 39 percent of LEAs also reported they experienced a  total decrease in funds of 5 percent or more. State education officials in  Georgia said that declining state and local revenues have forced many  LEAs to cut their budgets and eliminate programs, resulting in a loss of  jobs. Our analysis also found that the estimated percentage of the largest  LEAs that reported expecting to lose jobs even with SFSF funds was  higher than the national average. For example, officials at Charlotte- Mecklenburg Schools, the largest LEA in North Carolina, said the district  was facing an $87 million reduction in state and county funding and  sustained a net reduction of 769 positions after Recovery Act funds had  been applied. While budget gaps may help explain the loss of jobs in some  states and localities, there may be other factors that contribute to job loss.  For example, Florida state officials noted that Florida’s declining student  enrollment has meant that LEAs are retaining fewer staff.
In planning how to spend Recovery Act funds for their LEAs, most local  officials reported placing great importance on advancing educational goals  and reform set forth in Education’s guidance on how best to use the funds  (see fig 14). Specifically, we estimate that most LEAs—about 80  percent—gave great or very great importance to “improving results for  students” in deciding how to use Recovery Act funds for their school  districts. “Increasing educators’ long term capacity” was the next most  cited, with approximately 70 percent of LEAs giving very great or great  importance to this factor. A majority of LEAs considered “advancing  district/reform and avoid recurring costs” as important factors when  s when  planning how to utilize the Recovery Act funding at their LEAs.  planning how to utilize the Recovery Act funding at their LEAs.
According to our survey, LEAs planned to spend some of their Recovery  Act funds on items that could help build long-term capacity and advance  educational goals and reform while also avoiding recurring costs for LEAs.  Overall, LEAs reported several nonrecurring items such as purchasing  technological equipment, including new computers; providing professional  development for instructional staff; and purchasing instructional materials  as among the highest uses of funds after job retention and creation. Figure  15 shows the national estimated percentages of LEAs that reported  planning to use more than a quarter of their Recovery Act funds for these  three nonrecurring budgetary items across the three education programs.
Interviews with LEAs in a number of states illustrate the range of reform- oriented and capacity-building projects in these areas being supported  with Recovery Act funds. For example, in the Los Angeles Unified School  District, officials described using Recovery Act funds for a special  education leadership academy for assistant principals to instruct them on  compliance with special education requirements and working with  teachers to implement effective instructional programs. In Weldon City  Schools in North Carolina, LEA officials reported that IDEA Recovery Act  funds would enable the district to provide more technology for children in  their special education program, including updated computers and  transition kits for occupational course study classrooms. Without these  Recovery Act funds, officials said that technology funds for such a  program would have been unavailable. At Buckeye Elementary School  District in Arizona, officials said they used some of their IDEA Recovery  Act funds as seed money for acquiring software needed to implement an  educational initiative focusing on preventing the need for special  education interventions and serving approximately 600 students with  disabilities.
section_title: In Part Because of Fiscal Pressures, Many Local Education Agencies Plan to Use IDEA Flexibility to Decrease their Local Spending on IDEA Activities This Year, Including a Majority of LEAs in Some States
paragraphs: LEAs must budget at least the same total or per capita amount of local funds for the  education of children with disabilities as the LEA spent in the most recent prior year for  which information is available.
LEAs. Overall, among the 15 states in our study that had made LEA  determinations related to their state performance plan this year, all but  New York, Georgia, and Texas had experienced an increase in the  number of LEAs that met requirements. State officials in states that  experienced such increases attributed these increases to training,  technical assistance and monitoring of indicators that were problematic  for LEAs to meet in previous years. However, officials in some states also  told us they had changed the criteria in their state performance plan this  year. Others changed the determinations process by increasing the  minimum number of students—called an “n” size or cell size—required for  making calculations related to the state performance plan, which could  effectively prevent some LEAs with small numbers of students from being  evaluated in certain areas. If an LEA has fewer than the minimum number  of special education students required for a particular target, the LEA’s  data on that target would be considered “not applicable” and would not  have bearing on the determination of whether the LEA met requirements.
Officials in states that changed their determinations processes or criteria  said that doing so made their plans and targets comparable to other states’  targets and helped ensure that expectations placed on LEAs were  reasonable. Three states changed their determinations criteria and  experienced large increases in the number of LEAs meeting  requirements—Arizona, Michigan, and Ohio—while two others that  increased their minimum “n” size also experienced large increases— California and Illinois. (See table 5.) Officials in Ohio told us that they  changed the determinations criteria with the goal of increasing the number  of LEAs that were determined to meet requirements, thereby giving most  LEAs in the state the option to reduce their local spending. States have  some discretion over their determinations process and criteria, but the  Secretary of Education issued a letter to state education officials in  October 2009 encouraging them to implement the LEA determinations  process in a rigorous manner, with a focus on improving results for  students with disabilities and ensuring that appropriate special education  and related services are provided.
According to some state officials, some LEAs were hesitant to utilize the  reduced local expenditure flexibility in the past, because the increase in  their allocation—and the amount of local or state funding that could be  “freed up”—was small. However, this year, the amount of funding that can  be “freed up” is larger than in prior years, and using this flexibility will give  LEAs, some facing budgetary pressures, more flexibility in deciding how  to spend their local funds. According to state officials, LEAs that take  advantage of this flexibility will not necessarily reduce their local spending  by the entire 50 percent allowed under the law, but some state officials  said that some LEAs may reduce local spending because they have  concerns about creating unsustainable funding commitments for special  education, because services cannot be easily cut after Recovery Act funds  are gone. In Ohio and Colorado, state officials said that this flexibility will  allow LEAs to fund important services that will benefit both general  education and special education students. Another option for LEAs  seeking to benefit students in both general education and special  education settings is to set aside up to 15 percent of their IDEA funds for  Coordinated Early Intervening Services (CEIS), which can be used to  serve students who have not been identified as having a disability.  Mississippi state officials said that some of their LEAs plan to set aside  funds for CEIS instead of using the flexibility to decrease local spending.
This year, according to our survey, an estimated 44 percent of LEAs plan  to use the reduced local expenditure flexibility to decrease local spending  on students with disabilities, although the percentages vary across states:  from 14 percent in New York to 72 percent in Iowa. (See fig. 16.) An  estimated 48 percent of the largest LEAs planned to do so. However,  officials in some states said they had advised LEAs about whether to use  the flexibility, and state education officials in Colorado, Iowa, and Georgia  said they expect many or all eligible LEAs to utilize the flexibility, whereas  officials in the District of Columbia, Arizona, Mississippi, and Texas said  they expect few, if any, to do so.
As of November 6, 2009, states covered by our review had drawn down 46  percent ($8.4 billion) of the awarded education stabilization funds, 11  percent ($735 million) of Recovery Act funds for ESEA Title I, and 10  percent ($755 million) of Recovery Act funds for IDEA. Some states had  drawn down a much larger portion of their funds than other states. For  example, Arizona, California, Georgia, and Illinois had drawn down 83  percent or more of their awarded education stabilization funds, while the  District of Columbia and Pennsylvania had not drawn down any funds.  Pennsylvania had little time to draw down funds because it had just  received approval for its SFSF application a few days earlier. The District  of Columbia had not yet requested assurances from the LEAs that  education stabilization funds would be used in accordance with federal  requirements—the District requires such assurances before the LEAs  obligate federal funds. In addition, the District of Columbia had not drawn  down any of its Recovery Act funds for ESEA Title I or IDEA, Part B, in  part, because it had not completed its review of LEA applications for these  funds, according to District of Columbia officials. Although New Jersey  had not drawn down any of its ESEA, Title I or IDEA Recovery Act funds  as of November 6, the state drew down funds later in November.
Department of Education officials report they continue to work with  several states to provide clarification on the appropriate methods for  managing cash flows under the newly created SFSF program. However,  some state educational agencies (SEA) report that they need clarifying  guidance on cash management issues before moving forward with  guidance to LEAs. As we have reported, Recovery Act cash management  issues in a number of states have been a concern to Education and the  Education Office of Inspector General, and Education officials report that  they are monitoring drawdowns of Recovery Act funds to help ensure that  states are complying with federal requirements.
In our recent discussions with Education officials regarding cash  management, they said their guidance to SEAs and LEAs is to minimize the  amount of time they hold federal funds before they need to spend them.  Department of Education regulations require states to minimize the time  elapsing between the transfer of the grant funds from the U.S. Treasury  and disbursement by the states, and similarly require LEAs to minimize the  time they hold funds before disbursing them. Regulations generally require  subgrantees to calculate and remit any interest earned on advance  payments made to them by states on at least a quarterly basis. In other  words, the goal is to draw down the funds when they are needed and  spend them immediately. Education officials told us that if LEAs retain  federal cash balances of SFSF or other federal funds in interest bearing  accounts, they are to calculate the interest due using the actual interest  the funds have earned. These officials stated, however, that Education  does not require LEAs to keep federal funds in interest bearing accounts.  Further, according to Education officials, regulations do not require that  LEAs calculate the interest due on each federal funding program  separately.
However, as we have previously reported, several states do not have cash  management systems in place for SFSF funds that can disburse funds to  LEAs when they are needed and ensure the calculation and remittance of  any interest due. Officials in some of these states told us they are seeking  clarifying guidance from Education on how to properly track and report  on cash balances and interest earned.
The Illinois State Board of Education (ISBE) does not have a  mechanism in place to allow LEAs to draw down SFSF funds on an as- needed basis. As a result, the ISBE distributes the state’s share of SFSF  funds as General State Aid payments—these payments are made based  on a predetermined schedule (semimonthly, in equal installments).  According to Education officials, the agency is working with the ISBE  to develop a procedure to withhold future SFSF payments from LEAs  that carry SFSF cash balances.
In Arizona, state distribution of funding raised concerns at one LEA.  LEA officials told us they had planned to pay the salaries of 15  teachers over the course of the school year with their SFSF funds, and  they submitted a drawdown request for 1 month’s funding. However,  the state unexpectedly sent the funding all at one time, and the LEA  officials were concerned about having excess SFSF cash on hand at  month’s end. LEA officials said they used the SFSF funds to pay all  district salaries for that month, in order to be able to expend all funds  in a timely manner. In our discussions with Education officials, they  acknowledged there could be a cash management issue if an SEA is  sending SFSF funds to LEAs in advance of the LEAs’ needing it.  Education officials said they would need to look into this matter.
As we previously reported, the California Department of Education  (CDE) has recently implemented a pilot program to monitor LEA cash  balances. CDE officials report they are currently developing interest  calculation procedures for LEAs, including for Recovery Act SFSF  fund balances. Education officials said they have been in  communication with CDE about that agency’s efforts to develop  procedures for LEA calculation of interest on SFSF funds and other  federal cash balances. Education officials told us they are waiting to  make a decision on CDE’s proposed interest calculation procedures  until they receive the proposal in writing from CDE. CDE officials told  us they would issue further cash management instruction to LEAs  when the issue is resolved.
New Jersey Department of Education (NJED) officials reported that  they currently have a system in place to monitor SFSF cash balances.  They said they instruct LEAs to remit any interest over $100 earned on  SFSF cash balances back to the federal government; however, they do  not expect LEAs to accrue interest on SFSF funds because the LEAs  plan to use the funds each month to pay salaries. State officials told us  they monitor LEA SFSF expenditures on a quarterly basis to determine  LEA cash needs for the following quarter. If an LEA spends less than  90 percent of the payments issued that quarter, the NJED withholds  payments until the LEA’s expenditures exceed 90 percent.
section_title: LEAs’ Views of Federal Guidance Is Correlated with Their Views of State Guidance, and Some States with High Levels of Satisfaction Have Similar State Practices in Developing and Distributing Guidance
paragraphs: Our survey estimates show that a majority of LEAs nationwide found  Education’s guidance on allowable uses for IDEA, ESEA Title I, and SFSF  Recovery Act funds to be very adequate, adequate, or neither adequate nor  inadequate. For example, officials in two LEAs we interviewed after the  survey was completed told us they had found Education’s guidance  adequate. An official in another district we visited said that at the time of  the survey, he had assessed Education’s guidance as neither adequate nor  inadequate but later considered Education’s guidance adequate because  Education has issued additional guidance. A much smaller percentage of  LEAs found the guidance to be inadequate or very inadequate. Specifically,  as shown in figure 18, we estimate that the percentage of LEAs reporting  that guidance was very adequate, adequate, or neither adequate nor  inadequate was 69 percent for IDEA, 75 percent for ESEA Title I, and 60  percent for SFSF.
We found a statistically significant relationship for all three Education  programs we reviewed showing that LEAs with favorable assessments of  state guidance also tend to have favorable assessments of federal  guidance. For example, in Florida, where 87 percent of LEAs indicated  that their state’s IDEA Recovery Act guidance was very adequate or  adequate, 72 percent of LEAs indicated that Education’s guidance on this  subject was very adequate or adequate. Both of these estimates are  statistically higher than the national averages of 58 percent for state  guidance and 46 percent for Education’s guidance. Further, our survey  results indicate that LEAs’ assessment of both Education’s guidance and  their state’s guidance varied by the size of LEAs—with larger LEAs  assessing guidance more favorably than smaller LEAs. This difference was  statistically significant for SFSF as well as for IDEA and ESEA Title I  Recovery Act guidance. For example, an estimated 63 percent of the  largest LEAs said Education’s ESEA Title I Recovery Act guidance w very adequate or adequate compared to 48 percent of all other LEAs  nationally.
Three states—Florida, Massachusetts, and Georgia—were among the be in terms of the percentage of LEAs assessing their state’s Recovery Act  guidance for ESEA Title I, IDEA, and SFSF as adequate or very adequa Our interviews with state officials in these three states revealed three  common themes: (1) continuous communication between state officials  and LEA program and financial staff; (2) collaboration between stat local program and financial officials in developing brief, navigable  guidance documents to ease use; and (3) use of various media (or  technology) to enhance efficiency in delivering guidance. Education  officials agreed that states can play a critical role in disseminating and  explaining federal guidance. In particular, Education officials were  interested in knowing more about promising practices in states where  LEAs were satisfied with guidance, so that they could help disseminate  those practices to other states. te.
First, regarding communication, officials in Georgia said there is  continuous dialogue between state officials and LEA officials, and  official in Massachusetts reported that the state has developed an  organizational culture that placed a high priority on commun the field. Further, officials in Florida said that their frequent  communication with LEAs helped them keep LEAs abreast of importa updates and was particularly helpful because it helped state officials  generate a list of LEA questions and concerns that they were able to draw  on in deciding what guidance to develop. In contrast, officials in a school  s  district we visited in another state told us that when they call their state’ Departmen returned.  t of Education for guidance, they often do not get their calls  Second, regarding collaboration in developing guidance, state off Florida said they directly involved a group of superintendents in  developing user-friendly guidance documents and later invited all  superintendents to give feedback on the guidance. These guidance  documents are posted on the state’s Web site, highlight 21 possible  strategies for using Recovery Act funds, and indicate which strategies  icials in  correspond to particular Recovery Act programs. Further, officials in three states said they had brought state and local programmatic and  financial officials together as part of their guidance efforts. One state  official in Florida said that this effort had been critical to making sure the guidan ce was understood by both program and financial staff at the LEA  level.
Finally, regarding strategies to enhance efficiency in delivering guidanc Florida, Georgia, and Massachusetts used webinars to directly answer  questions from LEAs and used LISTERV e-mail lists, so that they could  compose a single e-mail message alert including new guidance and send it  state officials  to all superintendents at once. Both strategies have allowed  to provide consistent information to many superintendents  simultaneously. In contrast, officials in one district we visited in anoth state told us there had been times they had needed to call around the school district to see who had received guidance from state officials  because there was no consistency in which local officials were receiving  guidance from state officials. Florida officials also told us they had create summaries of Education’s guidance that highlighted the most important  information to make it easier for superintendents to find the information they needed. In contrast, a school superintendent in another state who  reported on GAO’s survey that his state’s guidance for ESEA Title I a SFSF was very inadequate said he felt “stranded on a desert island” because he did not receive updates when new guidance was made  available on the state Web site and did not have time to check the Web site  search for answers to his questions in  daily to see what had changed or to Education’s guidance documents.
section_title: Education Is Continuing to Provide Technical Assistanc and Monitor States’ Use of Recovery Act Funds
paragraphs: Education continues to provide intensive technical assistance to six  and territories that the department felt could benefit the most from  additional assistance. Education identified the six states and territories  that would be most likely to benefit from intensive technical assistance  using a risk-based approach that assessed factors such as high funding  levels and recent monitoring or audit findings. Four of the states— California, Illinois, Michigan, and Texas—and the District of Columbia  part of our review. Education officials have made site visits and held  conference calls with these states and involved officials from multiple  offices in the department to provide programmatic and financial expertis to answer the states’ questions. Education officials said that in plann ing  these meetings, they worked with each state to identify the types of  technical assistance that would be needed to address state-specific  concerns. Education also provides technical assistance to other sta issues related to the Recovery Act, but this technical assistance is  provided separately by individual program offices. Education also hosts biweekly webinars open to any states and school districts on Recovery  Act-related topics, such as quarterly reporting and cash management, a it makes the presentations available on its Web site for downloading.
Education officials told us they have been conducting on-site monito visits concerning ESEA Title I and IDEA that include monitoring of  Recovery Act-related issues, and have been monitoring SFSF in other way as it continues development of a comprehensive monitoring plan fo new program. Education officials told us they have asked specific  questions related to the Recovery Act during ESEA Title I and IDEA  monitoring visits. In addition, the program office responsible for IDEA ha been piloting a desk review tool specifically related to the Recovery Act  and shared an early draft with states to help inform them about h will be monitored. According to Education officials, to date, the  department has been monitoring the use of SFSF funds through its reviof SFSF applications, waiver applications, and quarterly Recovery Act reporting and through telephone calls with states. Officials said their  upcoming review of Phase II SFSF applications to be submitted by states  will help identify states that may be having problems related to SFSF, so  that the department can conduct on-site monitoring visits to those states.
Education officials said they plan to collect states’ SFSF subrecipient  monitoring plans in the future but have not yet begun to collect these  plans; in our last report, GAO recommended that Education take action, such as collecting and reviewing documentation of state  monitoring plans, to ensure that states understand and fulfill their  responsibility to monitor subrecipients of SFSF funds. Department  officials sent an e-mail reminding states of their responsibility to conduct  ates’  subrecipient monitoring on SFSF and specifying what should be in stmonitoring plans. Education officials said they routinely discuss the requirement for subrecipient monitoring during their site visits and  conference calls with states. Our work in states continues to indicate a  need for Education’s oversight of state subrecipient monitoring p example, we found that officials in Massachusetts do not have a  comprehensive monitoring plan and are instead planning to rely on their  lans. For  state’s Single Audit report, alterations to their LEA reporting  requirements, and reviews of LEAs’ funding applications to monitor SFSF  sub-recipients. However, Education officials told us they consistently tell  states that the Single Audit is not enough for subrecipient monitoring and  that states have to be active with ongoing subrecipient monitoring.
section_title: Housing Agencies Continue to Make Progress on Recovery Act Projects, Although Less Than Half of the Funds Have Been Obligated
paragraphs: The Recovery Act requires the U.S. Department of Housing and Urban  Development (HUD) to allocate $3 billion through the Public Housing  Capital Fund to public housing agencies using the same formula for  amounts made available in fiscal year 2008. HUD allocated Capital Fund  formula dollars to public housing agencies shortly after passage of the  Recovery Act and, after entering into agreements with more than 3,100  public housing agencies, obligated these funds on March 18, 2009. As of  November 14, 2009, 2,598 public housing agencies (83 percent of the  housing agencies that entered into agreements with HUD for Recovery Act  funds) had reported to HUD that they had obligated a total of $1.46 billion,  an increase of over $500 million from the level reported as of September 5,  2009. In total, public housing agencies reported obligating about 49  percent of the total Capital Fund formula funds HUD allocated to them  (see fig. 19). According to HUD officials, housing agencies report  obligations after they have entered into binding commitments to  undertake specific projects. A majority of housing agencies that had  obligated funds—2,113 of 2,598 housing agencies—had also drawn down  funds in order to pay for project expenses already incurred. In total, as of  November 14, 2009, public housing agencies had drawn down almost $350  million, or about 12 percent of the total HUD allocated to them. Funds  drawn down more than doubled, increasing by $204 million from the level  reported as of September 5, 2009.
The Recovery Act requires that housing agencies obligate 100 percent of  their funds within 1 year from when the funds became available, which  means they have until March 17, 2010, to obligate 100 percent of their  funds. More than 1,000 housing agencies (33 percent) had reported  obligating 25 percent of their funds or less as of November 14, 2009,  including 523 (17 percent) that had reported obligating none of their  Recovery Act funds (see fig. 20). However, 1,055 housing agencies (34  percent) had reported obligating 100 percent of their funds as of  November 14, 2009, placing them well ahead of the Recovery Act’s 12- month deadline. An additional 467 housing agencies (15 percent) had  reported obligating more than 75 percent of their funds as of November 14,  2009. The size of the grant and the number, size, and complexity of  projects that housing agencies selected may account for some of the  differences in obligation rates. Although HUD is making efforts to assist  housing agencies with meeting the deadline, officials expect some housing  agencies probably will not obligate all of their funds in time.
HUD officials stated they have been emphasizing the 1-year deadline to  housing agencies, and they pointed to notices, frequently asked questions,  and Web seminars as evidence. In addition, they have stressed that the  Recovery Act does not provide HUD with any way to grant exceptions or  extensions. HUD will recapture any funds not obligated by March 17, 2010,  and will reallocate those funds to other housing agencies. According to  HUD officials, in November 2009 HUD field staff began contacting housing  agencies that had not obligated any Recovery Act funds by phone, by e- mail, or in person in order to understand where these housing agencies are  in the process of awarding contracts and obligating funds. They said they  will repeat the process for housing agencies below certain obligation  levels, such as 25 percent or 50 percent, beginning in early December.  Field staff will be preparing status reports for each housing agency, which  HUD will review in order to determine what additional steps HUD should  take to assist housing agencies in meeting the March 2010 deadline. HUD  headquarters staff are also preparing an e-mail notification to all housing  agencies that are below the level of obligations at which HUD expects  them to be at this point in the year. HUD officials said they will send these  notifications each month. For housing agencies that continue to struggle  to obligate their funds, HUD officials said they plan to provide additional  technical assistance, including possibly sending staff on site to help the  process along. HUD plans to ask housing agencies to report obligations as  funds are obligated—agencies report monthly—so that HUD can have up– to-date information to determine ongoing outreach and monitoring efforts.  As they get closer to the March deadline, HUD officials expect more  housing agencies will achieve 100 percent obligations, allowing HUD to  better target its outreach efforts. While HUD’s goal is that agencies achieve  100 percent obligations, officials said that realistically some housing  agencies probably will not obligate all of their funds in time. They said that  part of the process of reaching out to housing agencies with low  obligations is to identify which housing agencies do not expect to make  the deadline, so that HUD can begin planning for recapturing and  reallocating the funds. They hope to have an estimate of how much will  not be obligated in time by early February 2010. The officials stated HUD  has not yet determined how it will reallocate funds that are recaptured. It  will be important for HUD to follow through on these efforts to ensure  housing agencies obligate the funds in a timely manner.
Of the 47 housing agencies in 16 states and the District of Columbia we  selected for in-depth review throughout our Recovery Act work, as of  November 14, 2009, 45 had reported obligating funds totaling $207 million,  or about 39 percent of the total Capital Fund formula funds HUD had  allocated to the agencies (see fig. 21). Obligations had increased by about  $60 million from the level we reported in September. A majority of housing  agencies that had obligated funds—43 of 45 housing agencies—had also  drawn down funds. In total, these housing agencies had drawn down about  $34 million, or about 6 percent of the total allocated to them by HUD, an  increase of about $21 million from the level we reported in September  2009.
Housing agencies that received Recovery Act formula grants of less than  $100,000 continue to obligate and draw down funds at a faster rate than  housing agencies that received grants of more than $500,000. The  difference between these groups of housing agencies has remained about  the same—13 percentage points—as when we reported in September 2009.  For housing agencies with smaller grants—that is, less than $100,000—the  average percentage of Recovery Act funds obligated was about 63 percent,  while for housing agencies with larger grants—that is, more than  $500,000—the average percentage of Recovery Act funds obligated was 50  percent (see table 7). Similarly, the average percentage of Recovery Act  funds drawn down was 41 percent for housing agencies with smaller  grants, compared with 17 percent for housing agencies with larger grants.
As we reported in September 2009, housing agencies with smaller grants  are often able to take advantage of simplified and less formal procurement  procedures, which could help them obligate funds more quickly. In  addition, we found that housing agencies with smaller grants are using  their Recovery Act funds on a limited number of small and narrowly  focused projects, while housing agencies with larger grants are using  Recovery Act funds on either a larger number of projects or projects with  a broader scope, some of which may require additional layers of HUD  review and approval.
subsections: section_title: More Projects Are Under Way; Lower-Than-Expected Bid Amounts Could Result in Housing Agencies Needing Additional Projects to Use All Recovery Act Funds
paragraphs: Housing agencies we visited reported that more of their projects had  begun since our prior visits for the July 2009 report, and several housing  agencies reported they had completed one or more projects during that  time. For this report, we selected 47 Recovery Act-funded projects at 25  housing agencies in nine states—11 of which had not started, 22 of which  were under way, and 14 of which were already completed (see fig. 22).  Many of the completed projects involved roof replacement, including  projects in Iowa, New Jersey, and Arizona. We visited several projects  under way that involved replacing windows and siding, repainting building  exteriors, or repairing sidewalks. As we previously reported, other  planned uses of Recovery Act funds include heating, ventilation, and air  conditioning (HVAC) system upgrades or replacements; interior  rehabilitation work, such as kitchen or bathroom renovations and flooring  or carpet replacements; and demolition and construction of new units. The  estimated costs for the projects we selected ranged from $4,500 for one  roof replacement to more than $32 million for the complete rehabilitation  of 172 rental units—$28 million of which will be Recovery Act funds.  Housing agencies reported that 62 of the 77 contracts they planned to  award for these projects—some projects had more than one contract— had already been awarded or were in the process of soliciting bids.
Officials from at least four housing agencies stated that they received bids  that were lower than expected, which will allow them to complete more  projects with these funds. They said that, due to economic conditions,  contractors have little work and are submitting lower bids in order to have  projects and keep their staff employed. As a result, housing agencies may  have to identify additional projects on which to use Recovery Act funds in  order to obligate all their funds, although officials from these agencies did  not anticipate having difficulties in obligating all their Recovery Act funds  before the deadline. For example, officials from Mississippi Regional  Housing Authority VIII were considering expanding the scope of an  interior renovation project after awarding a contract for less than half of  what they had budgeted for roofing, siding, and other exterior  improvements at another property.
section_title: Housing Agencies Report Few Challenges Meeting the Priorities of the Recovery Act
paragraphs: The Recovery Act required housing agencies to give priority to projects  already under way or in the 5-year plan, projects that can award contracts  based on bids within 120 days, and projects that rehabilitate vacant rental  units, and in many cases housing agencies were able to meet one or more  of these priorities. As we reported in July 2009, housing agencies generally  selected projects that were on their 5-year plans. Others, such as Boston  Housing Authority, also selected projects that were already under way but  that could be expanded or accelerated with additional funds. Eighteen  housing agencies we visited were able to award at least one contract based  on bids within 120 days of the funds becoming available. For example,  Rahway Housing Authority in New Jersey awarded seven of its nine  contracts, representing 87 percent of its Recovery Act funds, within 120  days. In addition, two housing agencies each had only one project and one  contract for that project, which they were able to award within 120 days.  However, housing agencies with larger projects or a larger number of  projects were at times unable to meet this time frame due to extensive  design work that needed to be done first or to internal and external  policies and procedures that are not easily sped up. For example, officials  at Boston Housing Authority said that the design work to meet the  extensive and complex building codes takes time. In addition, housing  agencies that HUD put on “zero threshold” or that were troubled  performers said they had difficulty meeting this priority because of the  additional monitoring steps HUD had put in place for them. Finally,  housing agencies reported having few vacant units and therefore did not  have many projects to rehabilitate vacant units. One exception was  Newark Housing Authority in New Jersey, which had rehabilitated 313  vacant units using Recovery Act funds and expected to rehabilitate 109  more. Newark Housing Authority officials said they had about 700 long- term vacant units, as well as 300 units vacant as a result of normal  turnover.
The Recovery Act also required that housing agencies use Recovery Act  funds to supplement rather than supplant funds from other sources.  Housing agency officials we spoke with generally did not see supplanting  as a major challenge and thought they would have no trouble abiding by  the requirement. Officials at several housing agencies noted they had many  more projects that needed to be done than could be completed with only  their regular Capital Fund grants, so it was not difficult to identify projects  that did not have any other funding. In addition, housing agency officials  told us they were keeping track of their Recovery Act funds separately  from their regular Capital Fund grants in order to make clear that the  Recovery Act funds were not supplanting other funds that had already  been obligated. Other housing agency officials stated that annual  statements and 5-year plans are reviewed multiple times—by the public,  by the housing agency’s board, and by HUD—and that these layers of  review serve as a check to ensure that supplanting does not occur.
section_title: HUD Continues to Monitor Troubled Housing Agencies’ Use of Recovery Act Funds
paragraphs: As we noted in our September 2009 report, HUD has designated 172  housing agencies as troubled under its Public Housing Assessment System  (PHAS) and has implemented a strategy for monitoring these housing  agencies. Of these 172 troubled housing agencies, 106 (61.6 percent)  were considered by HUD to be low-risk troubled, 53 (30.8 percent) were  considered medium-risk troubled, and the remaining 13 (7.6 percent) were  considered high-risk troubled. HUD officials stated they have completed  remote reviews of these housing agencies’ administration of the Recovery  Act and plan to complete on-site reviews on the premises of these housing  agencies by December 31, 2009. HUD analyzed a sample of 45 remote  reviews and 45 on-site reviews. Among other things, HUD remote reviews  found that many housing agencies had not amended their procurement  polices as required by HUD. On-site reviews found that most sampled  agencies had not yet awarded contracts at the time of the review. HUD  also found that agencies were moving cautiously on contracting as they  awaited HUD’s August 2009 guidance on implementing the “Buy  American” provision of the Recovery Act. HUD’s remote reviews also  raised questions about proposed work items that do not appear in  previously approved annual statements or 5-year plans. As a result,  according to HUD, field staff contacted housing agencies to ensure that  they appropriately amended their plans to reflect these projects. As of  November 14, 2009, troubled housing agencies accounted for 6 percent of  all Recovery Act funds provided by HUD, and they continue to obligate  and draw down Recovery Act funds at a slower rate than nontroubled  housing agencies (see fig. 23).
Further, when obligation rates are broken down by quartiles (see fig. 24),  as of November 14, 2009, 65 percent of all troubled housing agencies have  obligated 25 percent or less of their Recovery Act funds. More than one- third, almost 37 percent, of the troubled housing agencies have not  obligated any Recovery Act funds. As noted above, according to HUD  officials, HUD is in the process of contacting all housing agencies that had  not obligated any funds, including troubled housing agencies, as well as  housing agencies with low obligation rates, in order to determine what  assistance HUD could provide to these agencies.
One possible reason for these slower obligation and draw-down rates is  the additional monitoring that HUD is implementing for housing agencies  that are designated as troubled performers under PHAS. For example,  according to HUD officials, all 172 troubled public housing agencies— regardless of risk category—have been placed on a “zero threshold” status,  which means HUD has not allowed them to draw down Recovery Act  funds without HUD field office approval. HUD officials said the ability to  place housing agencies on “zero threshold” has always been available and  had been used for housing agencies that have had problems obligating and  expending their Capital Fund grants appropriately prior to the Recovery  Act. However, as we previously reported, HUD has implemented more  extensive monitoring for all troubled housing agencies, including requiring  that HUD field office staff review all award documents (such as  solicitations, contracts, or board resolutions, where applicable) prior to  obligation of Recovery Act funds. According to HUD officials, also  contributing to the low obligation percentages is the fact that many  troubled housing agencies routinely struggle with procurement processes.
section_title: HUD Is Implementing Its Strategy for Monitoring Nontroubled Housing Agencies
paragraphs: Building on its efforts to more closely monitor the use of Recovery Act  funds by troubled housing agencies, HUD is implementing a strategy for  monitoring nontroubled housing agencies, as well. Under its nontroubled  strategy, HUD has taken the 2,949 nontroubled housing agencies that  received Recovery Act funds and separated them into two groups for the  purposes of monitoring and oversight: high risk and low risk. The high- risk group is composed of the 332 housing agencies that have been  identified as the highest risk based in part on the amount of their Recovery  Act funding. The low-risk group consists of the remaining 2,617  nontroubled housing agencies. HUD’s nontroubled strategy calls for  remote reviews to be completed by January 15, 2010, on all nontroubled  housing agencies. In addition, HUD’s strategy calls for on-site reviews for a  sample of nontroubled housing agencies from each of the two risk groups,  with the objective of reaching those at greatest risk and ensuring coverage  of grantees constituting the greatest amount of formula grant dollars.  Remote reviews are to focus on four main components: grant initiation,  environmental compliance, procurement, and grant administration. On-site  reviews of a sample of housing agencies provide follow up to outstanding  issues from the remote reviews and also include a review of contract  administration for procurements related to the use of Recovery Act funds.
HUD’s nontroubled strategy calls for on-site reviews for a sample of 252  high-risk nontroubled housing agencies to be completed by February 15,  2010. For the remaining 2,617 housing agencies in the low-risk group,  HUD’s strategy calls for on-site reviews for a sample of 286 housing  agencies to be completed by February 15, 2010. In September 2009, we  recommended that HUD expand the criteria for selecting housing agencies  for on-site reviews to include housing agencies with open Single Audit  findings that may affect the use of Recovery Act funds. In October 2009,  HUD implemented this recommendation by expanding its criteria for  selecting housing agencies for on-site reviews to include all housing  agencies with open 2007 and 2008 Single Audit findings as of July 7, 2009,  relevant to the administration of Recovery Act funds. HUD has identified  27 such housing agencies and plans to complete these on-site reviews by  February 15, 2010.
section_title: Technical Challenges with FederalReporting.gov Delayed Housing Agencies’ Processing of Recipient Reports
paragraphs: HUD officials said that even though many of the data elements requested  for Recovery Act recipient reporting were new to housing agencies,  approximately 96 percent of housing agencies had successfully reported  into federalreporting.gov. Initial reports suggested a lower reporting rate  of approximately 84 percent, but this was due to a substantial number of  housing agencies incorrectly entering values into certain identification  fields, such as the award ID number, the awarding agency, or the type of  funding received. HUD officials said the system did not have validation  measures in place to ensure the correct award ID numbers were entered.  In addition, housing agencies could not edit the award ID number without  submitting a new report. According to a HUD official, OMB initially termed  reports that could not be matched with a federal agency as “orphaned.” A  HUD official said that HUD program and Recovery team staff reviewed  reports submitted with nonmatching award ID numbers and OMB’s list of  reports that could not be matched to a federal agency to determine if they  matched HUD awards. As a result of these efforts by HUD staff, HUD was  able to achieve a rate of reporting of approximately 96 percent.
According to HUD officials, public housing agencies encountered  challenges related to registration and system accessibility. For example, a  HUD official said the registration process for federalreporting.gov requires  several steps such as obtaining a DUNS number, registering with the  Central Contractor Registration (CCR) and obtaining a Federal Reporting  Personal Identification Number (FRPIN). The HUD official told us these  steps are necessary for validating the recipient reports because they  ensure the appropriate points of contact at the appropriate  organizations—in this case, public housing agencies—are reporting for  each program. Federalreporting.gov states that each recipient’s point of  contact information is taken directly from the CCR, and if an organization  changes its point of contact information, it will take 48 hours for  federalreporting.gov to receive the change and e-mail the FRPIN and  temporary password to the new point of contact. According to the HUD  official, a housing agency’s contact information in CCR is sometimes  outdated, and the systems are often not updated in time for access to be  correctly transferred. Additionally, one housing agency official in  Mississippi reported saving his data entry as a draft before being timed out  of the system but was unable to retrieve the data when he re-entered the  reporting Web site. A HUD official said that, in the future, HUD and OMB  will need to improve the function of the system and that the agencies are  working to ensure all housing agencies have access to the reporting  systems.
section_title: Housing Agencies’ Confusion about the Methodology for Calculating Jobs Created and Retained May Have Resulted in Reporting Errors
paragraphs: According to a HUD official, there was widespread misunderstanding by  public housing agencies about OMB’s methodology for calculating the  number of jobs created or retained by the Recovery Act, in part because  housing agencies are not familiar with reporting jobs information. In a few  cases, we found that public housing agencies had reported the number of  jobs created or retained into federalreporting.gov without converting the  number into full-time equivalents. For example, officials from a housing  agency in Illinois reported the number of people, by trade, who worked on  Recovery Act-related projects but did not apply the full-time equivalent  calculation outlined by OMB in the June 22 reporting guidance.  Additionally, officials from a public housing agency in Mississippi told us  that they based the number of jobs they reported into federalreporting.gov  on letters from their contractors detailing the number of positions rather  than full-time equivalents created as a result of their Recovery Act-funded  projects. In another case, a housing agency official in Massachusetts told  of having difficulty locating guidance on calculating job creation. As a  result, the housing agency may have underreported jobs data from an  architectural firm providing design services for a Recovery Act window  replacement project at a public housing complex.
OMB published guidance on calculating jobs created and retained using  full-time equivalents (FTE) on June 22, 2009. In early September, HUD  posted the OMB guidance to its Web site and provided information by e- mail to housing agencies on registration for federalreporting.gov, as well  as links to Web seminars and training provided by OMB. In the meantime,  as HUD was developing program-specific guidance, HUD and OMB  discussed clarifying portions of OMB’s guidance right up to the end of  September, according to a HUD official. HUD issued further guidance to  public housing agencies by e-mail on September 25, 2009, approximately 2  weeks before the October 10, 2009, deadline for recipient reporting,  providing templates and data dictionaries tailored to the Public Housing  Capital Fund. The guidance also reiterated the recipient reporting  responsibilities for public housing agencies.
HUD officials told us they did not have enough time to translate some of  the terminology into concrete terms that would be clearer to housing  agency officials, partly due to their continuing discussions with OMB on  clarifying its guidance. For example, HUD posted a jobs calculator  spreadsheet to its Web site, and HUD field staff would direct housing  agencies to this guidance when they asked specific questions about how to  calculate jobs. A HUD official said it seemed like some housing agencies  may have pulled information for the recipient reports from the wrong  fields in the job calculator, which produced errors. Therefore, greater  instruction may be needed beyond what was provided to housing agencies  on the job calculator’s instructions page. A HUD official stated they will  work with OMB to improve housing agencies’ understanding of the  methodology for reporting in full-time equivalents prior to the next round  of recipient reporting in January 2010. This is consistent with  recommendations we recently made. We reported in November 2009 that  recipients of Recovery Act funds were inconsistent in their interpretation  of OMB guidance on reporting FTEs. We recommended that OMB, among  other things, clarify the definition and standardize the period of  measurement for FTEs and work with federal agencies to align this  guidance with OMB’s guidance and across agencies.
HUD has taken a number of steps to ensure recipient reported data are  correct, including developing a data quality review plan, automated data  checks, flags for duplicate entries, awards entered incorrectly as  contracts, and incorrect award identification numbers. Overall, HUD  entered approximately 2,700 comments into federalreporting.gov through  its data quality checks of housing agency recipient reports. We continue to  monitor these efforts as part of our ongoing assessment of recipient  reporting requirements.
section_title: HUD Is Seeking to Improve Registration and Accessibility for RAMPS Reporting
paragraphs: As we reported in September 2009, HUD developed the Recovery Act  Management and Performance System (RAMPS) for Recovery Act  reporting purposes, including public housing agencies’ compliance  information for the National Environmental Policy Act (NEPA), as  required by the Recovery Act. Section 1609 of the Recovery Act requires  that adequate resources must be devoted to ensuring that applicable  environmental reviews under NEPA are completed expeditiously and that  the shortest existing applicable process under NEPA shall be used. HUD  officials said that while public housing agencies have had to comply with  NEPA since it was enacted in 1970, reporting on environmental  assessments is a new requirement for public housing agencies.
A HUD official said most of the challenges that housing agencies faced  were related to registration and accessing RAMPS rather than entering  data. For example, some housing agencies reported having difficulty  gaining access to RAMPS. According to a HUD official, this may be due to  housing agencies’ unfamiliarity with electronic reporting and frustration  with the amount of reporting required. The official said that for RAMPS,  HUD provided screenshot-by-screenshot guidance to housing agencies to  assist them through the reporting system. However, the HUD official also  said there was no self-registration for RAMPS. Instead, HUD provided  registration information to housing agencies using data elements from  HUD systems, including information on active users combined with  recipient groups, tax identification numbers and grant numbers. According  to the HUD official, if any of these elements did not line up across systems,  housing agencies were not registered to use RAMPS and could not access  the system. The official said HUD is working to clean up the data in  RAMPS to make sure the registration process is successful for the next  round of recipient reporting.
According to a HUD official, in some cases HUD field offices are  responsible for conducting the environmental reviews under NEPA and  therefore are responsible for reporting into RAMPS. The official said a  consequence of this is that it takes staff away from other responsibilities,  such as monitoring and oversight. In other cases, housing agencies that  complete environmental reviews under NEPA must report data directly  into HUD’s RAMPS.
section_title: Competitive Grants for Public Housing Have Been Awarded, and Projects Will Begin Soon
paragraphs: Under the Recovery Act, HUD was required to award nearly $1 billion to  public housing agencies based on competition for priority investments,  including investments that leverage private sector funding or financing for  renovations and energy conservation retrofitting. HUD accepted  applications from June 22 to August 18, 2009, and according to a HUD  official, 746 housing agencies submitted 1,817 applications for these  competitive grants. In September 2009, HUD awarded competitive grants  to housing agencies that successfully addressed the requirements of the  notice of funding availability under the following four categories:    For the creation of energy-efficient communities, 36 grants totaling  $299.7 million were awarded for substantial rehabilitation or new  construction, and 226 grants totaling $305.8 million were awarded for  moderate rehabilitation.
For gap financing for projects that are stalled due to financing issues,  38 grants totaling $198.8 million were awarded.
For public housing transformation, 15 grants totaling $95.9 million  were awarded to revitalize distressed or obsolete public housing  projects.
For improvements addressing the needs of the elderly or persons with  disabilities, 81 grants totaling $94.8 million were awarded.
According to data provided by HUD, larger housing agencies (that is, those  with more than 250 public housing units) were more successful in  obtaining competitive grants. Although smaller housing agencies (those  with fewer than 250 units) outnumber larger housing agencies by three to  one, larger agencies submitted about three applications for every one  submitted by smaller agencies. A HUD official said that some small  housing agencies have only one or two projects, and because one  competitive grant may be awarded for a given project, these agencies had  fewer opportunities to apply. Further, applications from larger housing  agencies were more likely to be successful. Specifically, while about 26  percent of applications from larger housing agencies resulted in  competitive grant awards, 11 percent of applications from smaller housing  agencies resulted in awards. Housing agencies with more than 250 units  represent about one-fourth of all housing agencies but manage most of the  public housing units nationally. As a result, because these housing  agencies likely have more needs and more projects to be funded, it was no  surprise to the HUD official they were so successful. He said HUD was  satisfied by the participation and successful applications of housing  agencies of all sizes.
We selected one competitive grant from each of eight housing agencies.  Six of the grants we selected were multimillion-dollar efforts, while five  grants had an energy-efficiency focus. Four projects involve at least 100  units, including one involving 281 units. See table 8 for a summary of the  projects. Housing agency officials said these projects would begin in the  coming months.
We found mixed views of the competition among housing agency officials  that had applied for competitive grants. We visited 15 housing agencies  that applied for competitive grants, including 8 that received competitive  grant awards. Officials at three agencies said they were very satisfied with  the application process, while five others said they were somewhat  satisfied, including two that were not awarded a competitive grant. Only  one official was very dissatisfied, and another was somewhat dissatisfied,  and in both cases, their housing agencies were not awarded a competitive  grant. Both officials said they had not received feedback on why their  applications were not successful and thought the requirements may have  favored agencies with more resources. HUD officials said they recently  notified housing agencies that had unsuccessful applications why they  were not selected, the most common reason being insufficient funds. In  addition, officials from two housing agencies thought the competition was  not fair because housing agencies that had already made certain  improvements, such as increasing energy efficiency or completing lead- paint abatement, were not able to accumulate as many points for those  types of activities as housing agencies that had been less proactive.
Capacity was a substantial barrier to applying for competitive grants for a  variety of agencies we visited, including at least one housing agency that  was awarded a competitive grant. For example, officials in Phoenix stated  they had a contractor assist with the application because their staff did not  have the time or capacity to complete it in time. Officials from two other  housing agencies stated they did not apply because they did not have  enough time or staff to pull together the information required before the  deadline. Officials from another agency believed that larger housing  agencies were able to put together better applications that were more  likely to be awarded grants because they had professional staff in house to  put the applications together. Other housing agency officials said they did  not apply because they were not sure that they had the capacity to  administer the competitive grant within the time frames specified in the  Recovery Act.
section_title: DOE’s Weatherization Assistance Program Is Just Beginning to Spend Recovery Act Funds
paragraphs: The Recovery Act appropriated $5 billion for the Weatherization  Assistance Program, which the Department of Energy (DOE) is  distributing to each of the states, the District of Columbia (District), and  seven territories and Indian tribes; the funds are to be spent over a 3-year  period. During the past 32 years, the program has helped more than 6.2  million low-income families by making such long-term energy-efficiency  improvements to their homes as installing insulation; sealing leaks; and  modernizing heating equipment, air circulation fans, and air conditioning  equipment. These improvements enable families to reduce energy bills,  allowing these households to spend their money on other needs, according  to DOE. The Recovery Act appropriation represents a significant increase  for a program that has received about $225 million per year in recent  years.
DOE has approved the weatherization plan of each of the states, the  District, and seven territories and Indian tribes. DOE has obligated about  $4.76 billion of the Recovery Act’s weatherization funding to the states,  while retaining about 5 percent of funds to cover the department’s  expenses. Each state has access to 50 percent of its funds, and DOE plans  to provide access to the remaining funds once a state meets a certain  target. As of September 30, 2009, 43 states and territories reported they  had begun to use Recovery Act weatherization funds, while 15 states and  territories reported they had not used any Recovery Act funds. The 43  states and territories also reported that, as of September 30, 2009, they had  outlaid $113 million, or about 2 percent, of the $5 billion for  weatherization activities and had completed weatherizing about 7,300, or  about 1 percent, of the 593,000 housing units planned. In addition, they  reported that about 2,800 jobs had been created and about 2,400 jobs had  been retained through the use of the Recovery Act’s weatherization funds.
As shown in table 9, as of November 30, 2009, six of the states in our  review had begun spending Recovery Act funds to weatherize homes,  while California and the District had not. A key factor slowing the start of  weatherization activities is the act’s requirement that all laborers and  mechanics employed by contractors and subcontractors on Recovery Act  projects be paid at least the prevailing wage, including fringe benefits, as  determined under the Davis-Bacon Act. Because the Weatherization  Assistance Program, funded through annual appropriations, is not subject  to the Davis-Bacon Act, the Department of Labor (Labor) had not  previously determined prevailing wage rates for weatherization workers.  On September 3, 2009, Labor completed its determination of wage rates  for weatherization work conducted on residential housing units in each  county of the 50 states and the District.
Officials in each of the states and the District in our review said that,  overall, Labor’s county-by-county prevailing wage rates for weatherization  work were about what they had expected. About two-thirds of these  officials told us Labor’s wage rates are similar to what local agencies had  previously been paying. Many representatives of the local agencies we  interviewed confirmed that these rates generally were about what they had  been paying for weatherization work.
However, many weatherization contracts between states and local  agencies have been delayed because of concerns about complying with  Recovery Act requirements—including Davis-Bacon Act requirements that  contractors pay workers weekly and submit weekly certified payroll  records—and OMB’s reporting requirements. Some state agencies have  delayed disbursing Recovery Act funds to local agencies because they  were not satisfied that local agencies had the proper infrastructure in  place to comply with these requirements. Pennsylvania officials told us  that delays occurred because some local agencies had initially submitted  management plans that had not included language describing how they  would comply with the Davis-Bacon Act. The state agencies of California  and the District of Columbia, which had not spent any Recovery Act funds  to weatherize homes, were finalizing Recovery Act weatherization  contracts with their local agencies as of November 30, 2009. California’s  state agency requires local agencies to adopt Recovery Act requirements in  their weatherization contracts, including certifying that they can comply  with the Davis-Bacon Act, before these agencies are provided with  Recovery Act funds to weatherize homes. Only 2 of California’s 35 local  agencies that have been awarded Recovery Act funds had accepted these  required amendments by the initial October 30, 2009, deadline. According  to California officials, many local agencies pursued negotiations due to  concerns about some provisions of these amendments.
Several state and local agency officials expressed concern about the  administrative burden to state and local agencies of complying with  Recovery Act requirements, and many of these agencies were taking the  time to hire additional staff to better ensure compliance. For example,  Michigan officials told us their agency planned to add 22 staff, including a  Davis-Bacon analyst, to ensure compliance with Recovery Act  requirements. They also told us that federal administrative requirements,  such as a weekly certified payroll, required them to make technological  upgrades in their weatherization division. Ohio officials told us that  ensuring compliance with the Davis-Bacon Act documentation was a  significant undertaking. District officials told us that their agency had not  expended Recovery Act funds to weatherize homes because they have  been developing the infrastructure to administer the program by, for  example, hiring new staff. Local agencies in California, Michigan, New  York, and Ohio had also hired new staff to process Davis-Bacon  paperwork. Several state and local officials expressed concern about the  administrative burden on small contractors of complying with Recovery  Act requirements because these contractors generally have fewer  resources and less experience with accounting processes.
According to DOE officials, some local agencies have been hesitant to use  Recovery Act funding to weatherize homes until they are certain they are  in compliance with the Davis-Bacon Act. The DOE officials had expected  to receive fewer questions from local agencies about Davis-Bacon Act  requirements after Labor had determined prevailing wages, but in fact they  continue to receive frequent questions about these requirements. The DOE  officials explained that many local agencies have been expending their  DOE annual appropriation funds—which are not subject to Davis-Bacon  Act requirements—to weatherize homes before using their Recovery Act  funds.
State and local officials in California, New York, and Ohio also expressed  concern about Labor’s determination that the new prevailing wage rates  for weatherization workers are limited to multifamily residential buildings  of four or fewer stories, while Labor’s commercial building construction  wage rates (for plumbers, carpenters, and other laborers) apply to  multifamily residential buildings of five or more stories. As a result, local  agencies conducting weatherization work on multifamily units in high rise  buildings must pay their workers wage rates that can be significantly  higher than what local agencies pay weatherization workers for residential  housing units. For example, in New York County (Manhattan), commercial  prevailing wages were three times more than the rates for residential  weatherization laborers. Representatives of two local agencies in New  York told us that they intend to subcontract out all weatherization work  conducted on buildings over four stories because they could not pay their  workers vastly different wages based on the type of building involved.  According to Ohio officials, some local agencies had delayed projects in  larger multifamily buildings until they could better estimate project costs.  In response to states’ concerns, DOE’s November 10, 2009, guidance states  that the wage rates for the new weatherization laborer category do not  apply to weatherization work performed on buildings of five or more  stories. The guidance allows the states to calculate the cost effectiveness  over the lifetime of a project by using the new weatherization wage rates  rather than the prevailing wages for plumbers, carpenters, and other  laborers working on multifamily buildings.
subsections: section_title: Some States Are Concerned That Compliance with the National Historic Preservation Act Will Slow Weatherization Activities
paragraphs: Compliance with the National Historic Preservation Act could also slow  the use of the Recovery Act’s weatherization funds. First enacted in 1966,  the National Historic Preservation Act requires federal agencies to, among  other things, take into account the effect of any federal or federally  assisted undertaking on historical properties included in a national  register of historic sites, buildings, structures, and objects. Michigan  state officials told us that, under the act, its State Historic Preservation  Office is allowed to conduct a historic review of every home over 50 years  of age if any work is to be conducted. They explained that, in Michigan,  this could mean an estimated 90 percent of the homes to be weatherized  would need such a review, which could cause significant delays. H e  in November 2009, Michigan state officials signed an agreement with th State Historic Preservation Office that is designed to expedite the review  process. With this agreement in place, state officials said they are  confident that the historic preservation requirements can be met without  causing further delays. New York officials told us that several entire  neighborhoods in their state fall under the protection of the act and noted  owever,  that the State Historic Preservation Office may have to conduct a review  before any residential units in such a neighborhood can be weatherized.  State officials in Iowa expressed similar concerns. State officials in New  York and Iowa have contacted their respective historic preservation  offices to develop approaches for addressing the review process.
section_title: State and Local Agencies Have Begun to Report on the Impacts of Recovery Act Funds; While All Submitted Timely Reports, Two Cited Issues with the Reporting Requirements
paragraphs: DOE’s guidance directs the states to report on the number of housing units  weatherized and the resulting impacts to energy savings and jobs created  and retained at both the state and local agency level. While state officials  have estimated the number of housing units that they expect to weatherize  using Recovery Act funds, only a few of the states have begun collecting  data about actual impacts. Although many local officials have collected  data about new hires, none could provide us with data on energy savings.  This lack of information about impacts exists primarily because most state  and local agencies either are just beginning to use Recovery Act funds to  weatherize homes or have not yet begun to do so. Some of the local  agencies, however, either collect or plan to collect information about  other impacts. For example, local agencies in both California and  Michigan collect data about customer satisfaction. In addition, a local  agency in California plans to report about obstacles, while an agency in  New York will track and report the number of units on the waiting list.
In regard to recipient reporting, weatherization officials in all eight states  that we reviewed said they submitted these reports on schedule. However,  Massachusetts and Ohio officials cited issues with the reporting  requirements. In Massachusetts, state officials told us of confusion  associated with terminology related to new or retained jobs, and local  officials said that the Massachusetts Recovery and Reinvestment Office  requires additional information about demographics not required by OMB.  Ohio officials told us that for reporting purposes, they estimated the  number of jobs that could potentially be created. The inconsistency  between potential positions and actual hours worked resulted in an  inaccurate reporting of jobs created. One of the local agencies we visited  reported 36 jobs created, but officials acknowledged they had only filled  20 positions at the time of our visit. Another local agency reported 14  agency and 8 contractor jobs created, but an official confirmed that only 6  agency and 7 contractor positions had been filled.
section_title: Federal, State, and Local Agencies Plan to Monitor the Use of Recovery Act Weatherization Funds but Face Challenges
paragraphs: States plan to monitor the use of the Recovery Act’s weatherization funds  through fiscal and programmatic reviews of the local agencies providing  weatherization service. DOE requires that state agencies collect  information from their local agencies and submit programmatic and fiscal  reports. Only a few states we reviewed expressed concerns that a small  number of their local agencies did not have adequate controls.
Most states reported that the primary tools for evaluating a local agency’s  internal controls will be the fiscal reviews and program monitoring. This  includes reviews of client files and financial information, on-site  monitoring of local service providers, and site inspections of at least 5  percent of weatherized homes. State officials in Iowa reported that  controls were in place prior to the Recovery Act and that the  demonstrated success of these programs is proof of sufficient internal  controls. Other state officials reported that Single Audits provided insight  into a local agency’s internal controls. Five of the eight states we reviewed  reported that they had adequate resources to monitor the status of  Recovery Act funds and evaluate the program’s success. However, some  states noted they would need to hire staff to meet the increased workload.
Local agencies plan to use a variety of controls to ensure that the  Recovery Act’s weatherization funds are used for the intended purposes.  The most frequently mentioned controls were to separate Recovery Act  funds from annually appropriated weatherization funds, pre- and post- weatherization evaluations, tracking job costs, and unannounced site  inspections. Most local agencies also have procedures in place to ensure  they do not contract with service providers that have been placed on the  “Excluded Parties List” due to a history of fraudulent business practices.  Local agencies reported the most common procedure to evaluate a  contractor’s reputation was to check the contractor’s name online against  the “Excluded Parties List.” Other local agencies require contractors to  sign documentation stating that they have not been debarred or bankrupt.  Risk assessments also serve as a procedure to prevent fraudulent or  wasteful use of Recovery Act funds. For example, some local agencies  reported that new contractors are subjected to a higher level of scrutiny  than more experienced contractors. Local agency officials in New York,  California, and Ohio told us a long history of weatherization service  mitigates the risk that a contractor will improperly use funds.
Our review has started to examine the states’ efforts to monitor the  performance and reporting of local agencies. While the states have spent  relatively few funds and we have reviewed weatherization activities in  only a few locales, we have identified challenges for DOE and the states to  ensure that Recovery Act funds are spent prudently and that the  performance of local agencies is well-managed. For example, in Ohio we  found during our site visits that grantees had inconsistent practices for  reporting the number of homes weatherized and, in one case, a grantee  used Recovery Act funds to weatherize the home of an ineligible applicant.  Faced with these early implementation challenges, Ohio officials indicated  that administrative monitoring will begin in December 2009 and fiscal  monitoring in January 2010, and on November 20, 2009, the state issued  new guidance to all state agencies regarding reporting requirements.  Challenges in Pennsylvania include expanding the state’s oversight  capacity, training and certifying weatherization workers, and  implementing a statewide procurement system for weatherization  materials purchased with Recovery Act funds. In addition, California’s  Inspector General reported that one local agency has been designated as  high risk because of questionable spending.
DOE is hiring staff to provide national oversight to the Recovery Act  weatherization program. DOE officials told us that each state will be  assigned a project officer who will review the state’s fiscal and  programmatic reports. Project officers will also be responsible for  coordinating site visits to the state and local agencies responsible for  weatherization, as well as visiting a sample of projects being weatherized  with Recovery Act funds. DOE is in the process of hiring this team.
section_title: FEMA’s EFSP Recovery Act Funds Have Been Awarded to Local Recipient Organizations
paragraphs: The Emergency Food and Shelter Program (EFSP), which is administered  by the Federal Emergency Management Agency (FEMA) within the  Department of Homeland Security (DHS), was authorized in July 1987 by  the Stewart B. McKinney Homeless Assistance Act to provide food,  shelter, and supportive services to the homeless. The program is  governed by a National Board composed of a representative from FEMA   and six statutorily designated national nonprofit organizations. Since its  first appropriation in fiscal year 1983, EFSP has awarded over $3.4 billion  in federal aid to more than 12,000 local private nonprofit and government  human service entities in more than 2,500 communities nationwide.
subsections: section_title: The Recovery Act Increased Funds for EFSP Program
paragraphs: The Recovery Act included a $100 million appropriation for the EFSP  program in addition to the $200 million included in DHS’s fiscal year 2009  appropriations. The additional funding was awarded to the National Board  on April 9, 2009. As stated in FEMA’s May 15, 2009, Recovery Act Plan for  EFSP, EFSP’s goal is to deliver critical funding to human services  organizations serving hungry and homeless people throughout our nation.  While additional funding is provided, FEMA’s Recovery Act plan notes that  EFSP’s objectives remain the same. These objectives are to  allocate funds to the neediest areas,    deliver the funds expeditiously and efficiently,   create and strengthen public and private sector partnerships,   empower local representatives to make funding decisions, and    maintain minimal but accountable reporting.
section_title: The National Board Distributes EFSP Funds to Local Recipient Organizations Selected by Local Boards
paragraphs: The National Board distributes the EFSP funds to local recipient  organizations (LRO) selected by Local Boards in jurisdictions the National  Board has determined are eligible for funds—for example, local food  banks or shelters within a state. The United Way Worldwide is the  Secretariat and Fiscal Agent to the National Board and employs a staff of  12 to administer the program. One FEMA permanent full-time position is  dedicated to the EFSP program, but the position is not funded through the  EFSP appropriation. By law, the total amount appropriated for the EFSP  program is awarded to the National Board.
The National Board uses population, unemployment, and poverty data to  determine which jurisdictions, such as counties or cities within a state, are  eligible for EFSP funds. Local Boards evaluate applications from LROs in  the jurisdiction and determine which LROs will receive the grant awards.
In order to be eligible to have LROs receive a portion of the $100 million in  EFSP Recovery Act funds, jurisdictions must have met one of the  following criteria from February 2008 through January 2009:  their number of unemployed was 13,000 or more with a 5 percent rate  of unemployment,  their number of unemployed was between 300 and 12,999 with a 7  percent rate of unemployment, or  their number of unemployed was 300 or more with a poverty rate of 11  percent.
Once the National Board determines that jurisdictions are eligible for  EFSP funding, and notifies the jurisdictions of their allocations, Local  Boards are convened in each of the qualifying jurisdictions to review  applications submitted by LROs and determine which LROs in their  communities will receive funds. While the Local Board determines which  LROs are to be awarded funds, the National Board distributes the funds  directly to the LROs, rather than through the Local Board or a state or  local government agency. The National Board’s program manual  stipulates, however, that the Local Boards are responsible for monitoring  LRO’s expenditure of EFSP funds to ensure that LRO’s actual  expenditures are consistent with planned uses of funds and are within the  purpose of the Act that established the EFSP program.
EFSP funds, including the Recovery Act funds, can be used for a range of  services, including food in the form of served meals or other food, such as  groceries; lodging in a mass shelter or hotel; 1 month’s rent or mortgage  payment; 1 month’s utility bill payment; minimal repairs to allow a mass  feeding or sheltering facility to function during a program year; and  equipment necessary to feed or shelter people up to a $300 limit per item.  Program funds cannot be used for rental security deposits of any kind,  cash payments of any kind, lobbying efforts, salaries (except as an  administrative allowance that is limited to 2 percent of the total award),  purchases or improvements of an individual’s private property, telephone  costs, repairs to government-owned or profit-making facilities, and any  payments for services not incurred.
The National Board reserved about $12 million of the $100 million EFSP  Recovery Act funds for State Set-Aside (SSA) awards. SSA committees  identify jurisdictions with significant needs or service gaps that may not  have qualified for EFSP funding under the standard formula. The  jurisdictions may include areas with recent jumps in unemployment and  isolated pockets of homelessness or poverty. The SSA committees develop  their own formula, based on the number of unemployed in the non-EFSP  qualifying jurisdictions in each state, to identify pockets of homelessness  or jumps in unemployment.
section_title: Recovery Act EFSP Award Funds to LROs in 16 States and the District of Columbia
paragraphs: As of November 4, 2009, LROs in the 16 states and the District of Columbia  (District) that GAO is following as part of its Recovery Act review were  awarded almost $66.2 million in Recovery Act EFSP funds (76 percent) out  of almost $87 million in standard Recovery Act awards nationwide, and  about $4.8 million (almost 40 percent) of the approximately $12 million in  Recovery Act SSA awards. The Recovery Act awards (standard and set- aside combined) for the LROs in the 16 states and the District ranged from  $14.6 million for California’s LROs to $720,540 for Iowa’s LROs. (See table  10.) The average standard EFSP Recovery Act award for the LROs in each  of the 16 states and the District was about $3.6 million. The average SSA  Recovery Act award was about $300,000 for the LROs in the 16 states,  ranging from about $724,000 for Pennsylvania’s LROs to about $2,300 for  Arizona’s. SSA funds, which are intended to meet significant needs or fill  gaps in places not covered by the standard EFSP funds, constituted  differing proportions of the total EFSP awards in the states we reviewed.  For example, the SSA award for LROs in Pennsylvania represented 19  percent of the state’s total EFSP award, while it represented less than 1  percent of Arizona LROs’ total award. In contrast, Iowa LROs received a  total SSA award of about $406,000—more than half (56 percent) of the  state LROs’ total award of about $720,500.
As of November 4, 2009, LROs in 16 states and the District of Columbia  had plans for using more than $64.7 million (98 percent) of their total  Recovery Act EFSP awards. (See table 11.)
Our analysis of the planned use of EFSP Recovery Act funds reported by  the Local Boards in the 16 states and the District showed that the largest  planned use of funds by the LROs was for “other food” (32 percent)—that  is, food programs such as food banks and pantries, food vouchers and  food-only gift certificates, and rent and mortgage assistance (29 percent).  However, there is some variation in how LROs in the states planned to use  the EFSP funds. For example, while LROs in California and New York  reported that they planned to use about 40 percent of their total award  funds on other food, LROs in Texas, Florida, and Michigan reported that  they planned to use from 29 percent to 37 percent of their award funds on  other food. Further, LROs in the District, Iowa, and Mississippi reported  that they planned to use from 29 percent to 39 percent of their EFSP funds  on mortgage and rent assistance, the second largest category for planned  use of funds. Mass shelter was the third-largest category for planned use of  EFSP funds by LROs across the 16 states and the District, representing  about 14 percent of total planned use of funds by LROs in these states.
section_title: Recovery Act Funds Provide Assistance to Local Governments and States and Help to Address Some Budget Challenges
paragraphs: For this report we expanded our focus on the use of Recovery Act funds to  include local as well as state governments. As shown in figure 25, we  visited 44 local governments to collect information regarding their use of  Recovery Act funds. To select local governments for our review, we  identified localities representing a range of types of governments (cities  and counties), population sizes, and economic conditions (unemployment  rates greater than and less than the state’s overall unemployment rate). We  balanced these selection criteria with logistical considerations including  other scheduled Recovery Act work, local contacts established during  prior reviews, and the geographic proximity of the local government  entities. The 44 localities we visited ranged in population from 15,042 in  Newton, Iowa to 8,363,710 in New York City. Unemployment rates in our  selected localities ranged from 5.8 percent in Garfield County, Colorado to  26.3 percent in Flint, Michigan.
The use of Recovery Act funds helped to fund existing programs for some  local governments. A number of local government officials reported that  they used Recovery Act funds for existing programs or non-recurring  projects and did not apply for grants that would result in long-term  financial obligations. For example, although several local government  officials reported applying for the Community Oriented Policing Services  (COPS) Hiring Recovery Program grant, officials in a few localities  expressed concerns about their ability to retain officers hired with  Recovery Act funds. Several localities reported applying for and receiving  funds for public works or infrastructure projects. For example, Meridian,  Mississippi is using Recovery Act funds from the Energy Efficiency and  Conservation Block Grant to complete restoration of its city hall using  energy-efficient materials. A few localities reported that projects to  increase energy efficiency could provide long-term cost-savings to the  local government.
The process of distributing federal assistance through grants is  complicated and involves many different parties. Most Recovery Act funds  to local governments flow through existing federal grant programs. Some  of these funds are provided directly to the local government by federal  agencies and others are passed from the federal agencies through state  governments to local governments. As shown in table 12, local officials  reported their governments’ use of Recovery Act funds in program areas  including public safety (COPS, Edward Byrne Memorial Justice Assistance  Grant (JAG)), Energy Efficiency and Conservation Block Grants (EECBG),  housing (Community Development Block Grant (CDBG) and Homeless  Prevention and Rapid Re-Housing Program (HPRP)), transportation and  transit, workforce investment (Workforce Investment Act (WIA)), and  human services (Community Services Block Grants (CSBG) and  Supplemental Nutrition Assistance Program (formerly the food stamp  program), and education (SFSF). Other Recovery Act funds received by  the selected localities included grants for community health centers, waste  water treatment, airport improvement, and other programs.
In addition to Recovery Act funds for which local governments were prime  recipients, several local government officials reported that additional  Recovery Act funds were received by other entities within their local  jurisdictions. For example, housing authorities, transit authorities,  nonprofit organizations, and school systems were reported as entities  within local jurisdictions which received Recovery Act funds directly from  the federal government. Newark, New Jersey officials reported that their  local government actively helped community partners pursue funding that  the city was not eligible for, such as a National Endowment for the Arts  grant. The city of Chicago, Illinois also established a partnership with  nonprofit organizations to provide training on how to apply for Recovery  Act grants for which the city was ineligible.
Some local governments reported experiencing challenges in applying for  and administering Recovery Act grants, including insufficient staff  capacity, lack of guidance, budget constraints, and short application  timetables. In particular, smaller localities, which are often rural, reported  that they faced challenges due to grant requirements and a lack of staff  capacity to find and apply for federal Recovery Act grants. Allegan County,  Michigan officials also told us the requirements and goals of many  Recovery Act programs do not fit the needs of a rural county like Allegan.  For example, applicants for a grant from the U.S. Department of  Transportation’s Transit Investments for Greenhouse Gas and Energy  Reduction program must apply for at least $2 million, making it difficult  for Allegan County to compete. Other local government officials reported  that they did not employ a staff person to handle grants and therefore did  not have the capacity to understand which grants they were eligible for  and how to apply for them. A few local officials also reported concerns  regarding some grants’ matching requirements, either at the state or  federal level. For example, officials in Springfield, Massachusetts and  Harrisburg, Pennsylvania reported an inability to apply for some grants  because it was not feasible for them to generate the funds needed to meet  the matching requirements.
subsections: section_title: Local Governments Report Ongoing Budget Challenges after Use of Recovery Act Funds
paragraphs: Local government officials reported that use of Recovery Act funds helps  to support local services but recent revenue declines are still resulting in  mid-cycle budget shortfalls. An October 2009 survey by the National  Association of Counties said that 56 percent of counties responding to the  survey reported starting their fiscal years with up to $10 million in  projected shortfalls. In the face of decreasing revenue sharing by  counties and states, a number of localities used Recovery Act funds to  plug the resulting gaps in program funding. The localities we visited  reported varied revenue-sharing relationships with state or county  governments, but several received at least some revenue from the state or  county government. A few of these localities reported that decreases in  revenue sharing contributed to their current budget shortfalls. In some  cases, the receipt of Recovery Act funds helped offset the decline in  revenue sharing from other levels of government. In other cases, Recovery  Act funds received at the state level may have reduced the severity of the  state’s revenue sharing reductions.
Several of the local governments included in our review experienced  revenue declines and budget gaps. For example, Los Angeles, California  officials stated that they were facing a $530 million shortfall as a result of  declining property taxes, sales taxes, transfer/real estate transaction taxes,  as well as utility and gas user taxes. In Jackson, Mississippi, the county  government in which Jackson is located reduced the city’s 2009 fiscal year  portion of the road and bridge tax revenue by over $500,000 and city  officials expect the revenue decrease to continue into fiscal year 2010. City  officials in Cincinnati, Ohio anticipate there will be a $28 million shortfall  in their general fund tax revenues for fiscal year 2009 and that these  revenues will continue to fall in fiscal year 2010.
Local governments took a variety of budget actions to address shortfalls.  Cincinnati, Ohio, for example, took several steps to close their budget  shortfall, including layoffs, furloughs, union wage concessions, cutbacks  in services, and drawing down on reserves. According to officials from  Atlanta, Georgia, they offset declines in revenues by raising the property  tax rate to address a projected $56 million budget gap. Officials from the  city of Dallas, Texas explained that property and sales taxes represent two  thirds of their $1.3 billion general revenue fund and the city of Dallas  experienced declines in property and sales tax revenue for the previous 12  months, and anticipates a decline in property tax revenue for fiscal year  2010. Dallas officials relied on reductions in staff and city services as well  as using $21.7 million from the city’s reserve fund to balance their budget.  Officials from both Dallas and Denton County, Texas reported that their  local governments receive no state aid. In contrast, the city of Springfield,  Massachusetts relies on state aid for 60 percent of its revenue base, and  state aid for the city of Buffalo, New York comprises about 43 percent of  its revenue base. Officials from Buffalo expressed concern over impending  cuts to state aid, while Springfield, Massachusetts officials noted that  reductions in state aid would have been more severe had the state not  received Recovery Act funds.
section_title: Local Government Plans for Recovery Act Exit Strategies Vary Based on Funding Received
paragraphs: Local government officials reported varied approaches to planning for the  end of Recovery Act funds and several local officials did not report the  need for a formal exit strategy. Officials representing a number of local  governments said they did not need an exit strategy because of the limited  effect of the use of Recovery Act funds. Officials in Yavapai County,  Arizona stated that Recovery Act funds did not result in the adjustment of  any budget actions. Although the county administration is not planning a  formal exit strategy, county agencies are developing plans for the end of  specific grant periods. Officials in Halifax County, North Carolina also  reported that Recovery Act funds have not yet impacted the city’s budget  and they have not discussed an exit strategy. Some local officials said that  because Recovery Act funds were generally used for one-time projects  which will not result in long-term liabilities they did not plan to develop an  exit strategy. For example, officials in Los Angeles reported that they are  working to ensure that Recovery Act funds are for one-time uses and  making sure funds are leveraged to enhance community services rather  than to fund ongoing projects requiring future financial support. Officials  in Newton, Iowa stated that the development of a Recovery Act exit  strategy is currently not applicable because the Recovery Act funded one- time improvement projects and not recurring operation expenses.
On the other hand, a number of local governments reported that they are  developing plans to sustain current Recovery Act projects after Recovery  Act funding ends. Officials in Dallas, Texas acknowledged that sustaining  the 50 police officers beyond the 3-year period of the Recovery Act  funding would be challenging, but because public safety is a top priority  and because it would be politically difficult to eliminate police officer  positions, the city is committed to taking any necessary steps to ensure it  can retain the additional officers. Other local governments reported  developing a more general exit strategy consisting of reductions in  expenditures or possible increases in revenue to prepare for the end of  Recovery Act funding. Officials in Steuben County, New York said that  they will have to increase taxes, reduce expenditures, and tap into their  reserve while Westchester County, New York officials said that they may  have to increase taxes and tap into reserves to prepare for the end of  Recovery Act funds. Officials in Tift County, Georgia plan to maintain two  positions in the District Attorney’s office supported by Recovery Act funds  by charging users a fee in the future. Officials in Springfield,  Massachusetts stated that the city is preparing for a “doomsday budget”  once Recovery Act funds are no longer available and are planning to hold  back expenditures as much as possible while exploring additional revenue  sources.
section_title: State Governments Receive Infusion of Recovery Act Funds While Continuing to Face Budget Challenges
paragraphs: The Recovery Act continues to help state governments maintain services.  According to associations representing state officials, budget cuts and tax  increases would be larger without the use of Recovery Act funds.  According to the National Governors Association (NGA) and National  Association of State Budget Officers (NASBO), states will have faced $256  billion in budget gaps between fiscal years 2009 and 2011. These  shortfalls were closed through a combination of budget cuts, tax  increases, use of available reserves, and use of Recovery Act funds  provided primarily for health care and education. According to the Pew  Center on the States (Pew), 6 of our 16 selected states fall within Pew’s  top 10 list of recession-stricken states that are particularly affected with  ongoing fiscal woes. According to a senior Iowa official, the receipt of  Recovery Act funds allowed Iowa to mitigate the effects of an across-the- board cut of 10 percent in fiscal year 2010 general fund expenditures,  including maintaining state and local education services and reducing the  number of layoffs in state agencies and local school districts. Without the  use of Recovery Act funds, Iowa may have needed to cut additional  programs, services and staff. As we reported in September 2009, Colorado  had already planned to use more than $600 million in Recovery Act funds  in fiscal year 2010.  These funds include SFSF and the increased FMAP for  Medicaid, which Colorado used to pay expenses related to its increased  Medicaid caseload.  The state now plans to use an additional $190 million  in Recovery Act funds to offset proposed cuts in budgets for higher  education and corrections.  North Carolina state budget officials told us  Recovery Act funds are helping in the areas of education and health and  human services, and the state intends to use more of its State Fiscal  Stabilization funds in the second quarter. The Governor of Massachusetts  also announced a plan to close the latest budget gap through the use of  $62 million in Recovery Act funds, among other strategies. Pennsylvania  enacted its fiscal year 2010 budget since our September report. Michigan  and the District of Columbia completed their fiscal years and their 2010  budgets since our September report. According to Michigan officials, the  state enacted its 2010 budget on October 30, 2009. Michigan addressed a  projected $2.7 billion shortfall through spending cuts, including cuts to  state agencies’ budgets, local school districts, provider reimbursement  rates for Medicaid services, and state revenue sharing to local  governments.
section_title: OMB Implements a Project for Earlier Reporting of Internal Control Weaknesses
paragraphs: Starting in April 2009, we have noted in our bimonthly reports that OMB  needs to take additional action to focus auditors’ efforts on areas that can  provide the most efficient and most timely results to realize the Single  Audit Act’s full potential as an effective oversight tool for Recovery Act  programs. We reported that as federal funding of Recovery Act programs  accelerates, the Single Audit process may not provide the accountability  and focus needed to assist recipients in making timely adjustments to  internal controls to provide assurances that the money is being spent  efficiently and effectively to meet program objectives. To provide  additional leverage as an oversight tool for Recovery Act programs, we  recommended that OMB adjust the current audit process to, among other  things, provide for review of internal controls before significant  expenditures occurred. The statutory Single Audit reporting deadline is  too late to provide audit results in time for the audited entity to take action  on internal control deficiencies before significant expenditures of  Recovery Act funds. As a result, an audited entity may not receive  feedback needed to correct identified internal control deficiencies until  the latter part of the subsequent fiscal year. The timing problem is  exacerbated by the extensions to the 9-month deadline, consistent with  OMB guidance, that have routinely been granted.
OMB has developed a Single Audit Internal Control Project in response to  our recommendations. One of the project’s goals is to encourage auditors  to identify and communicate significant deficiencies and material  weaknesses in internal control over compliance for selected major  Recovery Act programs 3 months sooner than the 9-month time frame  currently required under statute. If effective, the project should allow  auditee program management to expedite corrective action and mitigate  the risk of improper Recovery Act expenditures. OMB announced the  project on September 10, 2009. In order to facilitate early communication  of internal control significant deficiencies and material weaknesses, the  project requires the auditor to issue an interim report by November 30,  2009, based on its internal control test work. This communication is to be  based on the OMB Circular A-133 test work on the internal control over  compliance in effect for the period ended June 30, 2009, and is to be  presented to auditee management prior to December 31, 2009. Auditee  management is to provide the interim communication report and a  corrective action plan to the appropriate federal agency by January 31,  2010. Federal agencies—each of which will assign a project liaison—will  then have up to 90 days to issue a written interim management decision  regarding their assessment of the areas that have the highest risk to  Recovery Act funding and any concerns about the proposed plan of  corrective action. The project was designed to include at least 10 states  that received Recovery Act funding, with each state selecting at least 2  Recovery Act programs for interim internal control testing and reporting  from the following 11 programs.
Department of Labor’s Unemployment Insurance;    Department of Transportation’s (DOT) Federal-Aid Highway Surface    DOT’s Federal Transit-Capital Investment Grants;    Environmental Protection Agency’s (EPA) Capitalization Grants for  Clean Water State Revolving Fund;    EPA’s Capitalization Grants for Drinking Water State Revolving Fund;    Department of Energy’s (DOE) Weatherization Assistance Program,    Department of Education’s (Education) State Fiscal Stabilization    Education’s Title I, Part A of the Elementary and Secondary Education  Act of 1965, as amended;    Health and Human Services’ (HHS) Child Care and Development Block    HHS’s Medicaid; and   various agencies’ research and development clusters.
OMB designed the project to be voluntary. To encourage participation,  OMB provided incentives to the states for volunteering. States and their  auditors that participate are granted some relief in their workload because  the auditor will not be required to perform risk assessments of smaller  federal programs. OMB has also modified the requirements under  Circular A-133 to reduce the number of low-risk programs that must be  included in some project participants’ Single Audits. GAO had previously  recommended that OMB evaluate options for providing relief related to  low-risk programs to balance new audit responsibilities associated with  the Recovery Act.
One of the project’s goals is to identify deficiencies in internal controls for  selected major Recovery Act programs 3 months sooner than the 9-month  time frame currently required under statute, so that potential issues can be  addressed by the auditee’s management and the federal agencies in a  timely manner. Another goal is to provide OMB with insight into how a  variety of states are implementing certain Recovery Act programs. By  monitoring and analyzing the project’s results, OMB officials stated they  can determine whether states are experiencing issues that OMB may need  to address through additional guidance. If significant problems are  identified, OMB officials have stated they may release further guidance for  Recovery Act programs.
At the end of the project period, OMB will determine the success of the  project by evaluating whether  there has been sufficient participation from the auditees, auditors, and  federal agencies;  the early communication process provides auditee and federal  program management with useful information regarding internal  control deficiencies in the Recovery Act programs administered by the  states, thus resulting in expedited correction of such deficiencies and  reduced risk to Recovery Act programs; and  the process accelerates the audit resolution by the federal agencies  and therefore provides auditee management with early feedback to  assist in correction of the high-risk deficiencies in the most  expeditious manner.
subsections: section_title: Sixteen States Volunteered to Participate in OMB’s Single Audit Internal Control Project
paragraphs: On October 7, 2009, OMB announced that it was soliciting auditors and  auditees from the 50 states, the District of Columbia, Puerto Rico, and  Guam, to participate in the project. OMB encouraged potential  participants to respond to the announcement by October 16, 2009. The  following 16 states volunteered to participate in the project: Alaska,  California, Colorado, Florida, Georgia, Louisiana, Maine, Missouri, Nevada,  North Carolina, Ohio, Oklahoma, South Dakota, Tennessee, Texas, and  Virginia.
GAO had previously recommended that the Director of OMB take steps to  achieve sufficient participation and coverage of Recovery Act funded  programs in the project to leverage Single Audits as an effective oversight  tool. The 16 project participants can provide important information on the  potential impact of the early communication process.
OMB met its goals for the scope of the project, and OMB officials stated  that, overall, they were satisfied with the population and geographic  diversity among the states that volunteered. Participants include states  that use auditors within state government to conduct Single Audits as well  as some that use external auditors. In addition, California and Texas,  which are among the top three states with the highest levels of Recovery  Act obligations from the federal government, are participating.
The project required the states to select at least two programs for internal  control testing. Thirteen states selected 2 programs, 2 states selected more  than 2 programs, and Texas selected 8 programs. OMB officials said that  some of the officials from states not participating expressed concerns  about lacking sufficient resources to do the work.
Of the 16 project participants, 9 selected the unemployment insurance  program, 5 selected the SFSF program, 4 selected the Medicaid program,  and 5 selected the Highway Infrastructure Investment program for audit.  As of October 23, 2009, the Recovery Act portions of these 4 programs  were the top 4 of all Recovery Act programs in terms of obligations to  states. Further, each of the 11 Recovery Act programs included in the  project by OMB was selected for inclusion by at least one participating  state for early internal control testing.
The project’s coverage could be more comprehensive to provide greater  assurances about the extent that Recovery Act funding was effectively  used to meet program objectives. As of October 23, 2009, Recovery Act  federal obligations attributable to states totaled $236.5 billion and related  outlays totaled $106.3 billion. Based on these and other data gathered  through October 23, we estimate that, in dollar terms, the project  participants’ selected Recovery Act programs are responsible for  16 percent of Recovery Act obligations,    23 percent of Recovery Act outlays,    36 percent of Recovery Act obligations for the 16 volunteer states, and  50 percent of Recovery Act outlays for the 16 volunteer states.
OMB officials acknowledged that the project was not designed to provide  coverage over a majority of Recovery Act program funding.
We commend the 16 states that elected to participate in the project. OMB  has stated that by participating in the project, the auditors and auditees  are demonstrating to Congress and the general public their deep interest in  safeguarding the Recovery Act funds against fraud, waste, and abuse.  However, the project’s dependence on voluntary participation limits its  scope and coverage. 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. It is unclear whether OMB has the authority to  mandate participation in the project.
The project’s goal of identifying potential material weaknesses and  significant deficiencies for selected major Recovery Act programs sooner  than currently required has merit, especially since the project includes two  of the three states with the largest amounts of Recovery Act funding  nationwide—California and Texas. Although the project’s coverage could  be more comprehensive, it is our view that the analysis of the project’s  results could provide meaningful information to OMB for better oversight  of Recovery Act programs. OMB stated that it will use the results of its  analysis of the project as an indicator for making potential future  modifications for improvement in the Single Audit Act. We will continue to  monitor the implementation and progress of the project and report on its  status in our February 2010 report.
As we reported in July 2009, because a significant portion of Recovery Act  expenditures will be in the form of federal grants and awards, the Single  Audit process could be used as a key accountability tool over these funds.  However, the Single Audit Act, enacted in 1984 and most recently  amended in 1996, did not contemplate the risks associated with the  current environment where large amounts of federal awards are being  expended quickly through new programs, greatly expanded programs, and  existing programs. Finally, in our July 2009 report, we included a matter  for congressional consideration pointing out that Congress is considering  a legislative proposal.  We believe that the matter continues to be relevant  for Congressional consideration and reemphasize that:   To the extent that appropriate adjustments to the Single Audit process  are not accomplished under the current Single Audit structure,  Congress should consider amending the Single Audit Act or enacting  new legislation that provides for more timely internal control  reporting, as well as audit coverage for smaller Recovery Act programs  with high risk.
To the extent that additional audit coverage is needed to achieve  accountability over Recovery Act programs, Congress should consider  mechanisms to provide additional resources to support those charged  with carrying out the Single Audit Act and related audits.
section_title: OMB Has Provided Flexibility in Its Administrative Cost Guidance Related to Recovery Act Responsibilities
paragraphs: During a time when states are grappling with unprecedented levels of  declining state revenues and fiscal stress, states continue to seek relief  from additional pressures created by requirements to implement and  comply with the Recovery Act. This includes a wide range of activities to  help ensure the prudent, timely, and transparent expenditures of Recovery  Act funds, including, but not limited to, Single Audits. States often take on  additional fiscal and administrative burdens to accomplish critical  activities such as awarding grants, contracts, and cooperative agreements  and providing funds for expenses incurred for general administration.  Such additional costs can exacerbate states’ existing fiscal stress.  However, states do not generally recover central administrative costs up  front, but instead are reimbursed for such expenses after the fact. This  process can have the unintended consequence of preventing state  governments from obtaining the necessary resources to quickly build  administrative capacities to meet the important new oversight, reporting,  and audit requirements of the Recovery Act. In addition, as we previously  noted, it is our view that Congress should consider mechanisms to provide  additional resources to support those charged with carrying out the Single  Audit Act and related audits.
Our September 23, 2009, Recovery Act report noted that in order to  achieve the delicate balance between robust oversight and the smooth  flow of funds to Recovery Act programs, states may need timely  reimbursement for these activities. We recommended that to the extent  that the Director of OMB has the authority to consider mechanisms to  provide additional flexibilities to support state and local officials charged  with carrying out Recovery Act responsibilities, it is important to expedite  consideration of alternative administrative cost reimbursement proposals.
In response to this recommendation, OMB issued a memorandum on  October 13, 2009, to provide guidance to address states’ questions  regarding specific exceptions to OMB Circular A-87, Cost Principles for  State, Local and Indian Tribal Governments. In the memorandum, OMB  provided clarifications for states regarding specific exceptions to OMB  Circular A-87 that are necessary in order for the states to perform timely  and adequate Recovery Act oversight, reporting, and auditing. We believe  the October OMB guidance provides the additional clarification needed for  states and localities to proceed with their plans to recoup administrative  costs.
section_title: OMB, States, and Federal Agencies Took Actions Aimed at Reducing Risks Inherent in Initial Round of Section 1512 Reporting, but Further Data Quality Efforts Are Needed
paragraphs: We previously reported that the risks inherent in the initial round of  section 1512 recipient reporting could negatively impact the completeness,  accuracy, and reliability of the information reported and on actions taken  by OMB, the states, and federal agencies. Many recipients had not  previously been subject to such reporting requirements, and their systems  and processes had not been tested to provide reliable and accurate data,  such as that required by section 1512. Risks were also increased because  of the large number of recipients, making it more difficult for states and  federal agencies to monitor the quality of the data reported by these  recipients within a short time.
While actions have been taken by the states, the District of Columbia, and  federal agencies to address risks and help ensure the quality of the  reported data, we found there are significant issues to be addressed in  reporting data quality and consistent application of OMB guidance. All of  the jurisdictions we reviewed had data quality review procedures in place  for the recipient reporting data, either by a central state office or by state  agencies. For example, at least three states (Florida, Michigan, and  Pennsylvania) and the District of Columbia subjected the data to reviews  at different levels in the state, including reviews by state program offices,  state agencies, state recovery czars, and state agency inspectors general  (IG). In the District of Columbia, data was reviewed at three different  levels—by grant managers, by the agency administering the grant, and by  the District’s recovery czar. In Florida, fiscal and program staff in state  agencies and state agency IGs reviewed the data. At least six states  (Florida, Georgia, Iowa, Michigan, Ohio, and Pennsylvania) required prime  recipients to certify that they had reviewed the data. At least seven states  (Florida, Georgia, Iowa, Michigan, New Jersey, North Carolina, and Texas)  and the District of Columbia implemented controls, either manual or  automated, intended to identify blank fields, correct field size,  typographical errors, outliers, and other anomalies, such as whether the  amount of funds spent was greater than the amount of funds received.
In general, federal agencies that awarded Recovery Act funds to states  developed internal policies and procedures for limited data quality  reviews, as required by OMB. Federal agency IGs conducted reviews at  federal agencies to determine whether the agencies had established  processes to perform limited data quality reviews intended to identify  material omissions and significant reporting errors and notify the  recipients of the need to make appropriate and timely changes to their  reported data.
Even with the data quality review actions taken by states and federal  agencies, we found that the data suffers from a number of issues. As we  reported last month, based on our initial set of basic analyses of the  recipient report data available for download from Recovery.gov, we  identified recipient report records that showed certain data values or  patterns in the data that were either erroneous or merit further review due  to an unexpected or atypical data value or relationship between data  values. Although recipients in the states we reviewed generally made good  faith efforts to report accurately, there is evidence that the data reporting  has been inconsistent, partly due to various interpretations of guidance.  For example, recipients appear to have interpreted guidance on how to  calculate and report data on jobs created or retained in somewhat  different ways and took different approaches in how they developed their  jobs data.
We made two recommendations to the Director of OMB. First, to improve  the consistency of full-time equivalent (FTE) data collected and reported,  OMB should continue to work with federal agencies to increase recipient  understanding of the reporting requirements and application of the  guidance. Specifically, OMB should (1) clarify the definition and  standardize the period of measurement for FTEs and work with federal  agencies to align this guidance with OMB’s guidance and across agencies;  (2) given its reporting approach, consider being more explicit that “jobs  created or retained” are to be reported as hours worked and paid for with  Recovery Act funds; and (3) continue working with federal agencies and  encourage them to provide or improve program-specific guidance to assist  recipients, especially as it applies to the FTE calculation for individual  programs. Second, OMB should work with the Recovery Board and federal  agencies to re-examine review and quality assurance processes,  procedures, and requirements in light of experiences and identified issues  with this round of recipient reporting and consider whether additional  modifications need to be made and if additional guidance is warranted.
OMB agreed with our recommendations. In a written response to our  recommendations, OMB’s Controller told us that OMB is committed to  continually improving the reporting process, so that the Recovery Act  goals of transparency and usefulness to the American people will be met.  He also stated that each of our recommendations aligns with what OMB is  hearing directly from recipients and agencies. OMB is working to better  define the reporting period of measurement for recipients. As the  reporting becomes more regular with quarterly updates, the time period  covered by the data should be more consistent. OMB also plans to issue  streamlined guidance to provide additional clarity in advance of the  January reporting period, including refining its jobs-counting guidance.  Further, OMB has continuing discussions with agencies about lessons  learned and best practices, including suggestions for data quality. OMB  pointed out that while there were numerous instances of reliable and  accurate data reported, there were also erroneous data. OMB will continue  to work with the Recovery Board to identify errors, large and small, and  transparently correct them.
As recipient reporting moves forward, we will continue to review the  processes that federal agencies and recipients have in place to ensure the  completeness and accuracy of data, including reviewing a sample of  recipient reports across various Recovery Act programs to assure the  quality of reported information. Our subsequent quarterly reports on  recipient reporting will also discuss actions taken on the  recommendations and will provide additional recommendations, as  appropriate.
section_title: GAO’s Open Recommendations
subsections: section_title: Reporting on Program Impact
paragraphs: Recipients of Recovery Act funds are expected to report quarterly on a  number of measures, including the use of funds and the number of jobs  created and retained. In addition to statutory requirements, the Office of  Management and Budget (OMB) has directed federal agencies to collect  performance information and to assess program accomplishments.
Recipient financial tracking and reporting: Recovery Act prime  recipients and federal agency reviewers are required to perform data  quality checks; however, OMB guidance does not explicitly mandate a  methodology for conducting quality reviews and providing final approval  of data reported.
Recommendations: In our July report, we recommended that the  Director of OMB (1) clarify what constitutes appropriate quality control  and reconciliation by prime recipients, especially for subrecipient data,  and (2) specify who should provide formal certification and approval of  data reported. More recently, in our comments on recipient reporting of  jobs data, we recommended that OMB work with the Recovery  Accountability and Transparency Board and federal agencies to re- examine review and quality assurance processes, procedures, and  requirements in light of experiences and identified issues with the first  round of recipient reporting and consider whether additional  modifications need to be made and if additional guidance is warranted.
The Controller of OMB in a November 18, 2009, letter outlined a series of  actions OMB plans to take to address the issues and recommendations in  our November report on recipient reporting. Those actions include  conducting survey research with individual recipients to learn directly  about what they liked about the reporting system, as well as problems they  encountered.
According to the OMB Controller, OMB and federal agencies will continue  to work with the Recovery Board to examine recipient data for  inconsistencies or errors. We believe that if effectively implemented,  OMB’s planned and ongoing actions will address our recommendations.
Other impact measures: As we noted in our July report, reporting on  Recovery Act performance results is broader than the employment-related  reporting required by the act. We continue to recommend that the Director  of OMB—perhaps through the Senior Management Councils—clarify what  other program performance measures recipients are expected to report on  to demonstrate the impact of Recovery Act funding.
section_title: Communications and Guidance
paragraphs: Funding notification and program guidance: State officials expressed  concerns regarding communication on the release of Recovery Act funds  and their inability to determine when to expect federal agency program  guidance. As we recommended, OMB now requires federal agencies to  notify recovery coordinators in states, the District of Columbia,  commonwealths, and territories within 48 hours of an award to a grantee  or contractor in their jurisdiction. However, OMB does not have a master  timeline for issuing federal agency guidance. We believe that OMB and  federal agencies can strike a better balance between developing timely  and responsive guidance and providing a longer-range timeline to support  states’ and localities’ planning efforts.
Recommendation: We recommended in our April report and continue to  recommend the addition of a master schedule for anticipated new or  revised federal Recovery Act program guidance and a more structured,  centralized approach to making this information available, such as what is  provided at www.recovery.gov on recipient reporting.
OMB provided technical comments that have been incorporated into this  report, as appropriate.
We are sending copies of this report to the Office of Management and  Budget; the Centers for Medicare & Medicaid Services; the Departments of  Education, Energy, Housing and Urban Development, and Transportation;  and the Federal Emergency Management Agency. In addition, we are  sending sections of the report to officials in the 16 states and the District  covered in our review. The report is 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) 512-5500. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this report.  GAO staff who made major contributions to this report are listed in  appendix IV.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This appendix describes our objectives, scope, and methodology (OSM)  for this fourth of our bimonthly reviews on the Recovery Act. A detailed  description of the criteria used to select the core group of 16 states and the  District of Columbia (District) and programs we reviewed is found in  appendix I of our April 2009 Recovery Act bimonthly report.
subsections: section_title: Objectives and Scope
paragraphs: The Recovery Act specifies several roles for GAO, including conducting  bimonthly reviews of selected states’ and localities’ use of funds made  available under the act. As a result, our objectives for this report were to  assess (1) selected states’ and localities’ uses of and planning for Recovery  Act funds, (2) the approaches taken by the selected states and localities to  ensure accountability for Recovery Act funds, and (3) states’ plans to  evaluate the impact of the Recovery Act funds they have received to date.
Our teams visited the 16 selected states, the District, and a nonprobability  sample of 155 entities (e.g., state and local governments, local education  agencies, and public housing authorities) during September, October,  November, and December 2009. As for our previous Recovery Act reports,  our teams met with a variety of state and local officials from executive- level and program offices. During discussions with state and local officials,  teams used a series of program review and semistructured interview  guides that addressed state plans for management, tracking, and reporting  of Recovery Act funds and activities. We also reviewed state constitutions,  statutes, legislative proposals, and other state legal materials for this  report. Where attributed, we relied on state officials and other state  sources for description and interpretation of state legal materials.  Appendix III details the states and localities visited by GAO. Criteria used  to select localities within our selected states follow.
section_title: States’ and Localities’ Uses of Recovery Act Funds
paragraphs: Using criteria described in our earlier bimonthly reports, we selected the  following streams of Recovery Act funding flowing to states and localities  for review during this report: increased Medicaid Federal Medical  Assistance Percentage (FMAP) grant awards; the Federal-Aid Highway  Surface Transportation Program; the Transit Capital Assistance Program,  the State Fiscal Stabilization Fund (SFSF); Title I, Part A of the Elementary  and Secondary Education Act of 1965 (ESEA); Parts B and C of the  Individuals with Disabilities Education Act (IDEA); the Public Housing  Capital Fund; the Weatherization Assistance Program; and the Emergency  Food and Shelter Program. We also reviewed how Recovery Act funds are  being used by states and localities. In addition, we analyzed  www.recovery.gov data on federal spending.
section_title: Medicaid Federal Medical Assistance Percentage
paragraphs: For the increased FMAP grant awards, we obtained increased FMAP grant  and draw-down figures for each state in our sample and the District from  the Centers for Medicare & Medicaid Services (CMS). To examine  Medicaid enrollment, states’ efforts to comply with the provisions of the  Recovery Act, and related information, we relied on our Web-based  survey, asking the 16 states and the District to provide new information as  well as to update information they had previously provided to us. When  necessary, we interviewed Medicaid officials from certain states to clarify  survey responses. We also interviewed CMS officials regarding the  agency’s oversight of increased FMAP grant awards and its guidance to  states on Recovery Act provisions. To assess the reliability of increased  FMAP draw-down figures, we interviewed CMS officials on how these data  are collected and reported. To establish the reliability of our Web-based  survey data, we pretested the survey with Medicaid officials in several  states and also conducted consistent follow-up with all sample states to  ensure a high response rate. Based on these steps, we determined that the  data provided by CMS and submitted by states were sufficiently reliable  for the purposes of our engagement.
section_title: Federal-Aid Highway Surface Transportation Program
paragraphs: For highway infrastructure investment, we reviewed status reports and  guidance to the states and discussed these with the U.S. Department of  Transportation (DOT) and Federal Highway Administration (FHWA)  officials. We obtained data from FHWA on obligations, reimbursements,  and types of projects funded with Recovery Act highway infrastructure  funds nationally and for the District and each of the 16 states. From state  DOT officials, we obtained information on the status of projects and  contracts, including the number of projects planned, out for bid, awarded,  and completed. We interviewed officials from Arizona, California, Georgia,  Massachusetts, Mississippi, and New Jersey regarding the progress of  project and highway development in metropolitan areas. We interviewed  officials from Arizona, California, and Illinois, who developed their own  criteria to determine economically distressed areas to examine how these  states calculated and justified their designations. We obtained data from  10 states and the District on highway project cost estimates and contract  awards and analyzed these data to determine the savings from awarding  contracts for less than the estimated costs.  In all, we reviewed 1,880  contracts ranging from 12 contracts in the District to 587 in Illinois.
section_title: Transit Capital Assistance Program
paragraphs: For Recovery Act public transit investment, we reviewed information from  California, Colorado, Illinois, Iowa, New York, North Carolina, and  Pennsylvania on the Federal Transit Administration’s (FTA) Transit  Capital Assistance Program. We also examined the Fixed Guideway  Infrastructure Investment program in New York and Pennsylvania. We  reviewed status reports and guidance to the states and discussed these  with FTA officials. To determine the current status of transit funding, we  obtained data from FTA on obligations and unobligated balances for  Recovery Act grants nationally and, for each of our selected urbanized and  nonurbanized areas, the numbers and types of projects funded. We  reviewed information from selected urbanized and nonurbanized areas to  include how projects were chosen, how funds were used, and how  progress was reported. To determine how transit agencies and states are  ensuring the accountability of funds and addressing reporting  requirements, we reviewed the guidance each state uses to meet reporting  requirements, including reporting on project status, subcontracts, and  estimated jobs created. We also interviewed selected bus manufacturers  on how job creation figures were calculated for Recovery Act-funded  purchases. We also interviewed FTA about meetings with bus  manufacturers to standardize guidance on job reporting.
section_title: SFSF, ESEA Title I, and IDEA
paragraphs: To obtain national and selected state-level information on how Recovery  Act funds made available by the U.S. Department of Education under  SFSF, ESEA Title I, and IDEA are being used at the local level, we  designed and administered a Web-based survey of local education  agencies (LEA) in the 50 states and the District of Columbia. We surveyed  school district superintendents across the country to learn if they have  received or expect to receive Recovery Act funding and how these funds  are being used. We conducted our survey from August to October 2009,  with a 73 percent final weighted response rate at the national level. We  selected a stratified random sample of 2,101 LEAs from the population of  16,028 LEAs included in our sample frame of data obtained from the  Common Core of Data (CCD) in 2006-2007. In order to make estimates for  each of the 16 states and the District of Columbia, we stratified the sample  based on those specific states. With the exception of the District of  Columbia, all of our sample states had a response rate that exceeded 70  percent, with final weighted response rates ranging from 71 percent for  Iowa to 90 percent for Georgia.
We took steps to minimize nonsampling errors by pretesting the survey  instrument with officials in 5 LEAs in July and August 2009. Because we  surveyed a sample of LEAs, survey results are estimates of a population of  LEAs and thus are subject to sampling errors that are associated with  samples of this size and type. Our sample is only one of a large number of  samples that we might have drawn. As each sample could have provided  different estimates, we express our confidence in the precision of our  particular sample’s results as a 95 percent confidence interval (e.g., plus or  minus 10 percentage points). We excluded 14 of the sampled LEAs for  various reasons—because they were no longer operating in the 2009-2010  school year, were a duplicate entry, or were not an LEA—and therefore  were considered out of scope. All estimates produced from the sample and  presented in this report are representative of the in-scope population and  have margins of error of plus or minus 5 percentage points or less for our  overall sample and 12 percentage points or less for our 16 state samples,  excluding the District, unless otherwise noted.
To obtain specific examples of how LEAs are using Recovery Act funds,  we visited at least two LEAs in Arizona, California, the District, New York,  and North Carolina and interviewed LEA officials. To learn about issues  related to Recovery Act funds for education, we interviewed officials in  the District and state officials in each of the 16 states covered by our  review. We also interviewed officials at the U.S. Department of Education  (Education) and reviewed relevant laws, guidance, and communications to  the states. Further, we obtained information from Education about the  amount of funds these states have drawn down from their accounts with  Education.
section_title: Public Housing Capital Fund
paragraphs: For Public Housing, we obtained data from HUD’s Electronic Line of  Credit Control System on the amount of Recovery Act funds that have  been obligated and drawn down by each housing agency in the country. To  update progress on how housing agencies are using these funds, we visited  25 of the 47 agencies we previously selected in nine states. At the selected  agencies, we interviewed housing agency officials and conducted site  visits of ongoing or planned Recovery Act projects. We also selected one  Capital Fund Recovery Competition grant in all but one of the nine states  and collected information on the housing agency’s plans for those funds.  We also interviewed HUD officials to understand their procedures for  monitoring housing agency use of Recovery Act funds and validating data  that housing agencies reported to FederalReporting.gov.
section_title: Weatherization Assistance Program
paragraphs: For the Weatherization Assistance Program, we reviewed relevant  regulations and federal guidance and interviewed Department of Energy  officials who administer the program at the federal level. In addition, for  this report, we collected updated information from seven of our selected  states and the District on their weatherization programs. We conducted  semistructured interviews of officials in the states’ agencies that  administer the weatherization program and with local service providers  responsible for weatherization production. These interviews covered  updates on the use of funds, the implementation of the Davis-Bacon Act,  accountability measures, and impacts of the Recovery Act weatherization  program. We also conducted site visits to interview 20 local providers of  weatherization and to witness weatherization production. We continued to  collect data about each state’s total allocation for weatherization under the  Recovery Act, as well as the allocation already provided to the states and  the expenditures to date.
section_title: Emergency Food and Shelter Program
paragraphs: For the Emergency Food and Shelter Program (EFSP), we reviewed  relevant federal laws and regulations, and guidance from the Federal  Emergency Management Agency (FEMA) and the program’s National  Board, which administer the program, and interviewed the FEMA official  responsible for managing the program. We also analyzed data on the EFSP  Recovery Act funds awarded to local recipient organizations (LRO) in the  16 states and the District that GAO reviewed, as well as data on the  planned uses of EFSP Recovery Act funds reported by the LROs.
section_title: State and Local Budget
paragraphs: We continued our review of the use of Recovery Act funds for the 16 states  and the District, with a particular focus on those jurisdictions that enacted  budgets since our last report. We conducted interviews with budget  officials and reviewed proposed and enacted budgets and revenue  estimates to update our understanding of the use of Recovery Act funds in  the selected states and the District.
To select local governments for our review, we identified localities  representing a range of types of governments (cities and counties),  population sizes, and economic conditions (unemployment rates greater  than or less than the state’s overall unemployment rate). We used the  latest unemployment rates and population sizes that were available as we  prepared the draft. We balanced these selection criteria with logistical  considerations, including other scheduled Recovery Act work, local  contacts established during prior reviews, and the geographic proximity of  the local government entities.
The teams visited a total of 44 local government entities, 27 cities, 16  counties, and one local government entity organized as a city and county,  Denver. Due to the small sample size and judgmental nature of the  selection, GAO’s findings are not generalizable to all local governments.
To gain an understanding of local governments’ use of Recovery Act funds  we met with the chief executives, recovery coordinators, auditors, and  finance officials at the selected local governments. We also met with  associations representing local governments to understand their  perspectives on the impact of the Recovery Act on local governments and  reviewed reports and analysis regarding the fiscal conditions of local  governments.
The list of local governments selected in each state is found in appendix  III.
section_title: Assessing Safeguards and Internal Controls
paragraphs: To determine how states are planning for the recipient reporting  requirements of the Recovery Act, we asked cognizant officials to describe  the activities undertaken related to recipient reporting, including guidance  that has been issued to state agencies and subrecipients, monitoring plans,  and policies and procedures that have been developed for recipient  reporting. We also reviewed relevant recipient reporting guidance issued  by the Office of Management and Budget (OMB). For audit work related to  Single Audits, we reviewed OMB’s guidance and the scope and objectives  for the Single Audit Internal Control Project. We also discussed with  relevant OMB officials their efforts toward implementing the project. We  reviewed and analyzed federal agency financial and activity reports to  compare obligations and outlays by states for programs included in the  OMB project to obligations and outlays attributable to states for all  Recovery Act programs as of October 23, 2009. We obtained this data from  www.Recovery.gov. In addition, we discussed with OMB officials OMB’s  progress toward addressing GAO recommendations related to Single  Audits our in previous Recovery Act reports.
section_title: Data and Data Reliability
paragraphs: We collected funding data from www.recovery.gov and federal agencies  administering Recovery Act programs for the purpose of providing  background information. We used funding data from www.recovery.gov— which is overseen by the Recovery Accountability and Transparency  Board—because it is the official source for Recovery Act spending. Based  on our limited examination of this information thus far, we consider these  data sufficiently reliable with attribution to official sources for the  purposes of providing background information on Recovery Act funding  for this report. Our sample of states, localities, and entities has been  purposefully selected and the results of our reviews are not generalizable  to any population of states, localities, or entities.
We conducted this performance audit from September 18, 2009, to  December 4, 2009, in accordance with generally accepted government  auditing standards. Those standards require that we plan and perform the  audit to obtain sufficient, appropriate evidence to provide a reasonable  basis for our findings and conclusions based on our audit objectives. We  believe that the evidence obtained provides a reasonable basis for our  findings and conclusions based on our audit objectives.
section_title: Appendix II: Program Descriptions
paragraphs: Following are descriptions of selected grant programs discussed in this  report.
subsections: section_title: Medicaid Federal Medical Assistance Percentage
paragraphs: Medicaid is a joint federal-state program that finances health care for  certain categories of low-income individuals, including children, families,  persons with disabilities, and persons who are elderly. The federal  government matches state spending for Medicaid services according to a  formula based on each state’s per capita income in relation to the national  average per capita income. The Centers for Medicare & Medicaid Services,  within the Department of Health and Human Services, approves state  Medicaid plans, and the amount of federal assistance states receive for  Medicaid service expenditures is known as the Federal Medical Assistance  Percentage (FMAP). The Recovery Act’s temporary increase in FMAP  funding will provide the states with approximately $87 billion in  assistance.
section_title: Highway Infrastructure Investment Program
paragraphs: The Recovery Act provides funding to states for restoration, repair, and  construction of highways and other activities allowed under the Federal  Highway Administration’s Federal-Aid Highway Surface Transportation  Program and for other eligible surface transportation projects. The  Recovery Act requires that 30 percent of these funds be suballocated,  primarily based on population, for metropolitan, regional, and local use.  Highway funds are apportioned to states through federal-aid highway  program mechanisms, and states must follow existing program  requirements. While the maximum federal fund share of highway  infrastructure investment projects under the existing federal-aid highway  program is generally 80 percent, under the Recovery Act, it is 100 percent.
Funds appropriated for highway infrastructure spending must be used in  accordance with Recovery Act requirements. States are required to ensure  that all apportioned Recovery Act funds—including suballocated funds— are obligated within 1 year. The Secretary of Transportation is to  withdraw and redistribute to eligible states any amount that is not  obligated within these time frames. Additionally, the governor of each  state must certify that the state will maintain its level of spending for the  types of transportation projects funded by the Recovery Act it planned to  spend the day the Recovery Act was enacted. As part of this certification,  the governor of each state is required to identify the amount of funds the  state plans to expend from state sources from February 17, 2009, through  September 30, 2010.
section_title: Public Transit Program
paragraphs: The Recovery Act appropriated $8.4 billion to fund public transit  throughout the country through existing Federal Transit Administration  (FTA) grant programs, including the Transit Capital Assistance Program,  and the Fixed Guideway Infrastructure Investment program. Under the  Transit Capital Assistance Program’s formula grant program, Recovery Act  funds were apportioned to large and medium urbanized areas—which in  some cases include a metropolitan area that spans multiple states— throughout the country according to existing program formulas. Recovery  Act funds were also apportioned to states for small urbanized areas and  nonurbanized areas under the Transit Capital Assistance Program’s  formula grant programs using the program’s existing formula. Transit  Capital Assistance Program funds may be used for such activities as  vehicle replacements, facilities renovation or construction, preventive  maintenance, and paratransit services. Recovery Act funds from the Fixed  Guideway Infrastructure Investment program were apportioned by  formula directly to qualifying urbanized areas, and funds may be used for  any capital projects to maintain, modernize, or improve fixed guideway  systems.  As they work through the state and regional transportation  planning process, designated recipients of the apportioned funds— typically public transit agencies and metropolitan planning organizations  (MPO)—develop a list of transit projects that project sponsors (typically  transit agencies) submit to FTA for approval.
Funds appropriated for the Transit Capital Assistance Program and the  Fixed Guideway Infrastructure Investment Program must be used in  accordance with Recovery Act requirements. States are required to ensure  that all apportioned Recovery Act funds are obligated within 1 year. The  Secretary of Transportation is to withdraw and redistribute to each state  or urbanized area any amount that is not obligated within these time  frames. Additionally, governors must certify that the state will maintain  the level of state spending for the types of transportation projects funded  by the Recovery Act it planned to spend the day the Recovery Act was  enacted. As part of this certification, the governor of each state is required  to identify the amount of funds the state plans to expend from state  sources from February 17, 2009, through September 30, 2010.
section_title: Education
subsections: section_title: State Fiscal Stabilization Fund
paragraphs: The State Fiscal Stabilization Fund (SFSF), administered by the Office of  Elementary and Secondary Education of the Department of Education,  included approximately $48.6 billion to award to states by formula and up  to $5 billion to award to states as competitive grants. The Recovery Act  created the SFSF in part to help state and local governments stabilize their  budgets by minimizing budgetary cuts in education and other essential  government services, such as public safety. Stabilization funds for  education distributed under the Recovery Act must first be used to  alleviate shortfalls in state support for education to Local Education  Agencies (LEA) and public institutions of higher education (IHE). States  must use 81.8 percent of their SFSF formula grant funds to support  education (these funds are referred to as education stabilization funds)  and must use the remaining 18.2 percent for public safety and other  government services, which may include education (these funds are  referred to as government services funds). For the initial award of SFSF  formula grant funds, Education made available at least 67 percent of the  total amount allocated to each state, but states had to submit an  application to Education to receive the funds. The application required  each state to provide several assurances, including that the state will meet  maintenance-of-effort requirements (or will be able to comply with the  relevant waiver provisions) and that it will implement strategies to  advance four core areas of education reform: (1) increase teacher  effectiveness and address inequities in the distribution of highly qualified  teachers; (2) establish a pre-K-through-college data system to track  student progress and foster improvement, (3) make progress toward  rigorous college- and career-ready standards and high-quality assessments  that are valid and reliable for all students, including students with limited  English proficiency and students with disabilities; and (4) provide  targeted, intensive support and effective interventions to turn around  schools identified for corrective action or restructuring. In addition,  states were required to make assurances concerning accountability,  transparency, reporting, and compliance with certain federal laws and  regulations. After maintaining state support for education at fiscal year  2006 levels, states must use education stabilization funds to restore state  funding to the greater of fiscal year 2008 or 2009 levels for state support to  LEAs and public IHEs. When distributing these funds to LEAs, states must  use their primary education funding formula, but they can determine how  to allocate funds to public IHEs. In general, LEAs have broad discretion in  how they can use education stabilization funds, but states have some  ability to direct IHEs in how to use these funds.
section_title: ESEA Title I, Part A
paragraphs: The Recovery Act provides $10 billion to help LEAs educate disadvantaged  youth by making additional funds available beyond those regularly  allocated through Title I, Part A of the Elementary and Secondary  Education Act of 1965, as amended. Title I funding is administered by the  Office of Elementary and Secondary Education within the Department of  Education. The Recovery Act requires these additional funds to be  distributed through states to LEAs using existing federal funding formulas,  which target funds based on such factors as high concentrations of  students from families living in poverty. In using the funds, LEAs are  required to comply with applicable statutory and regulatory requirements  and must obligate 85 percent of the funds by September 30, 2010.  Education is advising LEAs to use the funds in ways that will build the  agencies’ long-term capacity to serve disadvantaged youth, such as  through providing professional development to teachers.
section_title: IDEA, Parts B and C
paragraphs: The Recovery Act provided supplemental funding for Parts B and C of the  Individuals with Disabilities Education Act (IDEA), as amended, the major  federal statute that supports early intervention and special education and  related services for children, and youth with disabilities. Part B provides  funds to ensure that preschool and school-aged children with disabilities  have access to a free and appropriate public education and is divided into  two separate grant programs —Part B grants to states (for school-age  children) and Part B preschool grants. The IDEA Part B grants are  administered by the Office of Special Education and Rehabilitative  Services. Part C funds programs that provide early intervention and  related services for infants and toddlers with disabilities—or at risk of  developing a disability—and their families.
section_title: Public Housing Capital Fund
paragraphs: The Public Housing Capital Fund provides formula-based grant funds  directly to public housing agencies to improve the physical condition of  their properties; to develop, finance, and modernize public housing  developments; and to improve management. Under the Recovery Act, the  Office of Public and Indian Housing within the U.S. Department of  Housing and Urban Development (HUD) allocated nearly $3 billion  through the Public Housing Capital Fund to public housing agencies using  the same formula for amounts made available in fiscal year 2008 and  obligated these funds to housing agencies in March 2009.
HUD was also required to award nearly $1 billion to public housing  agencies based on competition for priority investments, including  investments that leverage private sector funding or financing for  renovations and energy conservation retrofitting. In September 2009, HUD  awarded competitive grants for the creation of energy-efficient  communities, gap financing for projects stalled due to financing issues,  public housing transformation, and improvements addressing the needs of  the elderly or persons with disabilities.
section_title: Weatherization Assistance Program
paragraphs: The Recovery Act appropriated $5 billion for the Weatherization  Assistance Program, which the Department of Energy (DOE) is  distributing to each of the states, the District, and seven territories and  Indian tribes, to be spent over a 3-year period. The program, administered  by the Office of Energy Efficiency and Renewable Energy within DOE,  enables low-income families to reduce their utility bills by making long- term energy-efficiency improvements to their homes by, for example,  installing insulation, sealing leaks, and modernizing heating equipment, air  circulation fans, and air conditioning equipment. Over the past 32 years,  the Weatherization Assistance Program has assisted more than 6.2 million  low-income families. By reducing the energy bills of low-income families,  the program allows these households to spend their money on other  needs, according to DOE. The Recovery Act appropriation represents a  significant increase for a program that has received about $225 million per  year in recent years. DOE has approved the weatherization plans of the 16  states and the District that are in our review and has provided at least half  of the funds to those areas.
section_title: Emergency Food and Shelter Program
paragraphs: The Emergency Food and Shelter Program (EFSP), which is administered  by the Federal Emergency Management Agency (FEMA) within the  Department of Homeland Security (DHS), was authorized in July 1987 by  the Stewart B. McKinney Homeless Assistance Act to provide food, shelter  and supportive services to the homeless. The program is governed by a  National Board composed of a representative from FEMA and six  statutorily-designated national nonprofit organizations. Since its first  appropriation in fiscal year 1983, EFSP has awarded over $3.4 billion in  federal aid to more than 12,000 local private, non-profit, and government  human service entities in more than 2,500 communities nationwide.
section_title: State and Local Budget
paragraphs: The following grant programs were mentioned in the state and local  budget section of this report.
subsections: section_title: Airport Improvement Program
paragraphs: Within the Department of Transportation, the Federal Aviation  Administration’s Airport Improvement Program provides formula and  discretionary grants for the planning and development of public-use  airports. The Recovery Act provides $1.1 billion for discretionary Grant-in- Aid for Airports under this program with priority given to projects that can  be completed within 2 years. The Recovery Act requires that the funds  must supplement, not supplant, planned expenditures from airport- generated revenues or from other state and local sources for airport  development activities. The Recovery Act provides $1.1 billion for this  program.
section_title: Assistance to Rural Law Enforcement to Combat Crime and Drugs Program
paragraphs: The Recovery Act Assistance to Rural Law Enforcement to Combat Crime  and Drugs Program is administered by the Bureau of Justice Assistance  (BJA), a component of the Office of Justice Programs, U.S. Department of  Justice. The purpose of this program is to help rural states and rural areas  prevent and combat crime, especially drug-related crime, and provides for  national support efforts, including training and technical assistance  programs strategically targeted to address rural needs. The Recovery Act  provides $125 million for this program, and BJA has made 212 awards.
section_title: Broadband Technology Opportunities Program/ State Broadband Data and Development Program
paragraphs: The Department of Commerce’s National Telecommunications and  Information Administration (NTIA) administers the Recovery Act’s  Broadband Technology Opportunities Program. This program was  appropriated $4.7 billion, including $350 million for the purposes of  developing and maintaining a broadband inventory map. To accomplish  this, NTIA has developed the State Broadband Data and Development  Grant Program, a competitive, merit-based matching grant program to  fund projects that collect comprehensive and accurate state-level  broadband mapping data, develop state-level broadband maps, aid in the  development and maintenance of a national broadband map, and fund  statewide initiatives directed at broadband planning.
section_title: Brownfields Program
paragraphs: The Recovery Act provides $100 million to the Brownfields Program,  administered by the Office of Solid Waste and Emergency Response within  the Environmental Protection Agency, for cleanup, revitalization, and  sustainable reuse of contaminated properties. The funds will be awarded  to eligible entities through job training, assessment, revolving loan fund,  and cleanup grants.
section_title: Capital Improvement Program
paragraphs: The Department of Health and Human Services’ Health Resources and  Services Administration has allocated $862.5 million in Recovery Act funds  for Capital Improvement Program grants to health centers to support the  construction, repair, and renovation of more than 1,500 health center sites  nationwide, including purchasing health information technology and  expanding the use of electronic health records.
section_title: Child Care and Development Block Grants
paragraphs: Administered by the Administration for Children and Families within the  Department of Health and Human Services, Child Care and Development  Block Grants, one of the funding streams comprising the Child Care and  Development Fund, are provided to states, according to a formula, to  assist low-income families in obtaining child care, so that parents can  work or participate in education or training activities. The Recovery Act  provides $1.9 billion in supplemental funding for these grants.
section_title: Clean Water State Revolving Fund
paragraphs: The Recovery Act provides $4 billion for the Clean Water State Revolving  Fund, administered by the Office of Water within the Environmental  Protection Agency, to fund municipal wastewater infrastructure projects.  The Recovery Act requires states to use at least 50 percent of the amount  of their capitalization grant to provide additional subsidization of loans to  eligible recipients. In addition, to the extent there are sufficient project  applications, at least 20 percent of the appropriated funds must be  designated for green infrastructure, water efficiency improvements, or  other environmentally innovative projects.
section_title: Clean Cities program
paragraphs: The Department of Energy’s Clean Cities program, administered by the  Office of Energy Efficiency and Renewable Energy, is a government- industry partnership that works to reduce America’s petroleum  consumption in the transportation sector. The Department of Energy is  providing nearly $300 million in Recovery Act funds for projects under the  Clean Cities program, which provide a range of energy-efficient and  advanced vehicle technologies, such as hybrids, electric vehicles, plug-in  electric hybrids, hydraulic hybrids and compressed natural gas vehicles,  helping reduce petroleum consumption across the United States. The  program also supports refueling infrastructure for various alternative fuel  vehicles, as well as public education and training initiatives, to further the  program’s goal of reducing the national demand for petroleum.
section_title: Community Development Block Grants
paragraphs: The Community Development Block Grant (CDBG) program, administered  by the Office of Community Planning and Development within the  Department of Housing and Urban Development, enables state and local  governments to undertake a wide range of activities intended to create  suitable living environments, provide affordable housing, and create  economic opportunities, primarily for persons of low and moderate  income. Most local governments use this investment to rehabilitate  affordable housing and improve key public facilities. The Recovery Act  includes $1 billion for the CDBG program.
section_title: Community Services Block Grants
paragraphs: Community Services Block Grants (CSBG), administered by the  Administration for Children and Families within the Department of Health  and Human Services (HHS), provide federal funds to states, territories,  and tribes for distribution to local agencies to support a wide range of  community-based activities to reduce poverty. The Recovery Act  appropriated $1 billion for CSBG to become available immediately.
section_title: Community Oriented Policing Services (COPS) Hiring Recovery Program
paragraphs: The COPS Hiring Recovery Program (CHRP), administered by the Office  of Community Oriented Policing Services within the U.S. Department of  Justice, provides competitive grant funds directly to law enforcement  agencies for the purpose of hiring or rehiring career law enforcement  officers and increasing their community policing capacity and crime- prevention efforts. CHRP grants provide 100 percent funding for 3 years  for approved entry-level salaries and benefits for newly hired, full-time  sworn officer positions or for rehired officers who have been laid off, or  are scheduled to be laid off on a future date, as a result of local budget  cuts.
section_title: Diesel Emission Reduction Act Grants
paragraphs: The program objective of the Diesel Emission Reduction Act Grants,  administered by the Office of Air and Radiation in conjunction with the  Office of Grants and Debarment, within the U.S. Environmental Protection  Agency (EPA), is to reduce diesel emissions. EPA will award grants to  address the emissions of in-use diesel engines by promoting a variety of  cost-effective emission reduction strategies, including switching to cleaner  fuels, retrofitting, repowering or replacing eligible vehicles and equipment,  and idle reduction strategies. The Recovery Act appropriated $300 million  for the Diesel Emission Reduction Act grants. In addition, the funds  appropriated through the Recovery Act for the program are not subject to  the State Grant and Loan Program Matching Incentive provisions of the  Energy Policy Act of 2005.
section_title: Drinking Water State Revolving Fund
paragraphs: The Drinking Water State Revolving Fund program was established under  the Safe Drinking Water Act (SDWA) Amendments of 1996, which  authorizes the Environmental Protection Agency (EPA) to award  capitalization grants to states, which in turn are authorized to provide low- cost loans and other types of assistance to public water systems to finance  the costs of infrastructure projects needed to achieve or maintain  compliance with SDWA requirements. The Recovery Act provides $2  billion in funding for this program, which is administered by the Office of  Water within EPA.
section_title: Edward Byrne Memorial Justice Assistance Grant Program
paragraphs: The Edward Byrne Memorial Justice Assistance Grant (JAG) Program  within the Department of Justice’s Bureau of Justice Assistance provides  federal grants to state and local governments for law enforcement and  other criminal justice activities, such as crime prevention and domestic  violence programs, corrections, treatment, justice information sharing  initiatives, and victims’ services. JAG funds are allocated based on a  statutory formula determined by population and violent crime statistics, in  combination with a minimum allocation to ensure that each state and  territory receives some funding.
section_title: Energy Efficiency and Conservation Block Grants
paragraphs: The Energy Efficiency and Conservation Block Grants (EECBG),  administered by the Office of Energy Efficiency and Renewable Energy  within the Department of Energy, provides funds through competitive and  formula grants to units of local and state government and Indian tribes to  develop and implement projects to improve energy efficiency and reduce  energy use and fossil fuel emissions in their communities. The Recovery  Act includes $3.2 billion for the EECBG. Of that total, $400 million is to be  awarded on a competitive basis to grant applicants.
section_title: Title IV-E Adoption Assistance and Foster Care Programs
paragraphs: Administered by the Administration for Children and Families within the  Department of Health and Human Services, the Foster Care Program helps  states to provide safe and stable out-of-home care for children until the  children are safely returned home, placed permanently with adoptive  families or placed in other planned arrangements for permanency. The  Adoption Assistance Program provides funds to states to facilitate the  timely placement of children, whose special needs or circumstances  would otherwise make placement difficult, with adoptive families. Federal  Title IV-E funds are paid to reimburse statea for their maintenance  payments using the states’ respective Federal Medical Assistance  Percentage (FMAP) rates. Under the Recovery Act, an estimated  additional $806 million will be provided to states to increase the federal  match for state maintenance payments for foster care, adoption  assistance, and guardianship assistance.
section_title: Head Start/Early Head Start
paragraphs: The Head Start program, administered by the Office of Head Start of the  Administration for Children and Families within the Department of Health  and Human Services, provides comprehensive early childhood  development services to low-income children, including educational,  health, nutritional, social, and other services, intended to promote the  school readiness of low-income children. Federal Head Start funds are  provided directly to local grantees, rather than through states. The  Recovery Act provided an additional $2.1 billion in funding for Head Start,  including $1.1 billion directed for the expansion of Early Head Start  programs. The Early Head Start program provides family-centered services  to low-income families with very young children designed to promote the  development of the children, and to enable their parents to fulfill their  roles as parents and to move toward self-sufficiency.
section_title: Homelessness Prevention and Rapid Re-Housing Program
paragraphs: The Homelessness Prevention and Rapid Re-Housing Program,  administered by the Office of Community Planning and Development  within the Department of Housing and Urban Development, awards  formula grants to states and localities to prevent homelessness and  procure shelter for those who have become homeless. Funding for this  program is being distributed based on the formula used for the Emergency  Shelter Grants program. According to the Recovery Act, program funds  should be used for short-term or medium-term rental assistance; housing  relocation and stabilization services, including housing search, mediation  or outreach to property owners, credit repair, security or utility deposits,  utility payments, and rental assistance for management; or appropriate  activities for homeless prevention and rapid rehousing of persons who  have become homeless. The Recovery Act includes $1.5 billion for this  program.
section_title: Increased Demand for Services
paragraphs: The Department of Health and Human Services’ Health Resources and  Services Administration (HRSA) has allocated Recovery Act funds for  Increased Demand for Services (IDS) grants to health centers to increase  health center staffing, extend hours of operations, and expand existing  services. The Recovery Act provided $500 million for health center  operations. HRSA has allocated $343 million for IDS grants to health  centers.
section_title: Internet Crimes Against Children Initiatives
paragraphs: Internet Crimes Against Children Initiatives (ICAC), administered by the  Department of Justice, Office of Justice Programs’ (OJP) Office of Juvenile  Justice and Delinquency Prevention (OJJDP), seeks to maintain and  expand state and regional ICAC task forces to address technology- facilitated child exploitation. This program provides funding to states and  localities for salaries and employment costs of law enforcement officers,  prosecutors, forensic analysts, and other related professionals. The  Recovery Act appropriated $50 million for ICAC.
section_title: National Endowment for the Arts Recovery Act grants
paragraphs: The Recovery Act provides $50 million to be distributed in direct grants by  the National Endowment for the Arts to fund arts projects and activities  that preserve jobs in the nonprofit arts sector threatened by declines in  philanthropic and other support during the current economic downturn.
section_title: Neighborhood Stabilization Program 2
paragraphs: The Neighborhood Stabilization Program (NSP), administered by the  Office of Community Planning and Development within the Department of  Housing and Urban Development, provides assistance for the acquisition  and rehabilitation of abandoned or foreclosed homes and residential  properties, among other activities, so that such properties may be returned  to productive use. Congress appropriated $2 billion in NSP2 funds in the  Recovery Act for competitive awards to states, local governments, and  nonprofit organizations. NSP is considered to be a component of the  Community Development Block Grant (CDBG) program and basic CDBG  requirements govern NSP.
section_title: Recovery Act Assistance to Firefighters Fire Station Construction Grants
paragraphs: The Recovery Act Assistance to Firefighters Fire Station Construction  Grants, also known as fire grants or the FIRE Act grant program, is  administered by the Department of Homeland Security, Federal  Emergency Management Agency (FEMA), Assistance to Firefighters  Program Office. The program provides federal grants directly to fire  departments on a competitive basis to build or modify existing non-federal  fire stations in order for departments to enhance their response capability  and protect the communities they serve from fire and fire-related hazards.  The Recovery Act includes $210 million for this program and provides that  no grant shall exceed $15 million.
section_title: Recovery Act Impact on Child Support Incentives
paragraphs: Under title IV-D of the Social Security Act, the Administration for Children  and Families (ACF), within the Department of Health and Human Services,  administers matching grants to states to carry out their child support  enforcement programs, which enhance the well-being of children by  identifying parents, establishing support obligations, and monitoring and  enforcing those obligations. Furthermore, ACF makes additional incentive  payments to states based on their child support enforcement programs  meeting certain performance goals. These activities are appropriated  annually and the Recovery Act does not appropriate funds for either of  them. However, the Recovery Act temporarily provides for incentive  payments expended by states for child support enforcement to count as  state funds eligible for the matching grants. This change is effective  October 1, 2008, through September 30, 2010.
section_title: Transportation Investment Generating Economic Recovery Discretionary Grants
paragraphs: Administered by the Department of Transportation’s Office of the  Secretary, the Recovery Act provides $1.5 billion in competitive grants,  generally between $20 million and $300 million, to state and local  governments, and transit agencies. These grants are for capital  investments in surface transportation infrastructure projects that will have  a significant impact on the nation, a metropolitan area, or a region.  Projects eligible for funding provided under this program include, but are  not limited to, highway or bridge projects, public transportation projects,  passenger and freight rail transportation projects, and port infrastructure  investments.
section_title: Transit Investments for Greenhouse Gas and Energy Reduction Grant Program
paragraphs: The Transit Investments for Greenhouse Gas and Energy Reduction  (TIGGER) Grant program, administered by the Federal Transit  Administration within the Department of Transportation, is a discretionary  program to support transit capital projects that result in greenhouse gas  reductions or reduced energy use. The Recovery Act provides $100 million  for the TIGGER program, and each submitted proposal must request a  minimum of $2 million.
section_title: Senior Community Service Employment Program
paragraphs: The Senior Community Service Employment Program (SCSEP),  administered by the Employment and Training Administration within the  Department of Labor, promotes useful part-time opportunities in  community service activities for unemployed low-income persons who are  55 years or older and who have poor employment prospects. The Recovery  Act provides $120 million for SCSEP.
section_title: Services*Training*Officers *Prosecutors (STOP) Violence Against Women Formula Grants Program
paragraphs: Under the STOP Program, the Office on Violence Against Women within  the Department of Justice, has awarded over $139 million in Recovery Act  funds to promote a coordinated, multidisciplinary approach to enhance  services and advocacy to victims, improve the criminal justice system’s  response, and promote effective law enforcement, prosecution, and  judicial strategies to address domestic violence, dating violence, sexual  assault, and stalking.
section_title: Supplemental Nutrition Assistance Program (formerly the Food Stamp Program)
paragraphs: The Supplemental Nutrition Assistance Program (SNAP), administered by  the Food and Nutrition Service within the Department of Agriculture,  serves more than 35 million people nationwide each month. SNAP’s goal is  to help low-income people and families buy the food they need for good  health. The Recovery Act provides for a monthly increase in benefits for  the program’s recipients. The increases in benefits under the Recovery Act  are estimated to total $20 billion over the next 5 years.
section_title: Wildland Fire Management Program
paragraphs: The Department of Agriculture’s Forest Service administers the Wildland  Fire Management Program funding for projects on federal, state, and  private land. The goals of these projects include ecosystem restoration,  research, and rehabilitation; forest health and invasive species protection;  and hazardous fuels reduction. The Recovery Act provided $500 million for  the Wildland Fire Management program.
section_title: Workforce Investment Act Title I-B Grants
paragraphs: The Workforce Investment Act of 1998 (WIA) programs, administered  primarily by the Employment and Training Administration within the  Department of Labor, provide job training and related services to  unemployed and underemployed individuals. The Recovery Act provides  an additional $2.95 billion in funding for state formula grants for Youth,  Adult, and Dislocated Worker Employment and Training Activities under  Title I-B of WIA. These grants are allocated to states, which in turn  allocate funds to local entities. The adult program provides training and  related services to individuals ages 18 and older, the youth program  provides training and related services to low-income youth ages 14 to 21,  and dislocated worker funds provide training and related services to  individuals who have lost their jobs and are unlikely to return to those jobs  or similar jobs in the same industry.
section_title: Appendix III: Local Entities Visited by GAO in Selected States and the District of Columbia
paragraphs: Northern Arizona Council of Governments  California Department of Transportation  (Caltrans)
Federal Highway Administration - Illinois  Division Office  New York City Department of  Transportation  City of Plano  San Diego Association of Governments  San Francisco Municipal Transportation  Agency  Metropolitan Atlanta Rapid Transit Authority  (MARTA)
Des Moines Area Regional Transit Authority  Pace, the Suburban Bus Division of the  Regional Transportation Authority  North Carolina Department of Transportation  Public Transportation Division  Lehigh and Northampton Transportation  Authority (LANTA)
Lehigh Valley Planning Commission (LVPC)
Pennsylvania Department of Transportation  Bureau of Public Transportation  Southeastern Pennsylvania Transportation  Authority (SEPTA)
Port Authority of Allegheny County  Desert Star Community School, Inc.
Maricopa County Community College District  Saddle Mountain Unified School District  Los Angeles Unified School District  District of Columbia Public Schools   William E. Doar, Jr. Public Charter School  Illinois State Board of Education  New York City Department of Education  Weldon City Schools  City of Glendale Community Housing Division  City of Phoenix Housing Department  Housing Authority of Maricopa County  City of Tucson Department of Housing and  Community Development  Housing Authority of the City and County of  Denver  Housing Authority of the Town of Kersey  Des Moines Municipal Housing Agency  North Iowa Regional Housing Authority  Housing Authority for LaSalle County  Mississippi Regional Housing Authority No. VIII The Housing Authority of the City of Picayune  The Housing Authority of the City of Rahway  San Antonio Housing Authority (SAHA)
Community Action Partnership of Orange  County  Pacific Asian Consortium in Employment  (PACE)
Community Action Partnership of Riverside  County  Project Go, Inc.
District Department of the Environment  Polk County Public Works Department  Mid-Iowa Community Action, Inc.
Community Action Programs Inter-City, Inc.
Action, Inc.
Community Action Agency of Jackson,  Lenawee, Hillsdale   Michigan Department of Human Services  Oakland Livingston Human Services  Agency   Community Development Corporation of  Long Island  Long Island City  Community Environmental Center  People’s Equal Action and Community  Effort  Corporation for Ohio Appalachian  Development (COAD)
Mid-Ohio Regional Planning Commission  (MORPC)
Community Action Partnership of the  Greater Dayton Area (CAP-Dayton)
Total number of local governments visited by GAO is 44.
section_title: Appendix IV: GAO Contacts and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: The following staff contributed to this report: Stanley Czerwinski, Denise  Fantone, Susan Irving, and Yvonne Jones, (Directors); Thomas James,  James McTigue, and Michelle Sager, (Assistant Directors); Sandra Beattie  (Analyst-in-Charge); and Robert Alarapon, David Alexander, Marie Penny  Ahearn, Judith Ambrose, Peter Anderson, Lydia Araya, Thomas Beall,  James Bennett, Noah Bleicher, Jessica Botsford, Anthony Bova, Muriel  Brown, Lauren Calhoun, Richard Cambosos, Ralph Campbell Jr., Virginia  Chanley, Tina Cheng, Marcus Corbin, Robert Cramer, Jeffrey DeMarco,  Michael Derr, Helen Desaulniers, Ruth “Eli” DeVan, David Dornisch, Kevin  Dooley, Holly Dye, Abe Dymond, James Fuquay, Alice Feldesman,  Alexander Galuten, Ellen Grady, Anita Hamilton, Geoffrey Hamilton, Tracy  Harris, Bert Japikse, Karen Keegan, John Krump, Jon Kruskar, Hannah  Laufe, Jean K. Lee, Sarah McGrath, Jean McSween, Donna Miller, Kevin  Milne, Shelia McCoy, Mimi Nguyen, Josh Ormond, Ken Patton, Sarah  Prendergast, Brenda Rabinowitz, Carl Ramirez, James Rebbe, Beverly  Ross, Aubrey Ruge, Sylvia Schatz, Sidney Schwartz, John Smale Jr.,  Kathryn Smith, George Stalcup, Andrew J. Stephens, Alyssa Weir, Crystal  Wesco, and Kimberly Young.
section_title: Program Contributors
section_title: Contributors to Recovery Act Reporting on the Selected States and the District