GAO Releases Most Recent Report on The Recovery Act: Grant Implementation Experiences Offer Lessons for Accountability and Transparency

Across the United States, to date, the Department of the Treasury has paid out over $272 billion in Recovery Act funds for use in states and localities. Of that amount, $1.6 billion has been paid out since the beginning of fiscal year 2014. A significant component of the Recovery Act was grants for use in states and localities. As of the end of October 2013, the Department of the Treasury has awarded approximately $219 billion of Recovery Act funds in the form of grants. These grants covered a broad range of areas including education, transportation, infrastructure, energy, the environment, health care, and housing. The latest GAO report on the uses of Recovery Act funds focuses on funding for grant programs. See full report GAO-14-219.

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

The majority of the federal outlays—53 percent—has been provided through the increased Medicaid Federal Medical Assistance Percentage (FMAP) and the State Fiscal Stabilization Fund (SFSF) administered by the Department of Education.

The following review on funding for grant programs responds to a mandate for GAO under the Recovery Act to report on the uses of and accountability for Recovery Act funds in selected states and localities.

Practices at Federal, State, and Local Levels Contributed to Improved Accountability of Recovery Act Grant Programs but Challenges Existed

Federal, state, and local officials responsible for implementing grants funded by the Recovery Act as well as the external oversight community reported lessons learned regarding both useful practices and challenges to ensuring accountability. Faced with aggressive timelines for distributing billions of dollars, they adopted a number of practices to foster accountability including (1) strong support by top leaders; (2) centrally-situated collaborative governance structures; (3) the use of networks and agreements to share information and work towards common goals; and (4) adjustments to, and innovations in, usual approaches to conducting oversight such as the increased use of up-front risk assessments, the gathering of "real time" information, earlier communication of audit findings, and the use of advanced data analytics. For example, in 2009 the Recovery Accountability and Transparency Board (Recovery Board) established the Recovery Operations Center which used advanced data analysis techniques to identify potential fraud and errors before and after payments were made.

The Recovery Act's emphasis on accountability also presented challenges for several states and federal agencies. These included limited resources for oversight at the state and local levels, and the speed with which Recovery Act funds were distributed. One state addressed the challenge of limited resources by transferring funds from its central administration account to Recovery Act oversight. To facilitate the quick distribution of funds, maintenance-of-effort provisions concerning transportation projects (which prevented Recovery funds from being used for planned state projects) were rolled out before the Department of Transportation had time to issue sufficiently detailed definitions of what constituted "state funding." To address this challenge, the department had to issue clarifying guidance to states seven times during the first year of the Recovery Act.

The Recovery Act Resulted in Increased Transparency but Also Presented Challenges

Federal, state, and local officials also developed practices and encountered challenges related to the transparency of Recovery Act funds. An example of one good practice that was required by the Recovery Act was the creation of the website. This site, as well as similar portals created by states and localities, demonstrated several leading practices for effective government websites. These included (1) establishing a clear purpose, (2) using social networking tools to garner interest, (3) tailoring the website to meet audience needs, and (4) obtaining stakeholder input during design. Efforts to increase transparency also led to challenges for several states and federal agencies. For example, some recipients lacked knowledge or expertise in using the data systems needed to report grant spending, while others faced challenges with reporting the same data to multiple systems. Early GAO reviews also found several problems with job reporting data including discrepancies in how full time equivalents were recorded and the capacity of recipients to meet reporting deadlines. The Office of Management and Budget addressed these challenges by issuing additional guidance and providing technical support. Finally, agencies receiving Recovery Act funds were required to submit performance plans that identified measures on a program-by-program basis. The level of detail and the specificity of outcomes in these plans varied greatly for the agencies GAO examined, making it difficult to determine the extent to which some were making progress toward their goals and demonstrating results.

For additional information visit,, the federal government's Web site on the Recovery Act.

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