California – September 20, 2010

The content below was excerpted from the California Appendix (PDF, 30 pages) of GAO's most recent bimonthly review of the Recovery Act.[1]

What We Did

GAO's work in California included reviewing and updating information on six specific programs funded under the Recovery Act—Edward Byrne Memorial Justice Assistance Grants (JAG), Energy Efficiency and Conservation Block Grant (EECBG), Elementary and Secondary Education Act of 1965 (ESEA) Title I, Part A, Individuals with Disabilities Education Act (IDEA), Part B, State Energy Program (SEP), and Weatherization Assistance Program. Our work focused on California's uses of Recovery Act funds for these selected programs, the steps California agencies are taking to ensure accountability for Recovery Act funds, and the impacts that these funds have had on creating and retaining jobs. For descriptions and requirements of the programs we covered, see appendix XVIII of GAO-10-1000SP.

To determine how California used Recovery Act funds under selected programs, we met with officials from state agencies in charge of administering program funds and recipients of Recovery Act EECBG; ESEA Title I, Part A; IDEA, Part, B; and Weatherization Assistance Program funds in several jurisdictions. Recipients were selected primarily because they either were in the process of obligating or have spent Recovery Act funds. To assess the steps taken by California agencies to ensure accountability for Recovery Act funds, we interviewed officials from the California Recovery Task Force (Task Force), California's Recovery Act Inspector General, the California State Auditor, and selected state agencies to obtain information or updates on their oversight and auditing activities. In addition, we reviewed products, such as guidance memorandums, letters, and reports, issued by these agencies related to the Recovery Act. To assess the impact Recovery Act funds have had on job creation and retention, we reviewed the information California recipients reported on ( We also met with the Task Force to obtain current information on the state's experience in meeting Recovery Act reporting requirements and preparing the state's quarterly report and continued to follow up with the California Department of Education (CDE), the state agency administering Recovery Act education funds, on issues we previously reported on related to estimating and reporting jobs.

What We FoundBack to top

California Is Gaining Long-term Benefits from Recovery Act Funds for New and Expanding Programs, While Short-term Budget Stabilization Benefits Are Waning

California recipients continue to use Recovery Act funds to create new programs and expand services under existing programs that are expected to provide long-term benefits. For example, localities we visited plan to use EECBG funds, which is a program funded for the first time by the Recovery Act, to help achieve energy efficiency goals, including reduced energy use, and other long-term benefits. As part of this program, Sacramento County spent about $531,000 in EECBG Recovery Act funds on energy efficiency improvements to a county facility that is expected to reduce operations and maintenance costs. Recovery Act funds also expanded existing federal programs, such as the SEP, ESEA Title I, Part A, and IDEA, Part B. For instance, California was allocated $226 million in SEP Recovery Act funds which is a significant increase from the state's fiscal year 2009 appropriation of $1.5 million. These funds allowed the state to develop several new activities and expand services, including allocating about $110 million of the $226 million to retrofit municipal, commercial, and residential buildings. In prior reports, we noted programs, such as the Weatherization Assistance Program and JAG, which received significant increases in funding through the Recovery Act, and faced some implementation challenges, but recently overcame hurdles and are on track to meeting production and spending milestones. While Recovery Act funds have helped expand programs and services, California continues to face significant budgetary problems. State officials reported that Recovery Act funds will have less of an impact this fiscal year than they did last year because the state has largely distributed its State Fiscal Stabilization Fund (SFSF) funds and other one-time Recovery Act funds. As of August 19, 2010, California has not yet adopted a budget for state fiscal year 2010-2011, which began on July 1, and faces an estimated $19 billion budget gap.

State and Local Entities Continue to Conduct Oversight Activities to Help Ensure Appropriate Accountability for Recovery Act Funds

Since the Recovery Act was enacted in February 2009, state and local audit and oversight entities we met with have continued to take steps to help ensure the accountability of Recovery Act funds. Our prior reports discussed the oversight roles and activities of key state entities, including the Task Force, the California Recovery Act Inspector General, and State Auditor. Since our last report in May 2010, these entities regularly met with state departments and agencies regarding Recovery Act funds, reviewed selected subrecipients to ensure proper accounting for funds received, and issued reports highlighting concerns about the management of Recovery Act funds. For example, on June 9, 2010, the State Auditor provided an update on the progress three state agencies made in responding to recommendations in reports issued over the last year and noted areas where additional work remained related to the management and oversight provided by these entities for three Recovery Act programs— JAG, SEP, and Weatherization Assistance Program. Local auditors we met with have generally not begun to conduct Recovery Act-specific audits, with the exception of the San José Auditor, who has issued two Recovery Act reports to date. Some local auditors stated that they plan to conduct Recovery Act-specific audits in the future, while others stated that staffing resources limited their ability to conduct additional audits at this time.

California Reported over 83,000 Jobs in the Fourth Reporting Cycle and Continued to Make Improvements in the Reporting Process

Overall, California recipients reported funding more than 83,000 full-time equivalents (FTE) with Recovery Act funds during the last recipient reporting cycle—the period covering April 1, 2010 to June 30, 2010—as reported on on July 31, 2010. According to the Task Force, there were numerous new grants awarded and more Recovery Act funds expended during the fourth quarter reporting period compared to the prior quarter. Task Force officials also noted that this round of recipient reporting went more smoothly than prior rounds. During the reporting period, the Task Force took steps to ensure California recipients that do not directly report through the state's centralized system were accurately reporting FTEs. For instance, the Task Force contacted and provided guidance to recipients that did not report in the previous quarter to help them improve reporting in future quarters. CDE also took steps to address issues raised in our prior reports, including recipient reporting concerns about underreporting of vendor FTEs by its subrecipients and CDE's process for reviewing data.

Full September ReportBack to top

Recovery Act: Opportunities to Improve Management and Strengthen Accountability over States' and Localities' Uses of Funds
Recovery Act: Opportunities to Improve Management and Strengthen Accountability over States' and Localities' Uses of Funds
  • [1] Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009).
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