Colorado – July 8, 2009

The content below was excerpted from the Colorado Appendix (PDF, 41 pages) of GAO's second bimonthly review of the Recovery Act.[1]


Use of Funds

Our work in Colorado focused on eight federal programs,[2] selected primarily because these programs have begun disbursing funds to states and include existing programs receiving significant amounts of Recovery Act funds or significant increases in funding, and new programs. Colorado estimates that it will receive a total of $3.5 billion in Recovery Act funds, and is targeting funds to help restore the state's budget and to meet key program needs during the current budget crisis. Funds from some of these programs are intended for disbursement through states or directly to localities. The funds include the following:

U.S. Department of Education State Fiscal Stabilization Fund (SFSF)

Education has awarded Colorado $509 million, or about 67 percent of the state's total State Fiscal Stabilization Fund (SFSF) allocation of $760 million. Colorado had obligated a total of almost $176 million of the funds as of June 30, 2009.[3] Colorado is using these funds primarily to support its higher education system; without the funds, according to state officials, budget cuts could have resulted in the closure of some institutions and increased tuition at others. Local education officials we spoke with stated that their districts do not yet have specific plans for the funds, but anticipate using them to retain teachers and reduce the potential for layoffs.

Highway Infrastructure Investment Funds

The U.S. Department of Transportation's Federal Highway Administration (FHWA) apportioned $404 million in Recovery Act funds to Colorado, of which 30 percent was suballocated to metropolitan and other areas. As of June 25, 2009, the federal government's obligation was $244 million, and Colorado had awarded 29 projects. Colorado plans 92 projects using Recovery Act funds, with the initial projects consisting primarily of routine paving projects and later projects involving new highway construction and bridge replacement. For example, one ongoing project in central Colorado involves paving 12.5 miles of highway, while a planned project in the Denver metro area will replace two bridges on Interstate 76.

Funds Made Available as a Result of Increased Medicaid Federal Medical Assistance Percentage (FMAP)

As of June 29, 2009, Colorado had received almost $241 million in increased FMAP grant awards, of which it had drawn down more than $197 million, or almost 82 percent of funds. Colorado reported using funds made available as a result of the increased FMAP to offset the state budget deficit[4] in an effort to avoid or mitigate Medicaid benefit cuts and provider rate cuts resulting from the state's economic conditions. [5]

Individuals with Disabilities Education Act (IDEA), Parts B and C

Education has provided Colorado $80.5 million in Recovery Act IDEA Part B and C funds, or 50 percent of its total allocation of $161 million. These funds, which are managed by two different state departments in Colorado, are targeted for, among other things, assistive technology for students with disabilities and professional development for special education teachers. As of June 29, 2009, Colorado's Department of Education had reimbursed school districts more than $3.9 million for Part B and had obligated an additional $156,000. As of June 30, 2009, the Department of Human Services had obligated more than $3.3 million for contracts with service providers under Part C.

Title I, Part A, of the Elementary and Secondary Education Act (ESEA) of 1965

Education has awarded Colorado $55.6 million in Recovery Act ESEA Title I, Part A, funds or 50 percent of its total allocation of $111 million. As of June 29, 2009, Colorado had reimbursed individual school districts about $279,000. Planned uses of the funds in Colorado include preschool education, family literacy improvements, and teacher development.

Weatherization Assistance Program

The U.S. Department of Energy (DOE) allocated about $79.5 million in Recovery Act weatherization funding to Colorado. As of June 30, 2009, DOE had provided $7.95 million to the state and Colorado had obligated $5.25 million of these funds, of which almost $1 million had been spent. Colorado plans to hire additional staff and purchase equipment to help it weatherize more than 16,000 housing units using Recovery Act funds.

Edward Byrne Memorial Justice Assistance Grants

The Department of Justice's Bureau of Justice Assistance has allocated a total of $29.9 million for state and local governments in Colorado. As of June 26, 2009, Colorado had received its full state award of $18.3 million and had obligated and spent about $13,700 of these funds.[6] The Colorado Department of Public Safety, which administers these grants for the state Colorado, received nearly 200 applications from state and local entities for grant funds, and will select applications for funding in July 2009, for award beginning October 1, 2009. Of available funds, 60 percent will be awarded to local government entities while 40 percent will be awarded to state agencies.

Public Housing Capital Fund

The U.S. Department of Housing and Urban Development (HUD) has allocated almost $17 million in Recovery Act funding to 43 public housing agencies in Colorado. Based on information available as of June 20, 2009, about $2.4 million (14 percent) had been obligated by those agencies and about $201,000 (1 percent) had been spent. At the three housing authorities we visited, this money, which flows directly from HUD to public housing agencies, is being used for various projects including construction of new units, rehabilitation of existing units, and smaller-scale projects such as fence and window replacement at rural housing units.

Safeguarding & TransparencyBack to top

Colorado has, since our April 2009 report,[7] developed a coding structure to account for Recovery Act funds separately from non-Recovery Act funds, addressing officials' concerns that tracking the funds might be difficult with the state's aging central accounting system. The responsibility for tracking and monitoring of, and exercising internal controls over, Recovery Act funds has largely been delegated to the individual state departments, which will generally use existing systems and internal control procedures. Although the State Controller initially expressed concerns that the state does not have a centralized process for monitoring the effectiveness of state departments' internal controls, that office has taken steps to address these concerns. In addition, the state departments use their Single Audit Act audits (Single Audit), among other information, as a source of information to assess program risks and monitor funds.[8] The Office of the State Auditor (which is responsible for conducting the state's Single Audit) had concerns about the lack of timely guidance from the Office of Management and Budget (OMB) on specific audit requirements related to state departments' expenditures of Recovery Act funds. In addition, the office noted that additional funding will be needed to cover the cost of the Recovery Act audit work. State officials told us that the state might be able to provide Recovery Act funds to cover these audit costs, consistent with OMB guidance on using Recovery Act funds to cover certain administrative costs associated with implementing the act, but that no proposal has been developed.

Assessing the Effects of SpendingBack to top

While it is still too early to assess the impacts of Colorado's Recovery Act funding, state officials are planning to track and monitor centrally the results of this spending, including identifying the number of jobs created and retained through Recovery Act spending. Officials with the Colorado Recovery office said that they are still evaluating whether they will modify and use an existing system or acquire a new system to track and monitor effects. The state plans to report data centrally on jobs created and retained, but some state department officials said that reporting guidelines have not yet been finalized and that they need guidance, particularly on counting jobs created and retained.

Full July ReportBack to top

Recovery Act: States' and Localities' Current and Planned Uses of Funds While Facing Fiscal Stresses
Recovery Act: States' and Localities' Current and Planned Uses of Funds While Facing Fiscal Stresses (Appendixes)
  • [1] Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009).
  • [2] In some states, GAO also reviewed a ninth program receiving funds under the Recovery Act, the Workforce Investment Act Youth Program. GAO did not review this program in Colorado.
  • [3] Obligation, as used by the state, refers to funds that have been encumbered with a contract or other agreement.
  • [4] Colorado officials noted that the use of the words budget deficit is not necessarily applicable, because the state's constitution requires it to have a balanced budget annually and does not permit a budget deficit. Therefore, while Medicaid officials' response to our data collection instrument indicated that the funds made available as a result of the increased FMAP were being used to offset the state budget deficit, officials believe that a more accurate description of the use of these funds is that they are allowing the state to minimize needed program cuts and provider rate cuts.
  • [5] The increased FMAP available under the Recovery Act is for state expenditures for Medicaid services. However, the receipt of this increased FMAP may reduce the funds that states would otherwise have to use for their Medicaid programs, and states have reported using these available funds for a variety of purposes.
  • [6] We did not review Edward Byrne Memorial Justice Assistance Grants awarded directly to local governments in this report because the Bureau of Justice Assistance's (BJA) solicitation for local governments closed on June 17; therefore, not all of these funds have been awarded.
  • [7] GAO, Recovery Act: As Initial Implementation Unfolds in States and Localities, Continued Attention to Accountability Issues is Essential, GAO-09-580 (Washington, D.C.: Apr. 23, 2009).
  • [8] The Single Audit Act of 1984, as amended (31 U.S.C. ch. 75), requires that each state, local government, or nonprofit organization that expends $500,000 or more a year in federal awards must have a Single Audit conducted for that year subject to applicable requirements, which are generally set out in Office of Management and Budget Circular No. A-133, Audits of States, Local Governments and Non-Profit Organizations (June 27, 2003). If an entity expends federal awards under only one federal program, the entity may elect to have an audit of that program.
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