Colorado – September 23, 2009

The content below was excerpted from the Colorado Appendix (PDF, 49 pages) of GAO's third bimonthly review of the Recovery Act.[1]

Contents

Use of Funds

Colorado is targeting Recovery Act funds to help restore the state’s budget and to meet key program needs during the current budget crisis. Our work in Colorado focused on specific Recovery Act programs, including a detailed review of three programs—State Fiscal Stabilization Fund (SFSF), Transit Capital Assistance, and Weatherization Assistance. We reviewed these programs in detail for different reasons. The state has allocated major portions of SFSF funds to institutions of higher education (IHE), and we therefore reviewed this program. We included transit funds because of a Recovery Act deadline for obligating a portion of funds by September 1, 2009, in addition to the fact that the state received a significant amount of transit funds. Finally, we included the weatherization program in our review because of the large influx of funds the state received and the increased risks associated with managing those funds. In addition to the detailed review of these three programs, we updated funding information for three other programs—Highway Infrastructure Investment; Individuals with Disabilities Education Act (IDEA), Part B; and Title I, Part A, of the Elementary and Secondary Education Act (ESEA) of 1965. For all programs, we identified the use of Recovery Act funds; examined safeguards over these funds, including those related to procurement of goods and services; and considered how the effects of Recovery Act spending would be reported by the state of Colorado.

Budget Stabilization

As we reported in July 2009, Colorado estimated it will receive a total of $3.5 billion in Recovery Act funds.[2] While Recovery Act funds helped Colorado balance its budget for fiscal year 2009 and will provide additional support for the state’s budgets in fiscal years 2010 and 2011, the state still faces significant revenue shortfalls in those 2 years. As a result, the state has made $318 million in budget cuts in the fiscal year 2010 budget and anticipates making more drastic cuts in fiscal year 2011.

In summary, for the Recovery Act programs we reviewed, we found the following:

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

  • Education has allocated $760 million in SFSF funding to Colorado and Colorado plans to spend the majority of the funds on higher education. As of September 2, 2009, state IHEs had been reimbursed $155 million from SFSF funds. The two state institutions we reviewed used the funds to restore teaching positions and programs and to limit tuition increases. Recent budget cuts at the state level have caused the state to plan to reallocate $81 million in SFSF funds from K-12 to higher education in fiscal year 2010. The budget cuts decreased the state’s spending on higher education below levels required to meet Recovery Act requirements. As a result, on September 9, 2009, the state submitted a request to Education to waive the requirement to maintain state education spending at certain levels in fiscal year 2010.

Transit Capital Assistance

  • The U.S. Department of Transportation’s (DOT) Federal Transit Administration (FTA) apportioned $103 million in Recovery Act Transit Capital Assistance funds to Colorado and urbanized areas in the state. Of that total, $90.2 million was apportioned to urbanized areas and the remaining $12.5 million was apportioned to the state for spending in nonurbanized or rural areas. As of September 1, 2009, FTA had obligated $96.3 million for the state and urbanized areas in Colorado. Officials from Colorado transit agencies told us they directed Recovery Act funds toward high-priority projects that were facing a funding shortfall, including capital maintenance, safety improvements, and light rail projects.

Weatherization Assistance Program

  • The U.S. Department of Energy (DOE) allocated about $79.5 million in Recovery Act weatherization funding to Colorado, as we reported in July 2009. As of September 15, 2009, DOE had provided almost $39.8 million to the state and Colorado had obligated $17.3 million of these funds, of which about $4.1 million had been spent. Colorado’s weatherization plan was approved by DOE on August 13, 2009. Officials from some weatherization agencies in Colorado were concerned that Davis-Bacon Act wage requirements have increased the wages that they will pay for weatherization work, potentially limiting the amount of weatherization activities that can be completed in Colorado.

Highway Infrastructure Investment Funds

  • DOT’s Federal Highway Administration (FHWA) initially apportioned almost $404 million in Recovery Act funds to Colorado. Of these funds, $18.6 million was transferred to FTA for transit projects, leaving $385 million for highway projects in the state. As of September 1, 2009, FHWA had obligated almost $290 million for Colorado projects and about $16.5 million had been reimbursed by the federal government.

Individuals with Disabilities Education Act (IDEA) Part B

  • As of August 31, 2009, Education had allocated $154 million to Colorado for IDEA Part B. As of the same date, Colorado had reimbursed almost $4.1 million in Part B funds to local education agencies (LEA).

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

  • As of August 31, 2009, Education had awarded Colorado $111 million for ESEA Title I, Part A and Colorado had reimbursed almost $280,000 in ESEA Title I, Part A funds to LEAs.

General Administrative Costs

  • The Office of Management and Budget (OMB) released guidance on May 11, 2009, allowing states to recover costs related to central administrative activities to manage Recovery Act programs and funds.[3] Such activities include oversight of the state’s reporting and auditing of Recovery Act programs. Colorado submitted a cost allocation plan to the Department of Health and Human Services Division of Cost Allocation (DCA), the agency charged with approving such plans, on August 13, 2009. State officials expect DCA to review the plan within 60 days; as of September 14, 2009, the plan had not been approved. The State Controller is concerned that timing and methodology difficulties will delay its approval, thereby delaying the state’s ability to recover these costs and hindering the state’s ability to oversee Recovery Act programs and funds.

Contracting

Colorado has taken several steps to facilitate the timely and efficient management of Recovery Act contracts. First, legislation was enacted permitting a waiver of its procurement code requirements under certain circumstances, although the state has not yet used the waiver.[4] Second, the State Purchasing Office developed and provided procurement guidance regarding the use of Recovery Act funds. Third, Colorado identified the need to hire 16 staff in the Department of Personnel andAdministration and several state agencies in the areas of purchasing, accounting, contracts, and risk management; the state plans to use general administrative funds to pay for some of these staff and program administrative funds for others. Finally, Colorado implemented a new Contract Management System on July 1, 2009, to facilitate centralized data collection and reporting on all state contracts. Various Colorado agencies have begun awarding Recovery Act contracts, including the Colorado Department of Transportation (CDOT) and the Governor’s Energy Office.

Reporting

Colorado is planning to use a centralized process to report Recovery Act data to OMB rather than having state agencies report individually. However, a number of unresolved issues may affect Colorado’s ability to report to OMB in a complete and timely manner. For example, Colorado’s centralized reporting process is new and testing is ongoing, which may lead to problems when the state tries to upload data to OMB’s online portal, www.federalreporting.gov, by the October 10, 2009, deadline. The Office of the State Controller has issued guidance on Recovery Act reporting, and the state is conducting meetings with state agencies to train them in the new policies and systems for reporting.

Full September ReportBack to top

Recovery Act: Funds Continue to Provide Fiscal Relief to States and Localities, While Accountability and Reporting Challenges Need to Be Fully Addressed
GAO-09-1016
Recovery Act: Funds Continue to Provide Fiscal Relief to States and Localities, While Accountability and Reporting Challenges Need to Be Fully Addressed (Appendixes)
GAO-09-1017SP
  • [1] Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009).
  • [2] GAO, Recovery Act: States’ and Localities’ Current and Planned Uses of Funds While Facing Fiscal Stresses (Colorado), GAO-09-830SP (Washington, D.C.: July 8, 2009).
  • [3] OMB memorandum, M-09-18, Payments to State Grantees for Administrative Costs of Recovery Act Activities (Washington, D.C., May 11, 2009).
  • [4] 2009 Colo. Legis. Serv. Ch. 285 (S.B. 09-297) (West).
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