New Jersey – May 26, 2010

The content below was excerpted from the New Jersey Appendix (PDF, 31 pages) of GAO's most recent bimonthly review of the Recovery Act.[1]

What We Did

We reviewed four specific programs funded through the Recovery Act: Clean Water and Drinking Water State Revolving Funds (SRF), Highway Infrastructure Investment Program, Public Housing Capital Fund, and COPS Hiring Recovery Program (CHRP). We selected these programs for various reasons. The SRF, highway, and public housing programs all had 1-year obligation or contracting deadlines during the course of our review. Our work focused on the ability of these programs to meet the 1-year deadlines and challenges agencies faced in meeting them. (For descriptions and requirements of the programs we covered, see appendix XVIII of GAO-10-605SP.) To gain a further understanding of these issues, we met with state agency officials and conducted site visits to SRF subrecipients in Long Branch and the Borough of Beach Haven and public housing agencies in Elizabeth and Bergen County. We selected the SRF subrecipients because they incorporated green components into their projects, which was a new requirement under the Recovery Act. We selected the public housing agencies because they had obligated less than 50 percent of their Recovery Act funds as of January 30, 2010, and were required to have 100 percent of these funds obligated by March 17, 2010.[2] New Jersey CHRP recipients used more of their grant funds to hire new officers rather than to avoid layoffs or rehire officers compared to the national average. We met with officials from the East Orange and Trenton Police Departments to gain an understanding of their need for additional officers and the impact of the CHRP funds on their policing efforts.

In addition to the four program-specific reviews, we also interviewed state and local budget officials about their use of Recovery Act funds and the impact of these funds on state and local budgets. We selected three counties and one city-the Counties of Bergen, Burlington, and Cape May, and the City of Newark-to gain a deeper understanding about the use and impact of Recovery Act funds. The localities were selected based on various factors, including population, unemployment rates, type of government, and geographic dispersion. Finally, to gain an understanding of state efforts to oversee and monitor the use of Recovery Act funds, we interviewed officials from the state's accountability community about their oversight roles and audits related to Recovery Act funds.

What We FoundBack to top

SRF

The New Jersey Department of Environmental Protection (DEP) received approximately $162 million in Recovery Act funds for the Clean Water SRF program and approximately $43 million in Recovery Act funds for the Drinking Water SRF program. For example, the Long Branch Sewerage Authority received $7.5 million under the Clean Water SRF to make improvements to its wastewater treatment plan and the Borough of Beach Haven received $3.1 million under the Drinking Water SRF to install residential water meters. DEP changed its priority ranking systems and financing for the Recovery Act SRF program to ensure Recovery Act deadlines and requirements, such as the 1-year deadline to have all Recovery Act projects under contract by February 17, 2010, were met. According to local officials, these changes delayed the implementation of some projects under the base and Recovery Act SRF programs.[3]

Highways

The U.S. Department of Transportation's Federal Highway Administration (FHWA) apportioned $652 million in Recovery Act funds to New Jersey and obligated New Jersey's full apportionment by the 1-year deadline of March 2, 2010. However, the New Jersey Department of Transportation (NJDOT) faced challenges in meeting the deadline due, in part, to contracts being awarded at prices lower than state cost estimates. As a result of the lower contract prices, funds had to be deobligated by FHWA and obligated on new projects. Some of these deobligated funds became available for obligation close to the 1-year deadline and required NJDOT to identify additional projects in a short time period. Although NJDOT is not directly assessing the impact of Recovery Act funds on the state highway system, NJDOT officials stated the funds have allowed them to, among other things, rehabilitate or replace deficient bridges and pavement at both the state and local levels.

Public Housing Capital Fund

New Jersey's 80 public housing agencies met the 1-year obligation deadline of March 17, 2010, obligating $104 million in Recovery Act funds. The U.S. Department of Housing and Urban Development (HUD) field office provided guidance and technical assistance to help public housing agencies meet the obligation deadline. Despite the condensed time period, HUD officials, as well as officials from the public housing agencies we visited, stated that the obligation of their regular public housing capital funds is on track compared to previous years.

CHRP

A total of 18 law enforcement agencies in New Jersey received CHRP grants totaling $26.8 million. Officials from the East Orange and Trenton Police Departments told us their departments were understaffed due to budget constraints, and therefore used their CHRP funds to hire additional officers. Specifically, East Orange received funds to hire 14 additional officers over a 3-year period, and Trenton received funds to hire 18 additional officers. Officials from both police departments stated that they are confident they will be able to meet the requirement to retain officers for one additional year after the 3-year CHRP grant expires because they anticipate retirements over the next 3 years. As of April 1, 2010, East Orange had obligated about $1.4 million and expended about $20,606 of its CHRP grant, and Trenton had obligated its entire CHRP grant and expended $352,289.

Budget stabilization

Although Recovery Act funds helped New Jersey stabilize its budget, New Jersey faced a $2.2 billion budget gap in its current year budget and faces a larger projected shortfall of $10.7 billion for fiscal year 2011. The localities we visited also face budget challenges and may be unable to retain some positions funded by the Recovery Act. However, these localities largely used their Recovery Act funds for nonrecurring projects and to maintain services. For example, the County of Burlington received Recovery Act funds for 14 programs and used these funds for delivering meals to the elderly, homelessness prevention, and workforce training, among other things.

Accountability efforts

New Jersey's Recovery Accountability Task Force continues to hold regularly scheduled meetings on the use of Recovery Act funds by state agencies. The Office of the State Comptroller and the Office of the State Auditor recently issued audit reports on the use of Workforce Investment Act of 1998 (WIA) and Weatherization Assistance Program funds, respectively. The weatherization audit identified internal control weaknesses in the oversight of Recovery Act funds and made recommendations to strengthen accountability over the use of these funds.

Full May ReportBack to top

Recovery Act: States' and Localities' Uses of Funds and Actions Needed to Address Implementation Challenges and Bolster Accountability
GAO-10-604
Recovery Act: States' and Localities' Uses of Funds and Actions Needed to Address Implementation Challenges and Bolster Accountability
(Appendixes)
GAO-10-605SP
  • [1] Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009).
  • [2] We also obtained follow-up information from the Newark Housing Authority and Rahway Housing Authority on the impact, if any, the Recovery Act funds had on their ability to administer their regular public housing capital funds. These housing agencies had obligated more than 50 percent of their public housing capital funds as of January 30, 2010 and were therefore not a focus of this review.
  • [3] The base SRF program refers to all SRF funds generated through yearly appropriations, state-match, or repaid loans and does not include Recovery Act funds.
GAO Contact
portrait of of David J. Wise

David J. Wise

Director, Physical Infrastructure

wised@gao.gov

(202) 512-5731

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Eugene E. Aloise

Director, Natural Resources and Environment

aloisee@gao.gov

(202) 512-6870