New York – May 26, 2010

The content below was excerpted from the New York Appendix (PDF, 34 pages) of GAO's most recent bimonthly review of the Recovery Act.[1]

What We Did

We reviewed seven programs funded by the Recovery Act-the Clean Water and Drinking Water State Revolving Funds (SRF), the Edward Byrne Memorial Justice Assistance Grants (JAG), the Highway Infrastructure Investment Program, the Weatherization Assistance Program, and three education programs: (1) the U.S. Department of Education (Education) State Fiscal Stabilization Fund (SFSF); (2) Title I, Part A of the Elementary and Secondary Education Act of 1965, as amended (ESEA); and (3) the Individuals with Disabilities Education Act, as amended (IDEA), Part B. These programs were selected primarily because they are receiving significant amounts of Recovery Act funds, recently began disbursing funds to states, or both. We focused on how funds were being used, how safeguards were being implemented, and how results were being assessed. For descriptions and requirements of the programs we covered, see appendix XVIII of GAO-10-605SP.

Our work in New York also included understanding the state's fiscal condition and obtaining an update on two of the localities we visited for our December 2009 report. We visited New York City because it is the largest city in the state and its unemployment rate is above the state's rate.[2] We also visited Westchester County because it is a suburban county with an unemployment rate below the state's rate. Finally, we reviewed the work being done by the accountability community to oversee the use of Recovery Act funds.

What We FoundBack to top

Funds from the programs we reviewed are helping New York state and local governments stabilize their budgets while also stimulating infrastructure development and expanding existing programs. The following summarizes findings for the areas we examined.

Clean Water and Drinking Water SRFs

New York received about $436.9 million in Recovery Act funding for the Clean Water SRF, more than any other state, and about $86.8 million in Recovery Act funding for the Drinking Water SRF. Both SRFs relied primarily on project lists developed before the Recovery Act was passed to identify eligible projects. New York took innovative approaches to meeting Recovery Act requirements, such as partnering with another agency to identify new and existing green elements in clean water projects and developing a new grant program to meet the green reserve requirement.[3] We visited three SRF projects-an ecological restoration and improved stormwater management project in Brooklyn, a wastewater treatment plant upgrade project in Westchester County, and a new drinking water system project in Poestenkill. All three projects we visited reported that their final contract awards were lower than official cost estimates.

Highway Infrastructure Investment Program

The U.S. Department of Transportation's Federal Highway Administration (FHWA) apportioned $1.12 billion in Recovery Act funds to New York in March 2009 for highway infrastructure and other eligible projects.[4] The federal government obligated the state's full apportionment by the 1-year deadline of March 2, 2010. The New York State Department of Transportation (NYSDOT) reports that the majority of Highway Recovery Act funds are going towards the rehabilitation and repair of highways and bridges, as well as bridge replacement and highway reconstruction projects. As of May 3, 2010, $238 million had been reimbursed by the federal government. NYSDOT officials report that bids for state projects were 13 percent lower than the state's original estimated costs of the projects.

JAG Program

The U.S. Department of Justice's Bureau of Justice Assistance (BJA) awarded $110.6 million in Recovery Act JAG funding to New York. On the basis of a statutory formula, BJA awarded about 60 percent to New York state ($67.3 million), part of which ($43.8 million) was passed on to localities. According to officials, the bulk of the state funds have been obligated to implement recently enacted drug law reforms and continue recidivism pilot programs.[5] BJA also awarded $43.3 million in Recovery Act JAG funds directly to eligible localities in New York.[6] We visited two localities-New York City and Utica-that received such funds. While, according to officials, New York City is using nearly its entire direct local Recovery Act JAG award to retain personnel-such as New York City fire department and corrections officer positions-Utica is using most of its direct local Recovery Act JAG funds to purchase law enforcement equipment.

Weatherization Assistance Program

The U.S. Department of Energy (DOE) allocated $394.7 million in Recovery Act funds to New York in March 2009 for the Weatherization Assistance Program. Through March 31, 2010, New York had weatherized 1,309 units-2.9 percent of its goal of 45,000 units. In part, this low completion rate reflects the emphasis in the state plan on weatherizing multifamily projects, which account for over half of this goal. Multifamily projects typically take longer to complete than one- to four-family homes. Yet state officials were confident that they would not only meet but exceed their goal. They reported that work on an additional 10,546 units was currently under way and that energy audits-which are required before weatherization can begin-of an additional 14,008 units had been completed. Once these 24,554 units are completed, New York will have completed 57.5 percent of the units needed to meet its goal.

Education programs

Education allocated $549 million in SFSF government services funds to New York, most of which the state appropriated to education programs that were facing cuts prior to the enactment of the Recovery Act. Although the state has disbursed only 15 percent of the funds (partly because of administrative delays), a senior state budget official said that she believes the SFSF government services funds will be obligated by the federal deadline of September 30, 2011, with disbursements also occurring by federal deadlines. The New York State Education Department is undertaking new monitoring of SFSF funds and some additional monitoring of Recovery Act ESEA Title I, Part A and IDEA, Part B funds.

State and localities' use of Recovery Act funds

New York's persistent fiscal challenges have led to a projected budget gap of $9.2 billion for fiscal year 2010-2011. The Governor's proposed 2010-2011 Executive Budget, as amended and supplemented by additional gap-closing recommendations, closes this deficit, but the state's legislature has not approved a budget. Officials reported that the fiscal stability of the localities we revisited have been positively affected by Recovery Act funds. However, localities are concerned about cuts in state aid and future budget gaps, especially after the Recovery Act ends.

Accountability

The Stimulus Oversight Panel,[7] Office of the State Comptroller (OSC), and Economic Recovery and Reinvestment Cabinet, which is headed by the Governor's office, are primarily responsible for statewide oversight of Recovery Act funds.[8] In addition, an estimated 90 percent to 95 percent of the state's Recovery Act funding will be reviewed in the state's Single Audit.[9] The most recent Single Audit, which was issued November 25, 2009, for the fiscal year ending March 31, 2009, found material weaknesses in internal controls for two Recovery Act programs.[10] These involved 238 duplicate payments totaling $5,950 in the Recovery Act Unemployment Insurance program and inadequate identification of Recovery Act funds as separate from regular program funds for the Medical Assistance Program (Medicaid). The state implemented a manual process to prevent future duplicate payments and took steps to improve identification of Recovery Act funds for Medicaid. According to New York State Inspector General (NYSIG) officials, NYSIG also has ongoing investigations related to complaints received through the Stimulus Complaint hotline.

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] The U.S. Department of Labor, Bureau of Labor Statistics (BLS) reported an 8.8 percent unemployment rate for New York state for March 2010. This rate is preliminary and has not been seasonally adjusted.
  • [3] The Recovery Act required states to reserve at least 20 percent of their funds for projects that address green infrastructure, water or energy efficiency, or other environmentally innovative activities.
  • [4] This does not include obligations associated with over $175 million of apportioned funds that was transferred from FHWA to the Federal Transit Administration (FTA) for transit projects. Generally, FHWA has authority pursuant to 23 U.S.C. § 104(k)(1) to transfer funds made available for transit projects to FTA.
  • [5] Recidivism is a tendency to relapse into a previous condition or mode of behavior; especially relapse into criminal behavior.
  • [6] These are known as direct local awards.
  • [7] In July 2009, the Governor created a Stimulus Oversight Panel chaired by the New York State Inspector General (NYSIG) with the state Division of Human Rights Commissioner, Metropolitan Transportation Authority Inspector General (IG), and Medicaid IG as members. The panel meets on a biweekly basis to examine the use of Recovery Act funds by each of the 22 New York state agencies designated to receive them, to develop coordination with other state and federal law enforcement partners responsible for the oversight of Recovery Act funds, to discuss the progress of investigations whose allegations were received through the Stimulus Complaint hotline, and to initiate proactive reviews when deemed necessary.
  • [8] State program departments and agencies also have internal audit departments that review Recovery Act funds and localities and transit or housing authorities play a role in managing some Recovery Act funds that do not pass through state offices.
  • [9] Single Audits are prepared to meet the requirements of the Single Audit Act, as amended, and provide a source of information on internal control and compliance findings and the underlying causes and risks. The Single Audit Act requires states, local governments, and nonprofit organizations expending $500,000 or more in federal awards in a year to obtain an audit in accordance with the requirements set forth in the act. A Single Audit consists of (1) an audit and opinions on the fair presentation of the financial statements and the Schedule of Expenditures of Federal Awards; (2) gaining an understanding of and testing internal control over financial reporting and the entity's compliance with laws, regulations, and contract or grant provisions that have a direct and material effect on certain federal programs (i.e., the program requirements); and (3) an audit and an opinion on compliance with applicable program requirements for certain federal programs.
  • [10] A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a Federal program will not be prevented or detected by the entity's internal control.
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