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entitled 'Recovery Act: Status of States' and Localities' Use of Funds 
and Efforts to Ensure Accountability' which was released on December 
10, 2009. 

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Report to the Congress: 

United States Government Accountability Office: 
GAO: 

December 2009: 

Recovery Act: 

Status of States' and Localities' Use of Funds and Efforts to Ensure 
Accountability: 

GAO-10-231: 

GAO Highlights: 

Highlights of GAO-10-231, a report to the Congress. 

Why GAO Did This Study: 

This report, the fourth in a series responding to a mandate under the 
American Recovery and Reinvestment Act of 2009 (Recovery Act), 
addresses objectives including: (1) selected states’ and localities’ 
uses of Recovery Act funds and (2) the approaches taken by the selected 
states and localities to ensure accountability for Recovery Act funds. 
GAO’s work continues to focus on 16 states and certain localities in 
those jurisdictions, as well as the District of Columbia (District)—
representing about 65 percent of the U.S. population and two-thirds of 
the intergovernmental federal assistance available under the Recovery 
Act. GAO collected and analyzed documents and interviewed state and 
local officials. GAO also analyzed federal agency guidance and spoke 
with officials at the federal agencies overseeing Recovery Act 
programs, including the Office of Management and Budget (OMB) and the 
Departments of Education (Education), Transportation (DOT), Health and 
Human Services, Homeland Security, Housing and Urban Development (HUD), 
and Energy (DOE). 

What GAO Found: 

As of November 27, 2009, $69.1 billion, or about one quarter of the 
approximately $280 billion of total Recovery Act funds for programs 
administered by states and localities, had been paid out. Health, 
education, and training accounted for almost 85 percent of Recovery Act 
outlays to date for programs administered by states and localities (see 
figure). The largest programs within these areas were the Medicaid 
Federal Medical Assistance Percentage (FMAP), the State Fiscal 
Stabilization Fund (SFSF) for education and other purposes, and 
highways. 

[Figure: Refer to PDF for image: pie-chart] 

Health: 55.3%; 
Education and training: 29.0%; 
Transportation: 8.6%; 
Income security: 3.5%; 
Community development: 2.4%; 
Energy and environment: 1.2%. 
Total: $69.1 billion. 

Source: GAO analysis of data from Recovery.gov. 

[End of figure] 

Increased Medicaid FMAP Funding: 

Of their increased FMAP grant awards for federal fiscal year 2009, the 
16 states and the District had drawn down about $22.3 billion, or 97 
percent of the funds available, as of November 30, 2009. As of the same 
date, they had drawn down about $3.6 billion, or 54 percent of the 
funds available for the first quarter of federal fiscal year 2010. From 
April to September 2009, nearly all states and the District experienced 
Medicaid enrollment growth, most of which was due to the increasing 
enrollment of children—a population group that is sensitive to economic 
downturns. States and the District reported using or planning to use 
state funds freed up by the increased FMAP for various purposes such as 
financing general state budget needs. All but one of the states and the 
District expressed concern about the sustainability of their Medicaid 
programs when the availability of increased FMAP funds ends in January 
2011. GAO estimates that the 16 states’ and the District’s share of 
Medicaid payments will increase an average of 36 percent in January 
2011 compared with the first quarter of federal fiscal year 2010, 
although the effect of this increase will vary depending on changes in 
Medicaid enrollment. Some states and the District have begun 
considering options for reducing Medicaid programs in fiscal year 2011. 

Highway Infrastructure Investment and Transit Funding: 

Through November 16, 2009, in the 16 states and the District, $11.9 
billion (76 percent) of Recovery Act highway funds had been obligated 
for nearly 4,600 projects and $1.9 billion (16 percent) had been 
reimbursed. Nationally, $20.4 billion (77 percent) had been obligated 
for over 8,800 projects and $4.2 billion (20 percent) had been 
reimbursed. Reimbursements have increased considerably since we last 
reported in September. As highway projects progress, almost half of 
Recovery Act obligations, both nationally and in the 16 states and the 
District, have been for pavement improvements—resurfacing, 
rehabilitating, and reconstructing roadways. Both state and federal 
officials believe the states are on track to meet the Recovery Act’s 
requirement that all highway funds be obligated by March 2010. Of the 
$7.5 billion in Recovery Act formula funding made available nationally 
for transit projects, $6.7 billion (88 percent) had been obligated 
through November 5, 2009. Most of these obligations are being used to 
upgrade transit facilities, such as upgrading power substations or 
installing enhanced bus shelters, improving bus fleets and light rail 
systems, and conducting preventive maintenance. Transit agencies 
continue to express confusion about how to calculate the numbers of 
jobs created and saved, as required by the Recovery Act. GAO previously 
recommended that OMB work with recipients to enhance understanding of 
the reporting process and that DOT continue its outreach to state 
departments of transportation and transit agencies. Both agencies are 
implementing these recommendations, which will be key to addressing the 
continued lack of understanding. 

Education: 

As of November 6, 2009, of the Recovery Act funds available to them, 
the 16 states and the District had drawn down, in total, about $8.4 
billion (46 percent) in SFSF; 
$735 million (11 percent) in Elementary and Secondary Education Act 
Title I, Part A funds; 
and $755 million (10 percent) in Individuals with Disabilities 
Education Act (IDEA), Part B funds. GAO surveyed a nationally 
representative sample of local educational agencies (LEA) about their 
planned uses of Recovery Act funds and found (1) retaining jobs is the 
primary planned use, with 63 percent planning to use over 50 percent of 
their SFSF funds to retain jobs—however, even with SFSF funds, an 
estimated 32 percent expect to lose jobs; 
(2) other planned uses include nonrecurring items such as equipment; 
and (3) most report placing great importance on educational goals and 
reform in planning the use of Recovery Act funds. In response to GAO’s 
prior recommendation that Education take action to ensure states 
understand and fulfill their SFSF subrecipient monitoring 
responsibility, Education officials said they will collect and review 
states’ subrecipient monitoring plans. GAO will continue to follow 
implementation of this initiative. 

Other Selected Recovery Act Programs: 

HUD has entered into funding agreements with 3,121 public housing 
agencies and made available nearly all of the almost $3 billion in 
public housing formula grant funds provided under the Recovery Act. 
Overall, as of November 14, these agencies had reported obligating 
about half of the funds HUD had made available, but the progress toward 
obligating all funds by March 2010 varied by housing agency. For 
example, over 1,000 housing agencies had reported obligating all of 
their funds, but more than 500 housing agencies had reported obligating 
no funds. HUD is beginning to focus on helping housing agencies meet 
the Recovery Act’s March 2010 deadline to obligate all of their funds. 
Housing agencies GAO visited are using Recovery Act funds to replace 
roofs, windows, floors, and heating systems; 
upgrade kitchens and baths; 
and renovate rental units and common areas. HUD continues to make 
progress in monitoring housing agencies and is including in its on-site 
reviews housing agencies with relevant open Single Audit findings, as 
GAO recommended. Regarding the Weatherization Assistance Program, 
nationally, the states reported that, as of September 30, 2009, they 
had spent about $113 million (2 percent) of the $5 billion in Recovery 
Act funding and had completed weatherizing about 7,300 (1 percent) of 
the 593,000 housing units planned for weatherization. Many 
weatherization contracts between state and local weatherization 
agencies have been delayed, in part because of continuing concerns 
regarding prevailing wage rates. The Recovery Act also included a $100 
million appropriation for the Emergency Food and Shelter Program. Local 
recipient organizations in the 16 states and the District were awarded 
almost $66.2 million and plan to use the funds primarily for “other 
food” services such as food banks and pantries, food vouchers and food-
only gift certifications, and rent and mortgage assistance. 

Accountability: 

GAO has recommended that OMB take actions to realize the Single Audit 
Act’s full potential as an effective oversight tool for Recovery Act 
programs. In response to GAO’s recommendations, OMB implemented a 
Single Audit Internal Control Project to encourage earlier reporting, 
and 16 states have volunteered to participate. While its coverage could 
be more comprehensive, OMB’s analysis of the project’s results could 
provide meaningful information for improving future use of the Single 
Audit Act for Recovery Act programs. GAO has also suggested two matters 
for congressional consideration relating to the Single Audit Act. GAO 
continues to believe that Congress should consider (1) amending the 
Single Audit Act to provide for more timely internal control reporting 
and audit coverage for smaller high-risk Recovery Act programs and (2) 
developing mechanisms for providing additional resources to support 
those charged with carrying out the Single Audit Act and related 
audits. 

What GAO Recommends: 

GAO updates the status of agencies’ efforts to implement prior GAO 
recommendations to help address a range of accountability issues as 
well as matters for congressional consideration. No new recommendations 
are being made at this time. OMB provided technical comments that have 
been incorporated, as appropriate. 

View [hyperlink, http://www.gao.gov/products/GAO-10-231] or key 
components. For state summaries, see [hyperlink, 
http://www.gao.gov/products/GAO-10-232SP]. For more information, 
contact J. Christopher Mihm at (202) 512-6806 or mihmj@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

States and Localities Continue Use of Recovery Act Funds as Their 
Fiscal Conditions Remain Challenging: 

OMB Implements a Project for Earlier Reporting of Internal Control 
Weaknesses: 

OMB, States, and Federal Agencies Took Actions Aimed at Reducing Risks 
Inherent in Initial Round of Section 1512 Reporting, but Further Data 
Quality Efforts Are Needed: 

GAO's Open Recommendations: 

Appendix I: Objectives, Scope, and Methodology: Objectives and Scope:
States' and Localities' Uses of Recovery Act Funds: Medicaid Federal 
Medical Assistance Percentage: Federal-Aid Highway Surface 
Transportation Program: Transit Capital Assistance Program:
SFSF, ESEA Title I, and IDEA:
Public Housing Capital Fund:
Weatherization Assistance Program:
Emergency Food and Shelter Program:
State and Local Budget:
Assessing Safeguards and Internal Controls: Data and Data Reliability: 

Appendix II: Program Descriptions:
Medicaid Federal Medical Assistance Percentage: Highway Infrastructure 
Investment Program: Public Transit Program:
Education:
Public Housing Capital Fund:
Weatherization Assistance Program:
Emergency Food and Shelter Program:
State and Local Budget: 

Appendix III: Local Entities Visited by GAO in Selected States and the 
District of Columbia: 

Appendix IV: GAO Contacts and Staff Acknowledgments: 

Tables: 

Table 1: Original and Increased Quarterly FMAPs for Fiscal Year 2009 
and Preliminary Increased FMAPs for First Quarter of 2010 for 16 States 
and the District: 

Table 2: FMAP Grant Awards for Federal Fiscal Year 2009 and Funds Drawn 
Down for 16 States and the District, as of November 30, 2009: 

Table 3: Increase in State Share between Preliminary First Quarter 
Fiscal Year 2010 Increased FMAP and Fiscal Year 2011 Regular FMAP: 

Table 4: Recovery Act Highway Apportionments and Obligations Nationwide 
and in Selected States as of November 16, 2009 (dollars in millions): 

Table 5: Change in Percentage of LEAs Meeting Requirements of IDEA, 
Part B, and Eligible for Flexibility to Reduce Local Expenditures: 

Table 6: Percentage of Awarded Education Stabilization, ESEA Title I, 
and IDEA, Part B Recovery Act Funds Drawn Down by States as of November 
6, 2009: 

Table 7: Comparison of the Average Percentage of Funds Obligated and 
Drawn Down among Housing Agencies Grouped by Size of Recovery Act 
Grant, as of November 14, 2009: 

Table 8: Summary of Selected Projects Funded by Capital Fund Recovery 
Competition Grants: 

Table 9: Use of the Recovery Act's Weatherization Funds by Seven States 
and the District, as of November 30, 2009: 

Table 10: Standard, State Set-Aside, and Total EFSP Recovery Act Awards 
to LROs in 16 Selected States and the District, as of October 27, 2009: 

Table 11: Planned Use of EFSP Recovery Act Funds by Service Category 
for LROs in 16 States and the District, as of November 4, 2009: 

Table 12: Selected Examples of Local Governments' Use of Recovery Act 
Funds: 

Table 13: Highway Entities Visited by GAO: 

Table 14: Transit Entities Visited by GAO: 

Table 15: Educational Entities Visited by GAO: 

Table 16: Housing Entities Visited by GAO: 

Table 17: State and Local Weatherization Entities Visited by GAO: 

Table 18: Local Governments Visited by GAO (Government Type, Population 
and Unemployment): 

Figures: 

Figure 1: GAO's December 2009 Recovery Act Coverage of States and 
Localities: 

Figure 2: Estimated versus Actual Federal Outlays to States and 
Localities under the Recovery Act: 

Figure 3: Federal Recovery Act Outlays for Programs Administered by 
States and Localities (as of November 27, 2009): 

Figure 4: Percentage Increase in Medicaid Enrollment for April 2009 to 
September 2009 for 16 States and the District: 

Figure 5: Cumulative Recovery Act Highway Funds Obligated and 
Reimbursed by FHWA Nationwide from March 31, 2009, to November 16, 
2009: 

Figure 6: National Recovery Act Highway Obligations by Project 
Improvement Type as of October 31, 2009: 

Figure 7: Percentage of Recovery Act Highway Apportionments That Have 
Been Obligated for Statewide and Suballocated Areas in Selected States 
as of October 31, 2009: 

Figure 8: Nationwide Transit Capital Assistance Program Recovery Act 
Obligations by Project Type as of November 5, 2009: 

Figure 9: Estimated Percentage of LEAs Nationally with Funding 
Decreases and Increases of 5 Percent or More for School Year 2009-2010, 
by Source of Funding: 

Figure 10: Estimated Percentage of LEAs with Budget Increases and 
Decreases of 5 Percent of More for School Year 2009-2010, by State: 

Figure 11: Estimated Percentage of LEAs Nationally Planning to Use More 
Than 50 Percent of Their Recovery Act Funds to Retain and Create Jobs 
for SFSF, ESEA Title I, and IDEA Programs: 

Figure 12: Estimated Percentage of LEAs Planning to Use More Than 50 
Percent of Their Recovery Act Funds to Retain Jobs, by State for SFSF, 
ESEA Title I, and IDEA Programs: 

Figure 13: Estimated Percentage of LEAs Expecting Decreases in the 
Number of Jobs, Even with SFSF Recovery Act Funds, by State: 

Figure 14: Estimated Percentage of LEAs That Placed Very Great or Great 
Importance on Education Reform When Planning for Uses of Education 
Funding: 

Figure 15: Estimated Percentage of LEAs Nationally Planning to Use More 
Than 25 Percent of Their Recovery Act Funds for Professional 
Development, Technological Equipment, and Instructional Materials for 
SFSF, ESEA Title I, and IDEA Programs: 

Figure 16: Estimated Percentage of LEAs Planning to Take Advantage of 
Flexibility to Reduce Local Spending on IDEA, by State: 

Figure 17: Timeline of Major Department of Education Recovery Act 
Guidance and Period LEAs Could Respond to GAO's Survey: 

Figure 18: How LEAs Assessed the Content of Education's Guidance on 
Allowable Uses: 

Figure 19: Percentage of Public Housing Capital Fund Formula Grants 
Allocated by HUD That Have Been Obligated and Drawn Down Nationwide as 
of November 14, 2009: 

Figure 20: Housing Agencies' Obligations of Recovery Act Funds by 
Quartile as of November 14, 2009: 

Figure 21: Percentage of Public Housing Capital Fund Formula Grants 
Allocated by HUD That Have Been Obligated and Drawn Down by 47 Public 
Housing Agencies Selected by GAO as of November 14, 2009: 

Figure 22: Roof Repairs to an Iowa Public Housing Facility, Before Work 
Began and Work in Progress: 

Figure 23: Comparison of Obligation and Drawdown Rates for Troubled and 
Nontroubled Housing Agencies: 

Figure 24: Troubled versus Nontroubled Housing Agencies' Obligations of 
Recovery Act Funds by Quartile as of November 14, 2009: 

Figure 25: Selected Local Governments Included in Our December 2009 
Review: 

Figure 26: Selected Grant Programs and Their Administering Federal 
Agency or Office: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

December 10, 2009: 

Report to the Congress: 

States' and localities' use of Recovery Act funds continues as the 
nation responds to the most serious economic crisis since the Great 
Depression. Congress and the administration crafted the American 
Recovery and Reinvestment Act of 2009 (Recovery Act)[Footnote 1] with 
the broad purpose of stimulating the economy. As of November 27, 2009, 
$69.1 billion, or about one quarter of the approximately $280 billion 
in Recovery Act funds for programs administered by states and 
localities, had been paid out. Estimates show that the largest share of 
the funds is expected to be spent in fiscal year 2010. 

The Recovery Act specifies several roles for GAO, including conducting 
bimonthly reviews of selected states' and localities' use of funds made 
available under the act. This report, the fourth in response to the 
act's mandate, addresses the following: (1) selected states' and 
localities' uses of Recovery Act funds, (2) the approaches taken by the 
selected states and localities to ensure accountability for Recovery 
Act funds, and (3) states' plans to evaluate the impact of the Recovery 
Act funds they received. The report provides overall findings and 
discusses the status of actions in response to the recommendations we 
made in our earlier reports. In addition, our recent report on 
recipient reporting contained recommendations to the Office of 
Management and Budget (OMB) to address the data quality and reporting 
issues we identified. OMB agreed with those recommendations and is 
taking action to address them.[Footnote 2] 

As reported in our previous bimonthly Recovery Act reports, to address 
these objectives, GAO selected a core group of 16 states and the 
District of Columbia (District) that we will follow over the next few 
years.[Footnote 3] Individual summaries for this core group are 
compiled into an electronic supplement, GAO-10-232SP, and are also 
accessible through GAO's Recovery Act page at www.gao.gov/recovery/. 
Our reviews examine how Recovery Act funds are being used and whether 
they are achieving the stated purposes of the act. These purposes 
include: 

* to preserve and create jobs and promote economic recovery; 

* to assist those most impacted by the recession; 

* to provide investments needed to increase economic efficiency by 
spurring technological advances in science and health; 

* to invest in transportation, environmental protection, and other 
infrastructure that will provide long-term economic benefits; 
and: 

* to stabilize state and local government budgets, in order to minimize 
and avoid reductions in essential services and counterproductive state 
and local tax increases. 

The states selected for our bimonthly reviews contain about 65 percent 
of the U.S. population and are estimated to receive collectively about 
two-thirds of the intergovernmental federal assistance funds available 
through the Recovery Act. We selected these states and the District on 
the basis of federal outlay projections, percentage of the U.S. 
population represented, unemployment rates and changes, and a mix of 
states' poverty levels, geographic coverage, and representation of both 
urban and rural areas. For this report we visited a nonprobability 
sample of 155 local entities within the 16 states and the District for 
our program reviews. These local entities represented a range of types 
of local governments (cities and counties) and program areas as shown 
below. The local governments also varied by population sizes and 
economic conditions (unemployment rates greater than or less than the 
state's overall unemployment rate). 

Figure 1: GAO's December 2009 Recovery Act Coverage of States and 
Localities: 

[Refer to PDF for image: table] 

States visited: 16[A]; 

Local governments visited to review overall use of funds: 44; 

Local governments visited by program area: 
Highway: 17; 

Transit: 25; 

Education: 19; 

Housing: 26; 

Weatherization: 24. 

Source: GAO analysis of states’ and localities’ use of Recovery Act 
funds. 

Notes: Entities include government officials and agencies, 
transportation and transit authorities, school districts, charter 
schools, housing authorities, and nonprofit organizations. Appendix III 
provides a complete list of the local entities visited for this report. 

[A] In addition to the 16 states, the District of Columbia is also 
included in GAO's bimonthly reviews of the use of Recovery Act funds. 

[End of figure] 

Our work for this report focused on selected federal programs primarily 
because they have begun disbursing funds to states or have known or 
potential risks. These programs are as follows: 

* Federal Medical Assistance Percentage (FMAP); 

* Federal-Aid Highway Surface Transportation Program; 

* Transit Capital Assistance Program; 

* Fixed Guideway Infrastructure Investment Program; 

* State Fiscal Stabilization Fund (SFSF); 

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

* Individuals with Disabilities Education Act (IDEA), as amended, Parts 
B and C; 

* Public Housing Capital Fund; 

* Weatherization Assistance Program; 
and: 

* Emergency Food and Shelter Program (EFSP). 

The risks can include existing programs receiving significant amounts 
of Recovery Act funds or new programs. We collected documents from and 
conducted semistructured interviews with executive-level state and 
local officials and staff from state offices, including governors' 
offices, recovery leads, state and local auditors, and controllers. In 
addition, our work focused on federal, state, and local agencies 
administering the selected programs receiving Recovery Act funds. We 
analyzed guidance and interviewed officials from OMB. We also analyzed 
grant award amounts, as well as relevant regulations and federal agency 
guidance on programs selected for this review, and spoke with relevant 
program officials at the U.S. Departments of Education, Energy, Health 
and Human Services (Centers for Medicare & Medicaid Services), Housing 
and Urban Development (HUD), Homeland Security (Federal Emergency 
Management Agency), and Transportation. 

Where attributed to state officials, we did not review state legal 
materials for this report but relied on state officials and other state 
sources for description and interpretation of relevant state 
constitutions, statutes, legislative proposals, and other state legal 
materials. The information obtained from this review cannot be 
generalized to all states and localities receiving Recovery Act 
funding. A detailed description of our scope and methodology can be 
found in appendix I. 

We conducted this performance audit from September 18, 2009, to 
December 4, 2009, in accordance with generally accepted government 
auditing standards. Those standards require that we plan and perform 
the audit to obtain sufficient, appropriate evidence to provide a 
reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a reasonable 
basis for our findings and conclusions based on our audit objectives. 

Background: 

Our analysis of initial estimates of Recovery Act spending provided by 
the Congressional Budget Office (CBO) suggested that about $49 billion 
would be outlayed to states and localities by the federal government in 
fiscal year 2009, which ran through September 30, 2009. Actual federal 
Recovery Act outlays reported on www.recovery.gov (Recovery.gov) show 
that about $53 billion was outlayed to states and localities in fiscal 
year 2009, about $4 billion more than estimated. Nonetheless, a greater 
amount of Recovery Act funding is estimated to be outlayed in fiscal 
year 2010. For fiscal year 2010, as of November 27, 2009, the federal 
Treasury had paid out approximately $16.2 billion to states and 
localities. Figure 2 shows the original estimate of federal outlays to 
states and localities under the Recovery Act compared with actual 
federal outlays as reported by federal agencies on Recovery.gov. 

Figure 2: Estimated versus Actual Federal Outlays to States and 
Localities under the Recovery Act: 

[Refer to PDF for image: vertical bar graph] 

Federal fiscal year (October 1-September 20): 2010; 
Original estimate: $48.9 billion; 
Actual as of November 27, 2009: $52.9 billion. 

Federal fiscal year (October 1-September 20): 2010; 
Original estimate: $107.7 billion; 
Actual as of November 27, 2009: $16.2 billion. 

Federal fiscal year (October 1-September 20): 2011; 
Original estimate: $63.4 billion. 

Federal fiscal year (October 1-September 20): 2012; 
Original estimate: $23.3 billion. 

Federal fiscal year (October 1-September 20): 2013; 
Original estimate: $14.4 billion. 

Federal fiscal year (October 1-September 20): 2014; 
Original estimate: $9.1 billion. 

Federal fiscal year (October 1-September 20): 2015; 
Original estimate: $5.7 billion. 

Federal fiscal year (October 1-September 20): 2016; 
Original estimate: $2.5 billion. 

Source: GAO analysis of CBO, Federal Funds Information for States, and 
Recovery.gov data. 

[End of figure] 

As of November 27, 2009, the federal government had outlayed $69.1 
billion in Recovery Act funds to state and local governments. As in 
figure 3, health, and education and training accounted for almost 85 
percent of Recovery Act outlays for programs administered by states and 
localities. The largest programs within these areas were the FMAP, 
SFSF, and highway spending. The distribution of total federal outlays 
to states and localities by program is shown in figure 3. 

Figure 3: Federal Recovery Act Outlays for Programs Administered by 
States and Localities (as of November 27, 2009): 

[Refer to PDF for image: pie-chart] 

Health: 55.3%; 
Education and training: 29.0%; 
Transportation: 8.6%; 
Income security: 3.5%; 
Community development: 2.4%; 
Energy and environment: 1.2%. 
Total: $69.1 billion. 

Source: GAO analysis of data from Recovery.gov. 

[End of figure] 

As we reported on November 19, 2009, recipients GAO contacted appear to 
have made good-faith efforts to ensure complete and accurate reporting. 
[Footnote 4] However, GAO's fieldwork and initial review and analysis 
of recipient data from Recovery.gov indicate that there are a range of 
significant reporting and quality issues that need to be addressed. 
Even if the data quality issues are resolved, it is important to 
recognize that the full-time equivalents (FTE) in recipient reports 
alone do not reflect the total employment effects of the Recovery Act. 
As noted, these reports solely reflect direct employment arising from 
the expenditure of less than one third of Recovery Act funds. 
Therefore, both the data reported by recipients and other macroeconomic 
data and methods are necessary to gauge the overall employment effects 
of the stimulus. The Recovery Act includes entitlements and tax 
provisions, which also have employment effects. The employment effects 
in any state will vary with labor market stress and fiscal condition. 

States and Localities Continue Use of Recovery Act Funds as Their 
Fiscal Conditions Remain Challenging: 

Increased FMAP Continues to Help States Finance Their Growing Medicaid 
Programs, but Concerns about Longer-Term Sustainability Have Led States 
to Consider Future Program Reductions: 

Medicaid is a joint federal-state program that finances health care for 
certain categories of low-income individuals, including children, 
families, persons with disabilities, and persons who are elderly. The 
federal government matches state spending for Medicaid services 
according to a formula based on each state's per capita income in 
relation to the national average per capita income. The rate at which 
states are reimbursed for Medicaid service expenditures is known as the 
Federal Medical Assistance Percentage (FMAP), which may range from 50 
percent to no more than 83 percent. The Recovery Act provides eligible 
states with an increased FMAP for 27 months from October 1, 2008, to 
December 31, 2010.[Footnote 5] On February 25, 2009, the Centers for 
Medicare & Medicaid Services (CMS) made increased FMAP grant awards to 
states, and states may retroactively claim reimbursement for 
expenditures that occurred prior to the effective date of the Recovery 
Act. Generally, for fiscal year 2009 through the first quarter of 
fiscal year 2011, the increased FMAP, which is calculated on a 
quarterly basis, provides for (1) the maintenance of states' prior year 
FMAPs, (2) a general across-the-board increase of 6.2 percentage points 
in states' FMAPs, and (3) a further increase to the FMAPs for those 
states that have a qualifying increase in unemployment rates. 

For states to qualify for the increased FMAP available under the 
Recovery Act, they must meet a number of requirements, including the 
following: 

* States generally may not apply eligibility standards, methodologies, 
or procedures that are more restrictive than those in effect under 
their state Medicaid programs on July 1, 2008.[Footnote 6] 

* States must comply with prompt payment requirements.[Footnote 7] 

* States cannot deposit or credit amounts attributable (either directly 
or indirectly) to certain elements of the increased FMAP into any 
reserve or rainy-day fund of the state.[Footnote 8] 

* States with political subdivisions--such as cities and counties--that 
contribute to the nonfederal share of Medicaid spending cannot require 
the subdivisions to pay a greater percentage of the nonfederal share 
than would have been required on September 30, 2008.[Footnote 9] 

* Most States Report Using Increased FMAP to Maintain Services to 
Growing Medicaid Population: 

We previously reported that by the end of fiscal year 2009, the 
Recovery Act had provided increased FMAP rates in the 16 states and the 
District that averaged 10.57 percentage points higher than the original 
2009 rates established by the Department of Health and Human Services 
(HHS).[Footnote 10] For the first quarter of federal fiscal year 2010, 
qualifying increases in unemployment rates or increases in base FMAP 
rates contributed to higher increased FMAP rates for half of the sample 
states when compared to the fourth quarter of fiscal year 2009. The 
increased FMAP for the first quarter of fiscal year 2010 averaged 11.07 
percentage points higher than the original 2009 rate, with increases 
ranging from 9.02 percentage points in Mississippi to 13 percentage 
points in Michigan. (See table 1.) 

Table 1: Original and Increased Quarterly FMAPs for Fiscal Year 2009 
and Preliminary Increased FMAPs for First Quarter of 2010 for 16 States 
and the District: 

Percentage points: 

State: Arizona; 
Original fiscal year 2009 FMAP[A]: 65.77; 
Fourth quarter fiscal year 2009 increased FMAP[B]: 75.93; 
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 75.93; 
Difference between original 2009 FMAP and preliminary first quarter 
2010 increased FMAP: 10.16. 

State: California; 
Original fiscal year 2009 FMAP[A]: 50.00; 
Fourth quarter fiscal year 2009 increased FMAP[B]: 61.59; 
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 61.59; 
Difference between original 2009 FMAP and preliminary first quarter 
2010 increased FMAP: 11.59. 

State: Colorado; 
Original fiscal year 2009 FMAP[A]: 50.00; 
Fourth quarter fiscal year 2009 increased FMAP[B]: 61.59; 
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 61.59; 
Difference between original 2009 FMAP and preliminary first quarter 
2010 increased FMAP: 11.59. 

State: District of Columbia; 
Original fiscal year 2009 FMAP[A]: 70.00; 
Fourth quarter fiscal year 2009 increased FMAP[B]: 79.29; 
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 79.29; 
Difference between original 2009 FMAP and preliminary first quarter 
2010 increased FMAP: 9.29. 

State: Florida; 
Original fiscal year 2009 FMAP[A]: 55.40; 
Fourth quarter fiscal year 2009 increased FMAP[B]: 67.64; 
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 67.64; 
Difference between original 2009 FMAP and preliminary first quarter 
2010 increased FMAP: 12.24. 

State: Georgia; 
Original fiscal year 2009 FMAP[A]: 64.49; 
Fourth quarter fiscal year 2009 increased FMAP[B]: 74.42; 
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 74.96; 
Difference between original 2009 FMAP and preliminary first quarter 
2010 increased FMAP: 10.47. 

State: Illinois; 
Original fiscal year 2009 FMAP[A]: 50.32; 
Fourth quarter fiscal year 2009 increased FMAP[B]: 61.88; 
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 61.88; 
Difference between original 2009 FMAP and preliminary first quarter 
2010 increased FMAP: 11.56. 

State: Iowa; 
Original fiscal year 2009 FMAP[A]: 62.62; 
Fourth quarter fiscal year 2009 increased FMAP[B]: 70.71; 
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 72.55; 
Difference between original 2009 FMAP and preliminary first quarter 
2010 increased FMAP: 9.93. 

State: Massachusetts; 
Original fiscal year 2009 FMAP[A]: 50.00; 
Fourth quarter fiscal year 2009 increased FMAP[B]: 61.59; 
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 61.59; 
Difference between original 2009 FMAP and preliminary first quarter 
2010 increased FMAP: 11.59. 

State: Michigan; 
Original fiscal year 2009 FMAP[A]: 60.27; 
Fourth quarter fiscal year 2009 increased FMAP[B]: 70.68; 
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 73.27; 
Difference between original 2009 FMAP and preliminary first quarter 
2010 increased FMAP: 13.00. 

State: Mississippi; 
Original fiscal year 2009 FMAP[A]: 75.84; 
Fourth quarter fiscal year 2009 increased FMAP[B]: 84.24; 
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 84.86; 
Difference between original 2009 FMAP and preliminary first quarter 
2010 increased FMAP: 9.02. 

State: New Jersey; 
Original fiscal year 2009 FMAP[A]: 50.00; 
Fourth quarter fiscal year 2009 increased FMAP[B]: 61.59; 
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 61.59; 
Difference between original 2009 FMAP and preliminary first quarter 
2010 increased FMAP: 11.59. 

State: New York; 
Original fiscal year 2009 FMAP[A]: 50.00; 
Fourth quarter fiscal year 2009 increased FMAP[B]: 61.59; 
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 61.59; 
Difference between original 2009 FMAP and preliminary first quarter 
2010 increased FMAP: 11.59. 

State: North Carolina; 
Original fiscal year 2009 FMAP[A]: 64.60; 
Fourth quarter fiscal year 2009 increased FMAP[B]: 74.51; 
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 74.98; 
Difference between original 2009 FMAP and preliminary first quarter 
2010 increased FMAP: 10.38. 

State: Ohio; 
Original fiscal year 2009 FMAP[A]: 62.14; 
Fourth quarter fiscal year 2009 increased FMAP[B]: 72.34; 
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 73.47; 
Difference between original 2009 FMAP and preliminary first quarter 
2010 increased FMAP: 11.33. 

State: Pennsylvania; 
Original fiscal year 2009 FMAP[A]: 54.52; 
Fourth quarter fiscal year 2009 increased FMAP[B]: 65.59; 
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 65.85; 
Difference between original 2009 FMAP and preliminary first quarter 
2010 increased FMAP: 11.33. 

State: Texas; 
Original fiscal year 2009 FMAP[A]: 59.44; 
Fourth quarter fiscal year 2009 increased FMAP[B]: 69.85; 
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 70.94; 
Difference between original 2009 FMAP and preliminary first quarter 
2010 increased FMAP: 11.50. 

Average FMAP increase; 
Fourth quarter fiscal year 2009 increased FMAP[B]: 10.57; 
Difference between original 2009 FMAP and preliminary first quarter 
2010 increased FMAP: 11.07. 

Source: GAO analysis of HHS data. 

Note: Beginning in the third quarter of fiscal year 2009, HHS changed 
how it calculates the increased FMAP rates. Specifically, HHS 
calculates preliminary FMAP rates prior to the start of each quarter 
using Bureau of Labor Statistics preliminary unemployment estimates and 
adjusts these FMAP rates once the final unemployment numbers become 
available. 

[A] The original fiscal year 2009 FMAP rates were published in the 
Federal Register on November 28, 2007. A correction for the North 
Carolina FMAP rate was published on December 7, 2007. 

[B] The increased FMAP rates listed for the fourth quarter of federal 
fiscal year 2009 were provided by CMS on September 16, 2009. 

[C] Preliminary increased FMAP rates listed for the first quarter of 
federal fiscal year 2010 were provided by CMS on November 13, 2009. 

[End of table] 

As in the first half of federal fiscal year 2009, overall Medicaid 
enrollment for our sample of 16 states and the District continued to 
grow. For the third and fourth quarters of federal fiscal year 2009, 
overall Medicaid enrollment for our sample further increased by more 
than 3 percent.[Footnote 11] While nearly all of the sample states and 
the District reported an enrollment increase from April 2009 to 
September 2009--with the highest number of programs experiencing an 
increase of 3 percent to 6 percent--the percentage change in enrollment 
varied widely, ranging from less than 1 percent in three states to 
about 10 percent in Arizona. (See figure 4.) Similar to prior time 
periods, most of the enrollment increase was attributable to children, 
a population group that is sensitive to economic downturns.[Footnote 
12] 

Figure 4: Percentage Increase in Medicaid Enrollment for April 2009 to 
September 2009 for 16 States and the District: 

[Refer to PDF for image: vertical bar graph] 

State: California; 
Percent increase: 0.05%. 

State: Massachusetts; 
Percent increase: 0.27%. 

State: Georgia; 
Percent increase: 0.83%. 

State: Illinois; 
Percent increase: 1.81%. 

State: Pennsylvania; 
Percent increase: 2.23%. 

State: District of Columbia; 
Percent increase: 2.71%. 

State: North Carolina; 
Percent increase: 3.10%. 

State: Mississippi; 
Percent increase: 3.31%. 

State: Ohio; 
Percent increase: 3.41%. 

State: New Jersey; 
Percent increase: 3.48%. 

State: Iowa; 
Percent increase: 4.02%. 

State: Michigan; 
Percent increase: 4.08%. 

State: New York; 
Percent increase: 4.70%. 

State: Colorado; 
Percent increase: 5.21%. 

State: Texas; 
Percent increase: 5.29%. 

State: Florida; 
Percent increase: 6.82%. 

State: Arizona; 
Percent increase: 9.78%. 

Overall: 
Medicaid enrollment increased by 3.10 percent. 

Source: GAO analysis of state reported enrollment data. 

Note: The percentage increase is based on state-reported Medicaid 
enrollment data for April 2009 to September 2009. California and 
Georgia reported that their Medicaid enrollment totals for the fourth 
quarter of federal fiscal year 2009 would likely increase once data 
were finalized. Thus, our analysis likely understates the percentage 
enrollment increases for these states. We estimated enrollment for the 
District of Columbia for September 2009 because the District did not 
provide Medicaid enrollment for this month. 

[End of figure] 

States can continue to draw from their increased FMAP grant awards for 
third and fourth quarter fiscal year 2009 expenditures until CMS 
finalizes the grant awards for these quarters, a process the agency has 
not yet completed.[Footnote 13] As of November 30, 2009, the 16 sample 
states and the District had drawn down more than $22.26 billion from 
increased FMAP grant awards, or nearly 97 percent of funds available 
for federal fiscal year 2009. (See table 2.) Nationally, the 50 states, 
the District, and several of the largest U.S. insular areas combined 
have drawn down about $32.6 billion, which represents just over 96 
percent of the increased FMAP grants awarded in fiscal year 2009. In 
addition, with the exception of Pennsylvania, all of the sample states 
and the District have begun to draw down funds from their increased 
FMAP grant awards for the first quarter of federal fiscal year 2010. 
[Footnote 14] As of November 30, 2009, they have drawn down about $3.58 
billion, or almost 54 percent of funds available. 

Table 2: FMAP Grant Awards for Federal Fiscal Year 2009 and Funds Drawn 
Down for 16 States and the District, as of November 30, 2009 (Dollars 
in thousands): 

State: Arizona; 
FMAP grant awards[A]: $796,917; 
Funds drawn down: $755,923; 
Percentage of funds drawn down: 94.86. 

State: California; 
FMAP grant awards[A]: $4,364,715; 
Funds drawn down: $3,831,014; 
Percentage of funds drawn down: 87.77. 

State: Colorado; 
FMAP grant awards[A]: $340,024; 
Funds drawn down: $309,475; 
Percentage of funds drawn down: 91.02. 

State: District of Columbia; 
FMAP grant awards[A]: $141,775; 
Funds drawn down: $127,227; 
Percentage of funds drawn down: 89.74. 

State: Florida; 
FMAP grant awards[A]: $1,861,572; 
Funds drawn down: $1,861,572; 
Percentage of funds drawn down: 100.00. 

State: Georgia; 
FMAP grant awards[A]: $706,961; 
Funds drawn down: $683,840; 
Percentage of funds drawn down: 96.73. 

State: Illinois; 
FMAP grant awards[A]: $1,266,414; 
Funds drawn down: $1,213,733; 
Percentage of funds drawn down: 95.84. 

State: Iowa; 
FMAP grant awards[A]: $195,776; 
Funds drawn down: $194,046; 
Percentage of funds drawn down: 99.12. 

State: Massachusetts; 
FMAP grant awards[A]: $1,205,643; 
Funds drawn down: $1,162,444; 
Percentage of funds drawn down: 96.42. 

State: Michigan; 
FMAP grant awards[A]: $1,000,046; 
Funds drawn down: $996,670; 
Percentage of funds drawn down: 99.66. 

State: Mississippi; 
FMAP grant awards[A]: $291,580; 
Funds drawn down: $291,580; 
Percentage of funds drawn down: 100.00. 

State: New Jersey[B]; 
FMAP grant awards[A]: $856,509; 
Funds drawn down: $858,931; 
Percentage of funds drawn down: 100.28. 

State: New York; 
FMAP grant awards[A]: $4,327,183; 
Funds drawn down: $4,312,277; 
Percentage of funds drawn down: 99.66. 

State: North Carolina[B]; 
FMAP grant awards[A]: $827,062; 
Funds drawn down: $944,469; 
Percentage of funds drawn down: 114.20. 

State: Ohio; 
FMAP grant awards[A]: $1,228,943; 
Funds drawn down: $1,188,412; 
Percentage of funds drawn down: 96.70. 

State: Pennsylvania; 
FMAP grant awards[A]: $1,569,221; 
Funds drawn down: $1,546,619; 
Percentage of funds drawn down: 98.56. 

State: Texas; 
FMAP grant awards[A]: $2,026,041; 
Funds drawn down: $1,982,852; 
Percentage of funds drawn down: 97.87. 

State: Sample total; 
FMAP grant awards[A]: $23,006,383; 
Funds drawn down: $22,261,085; 
Percentage of funds drawn down: 96.76. 

State: National total; 
FMAP grant awards[A]: $33,800,409; 
Funds drawn down: $32,599,063; 
Percentage of funds drawn down: 96.45. 

Source: GAO analysis of HHS data as of November 30, 2009. 

[A] The FMAP grant awards listed are for all four quarters of federal 
fiscal year 2009 through November 30, 2009. 

[B] The drawdown in two states--North Carolina and New Jersey--has 
exceeded the states' 2009 increased FMAP grant award. CMS officials 
told us that, in some cases, states were incorrectly continuing to draw 
from the 2009 increased FMAP grant but that CMS is working with states 
to correct these discrepancies. 

[End of table] 

While the increased FMAP available under the Recovery Act is for state 
expenditures for Medicaid services, the receipt of these funds may 
reduce the funds that states would otherwise have to use for their 
Medicaid programs, and states have reported using these freed-up funds 
for a variety of purposes. Similar to their reported uses in fiscal 
year 2009, states and the District most commonly reported using or 
planning to use these freed-up funds in fiscal year 2010 to cover 
increased Medicaid caseloads, maintain Medicaid eligibility levels, and 
finance general state budget needs. In addition, more than half of the 
states and the District reported using these funds to maintain benefits 
and services and to maintain payment rates for practitioners and 
institutional providers. Five states reported using these funds to meet 
prompt pay requirements, and two states and the District also reported 
using these funds to help finance their State Children's Health 
Insurance Program or other local or state public health insurance 
programs. Although virtually all of the sample states and the District 
reported using these funds for multiple purposes, two states--North 
Carolina and Ohio--reported that they plan to continue using freed-up 
funds exclusively to finance general state budget needs. 

As we previously reported, 12 states indicated they made adjustments to 
their Medicaid programs in order to comply with Recovery Act 
requirements, including rescinding prior program changes or canceling 
planned changes that conflicted with requirements.[Footnote 15] In our 
most recent survey, three states reported making additional adjustments 
to comply specifically with the act's prompt pay requirement. For 
example, Florida and Michigan reported making systems changes that 
allow them to track their compliance with aspects of the prompt pay 
requirement. The sample states previously identified the prompt pay 
requirement as the most difficult for them in terms of compliance with 
the Recovery Act,[Footnote 16] and in the most recent survey, four 
states reported they did not comply with this requirement for 1 day. 
Nonetheless, most sample states and the District indicated in the 
recent survey that CMS's July 30, 2009, State Medicaid Director's 
letter provided them with sufficient information to facilitate 
compliance.[Footnote 17] 

Responses from the sample states and the District were more varied when 
asked about whether the increased FMAP funds were sufficient to protect 
and maintain their Medicaid programs during the economic downturn or to 
provide fiscal relief to the state. While two states reported that the 
amount of increased FMAP funds was sufficient to meet these purposes in 
fiscal year 2010, six states reported that the amount of increased FMAP 
was not sufficient. The remaining eight states and the District 
reported that the funds were only somewhat sufficient to meet these 
purposes during fiscal year 2010. Among the states that reported the 
amount of increased FMAP was not sufficient or only somewhat 
sufficient, some reported taking actions to reduce their Medicaid 
program spending. For example, California cut certain optional Medicaid 
benefits, including adult dental services, though an official said the 
state would have made additional program reductions without the 
increased FMAP. Pennsylvania reported reducing disproportionate share 
hospital payments[Footnote 18] and eliminating pay-for-performance 
funds for some Medicaid managed care organizations. 

States Are Considering Reductions to Their Medicaid Programs As 
Concerns about Program Sustainability Persist: 

As for the longer term outlook for their Medicaid programs, the 
District and all but one of the sample states reiterated their concerns 
about the sustainability of their Medicaid programs after the increased 
FMAP funds are no longer available, beginning in January 2011. When 
asked about the factors driving their concerns, virtually all of the 
states and the District cited the size of the increase in the state's 
share of Medicaid payments when the regular FMAP rate goes back into 
effect in January 2011--an increase we estimate will range from 28 
percent to 66.9 percent (an average of 36.4 percent) compared with the 
first quarter 2010 increased FMAP. (See table 3.) In addition, most of 
the sample states and the District reported that projected enrollment 
increases and further declines in economic conditions and tax revenues 
have also contributed to their concerns about the longer-term 
sustainability of their programs. Ultimately, the effect of states' 
increased share in Medicaid payments will vary depending on the extent 
of change in Medicaid enrollment within their individual programs. 

Table 3: Increase in State Share between Preliminary First Quarter 
Fiscal Year 2010 Increased FMAP and Fiscal Year 2011 Regular FMAP: 

State: Arizona; 
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 75.93; 
Fiscal year 2011 regular FMAP[B]: 65.85; 
Percentage difference in state share between preliminary first quarter 
2010 increased FMAP and 2011 regular FMAP: 41.9; 
Percentage point difference in state share between preliminary first 
quarter 2010 increased FMAP and 2011 regular FMAP: 10.08. 

State: California; 
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 61.59; 
Fiscal year 2011 regular FMAP[B]: 50.00; 
Percentage difference in state share between preliminary first quarter 
2010 increased FMAP and 2011 regular FMAP: 30.2; 
Percentage point difference in state share between preliminary first 
quarter 2010 increased FMAP and 2011 regular FMAP: 11.59. 

State: Colorado; 
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 61.59; 
Fiscal year 2011 regular FMAP[B]: 50.00; 
Percentage difference in state share between preliminary first quarter 
2010 increased FMAP and 2011 regular FMAP: 30.2; 
Percentage point difference in state share between preliminary first 
quarter 2010 increased FMAP and 2011 regular FMAP: 11.59. 

State: District of Columbia; 
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 79.29; 
Fiscal year 2011 regular FMAP[B]: 70.00; 
Percentage difference in state share between preliminary first quarter 
2010 increased FMAP and 2011 regular FMAP: 44.9; 
Percentage point difference in state share between preliminary first 
quarter 2010 increased FMAP and 2011 regular FMAP: 9.29. 

State: Florida; 
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 67.64; 
Fiscal year 2011 regular FMAP[B]: 55.45; 
Percentage difference in state share between preliminary first quarter 
2010 increased FMAP and 2011 regular FMAP: 37.7; 
Percentage point difference in state share between preliminary first 
quarter 2010 increased FMAP and 2011 regular FMAP: 12.19. 

State: Georgia; 
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 74.96; 
Fiscal year 2011 regular FMAP[B]: 65.33; 
Percentage difference in state share between preliminary first quarter 
2010 increased FMAP and 2011 regular FMAP: 38.5; 
Percentage point difference in state share between preliminary first 
quarter 2010 increased FMAP and 2011 regular FMAP: 9.63. 

State: Illinois; 
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 61.88; 
Fiscal year 2011 regular FMAP[B]: 50.20; 
Percentage difference in state share between preliminary first quarter 
2010 increased FMAP and 2011 regular FMAP: 30.6; 
Percentage point difference in state share between preliminary first 
quarter 2010 increased FMAP and 2011 regular FMAP: 11.68. 

State: Iowa; 
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 72.55; 
Fiscal year 2011 regular FMAP[B]: 62.63; 
Percentage difference in state share between preliminary first quarter 
2010 increased FMAP and 2011 regular FMAP: 36.1; 
Percentage point difference in state share between preliminary first 
quarter 2010 increased FMAP and 2011 regular FMAP: 9.92. 

State: Massachusetts; 
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 61.59; 
Fiscal year 2011 regular FMAP[B]: 50.00; 
Percentage difference in state share between preliminary first quarter 
2010 increased FMAP and 2011 regular FMAP: 30.2; 
Percentage point difference in state share between preliminary first 
quarter 2010 increased FMAP and 2011 regular FMAP: 11.59. 

State: Michigan; 
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 73.27; 
Fiscal year 2011 regular FMAP[B]: 65.79; 
Percentage difference in state share between preliminary first quarter 
2010 increased FMAP and 2011 regular FMAP: 28.0; 
Percentage point difference in state share between preliminary first 
quarter 2010 increased FMAP and 2011 regular FMAP: 7.48. 

State: Mississippi; 
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 84.86; 
Fiscal year 2011 regular FMAP[B]: 74.73; 
Percentage difference in state share between preliminary first quarter 
2010 increased FMAP and 2011 regular FMAP: 66.9; 
Percentage point difference in state share between preliminary first 
quarter 2010 increased FMAP and 2011 regular FMAP: 10.13. 

State: New Jersey; 
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 61.59; 
Fiscal year 2011 regular FMAP[B]: 50.00; 
Percentage difference in state share between preliminary first quarter 
2010 increased FMAP and 2011 regular FMAP: 30.2; 
Percentage point difference in state share between preliminary first 
quarter 2010 increased FMAP and 2011 regular FMAP: 11.59. 

State: New York; 
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 61.59; 
Fiscal year 2011 regular FMAP[B]: 50.00; 
Percentage difference in state share between preliminary first quarter 
2010 increased FMAP and 2011 regular FMAP: 30.2; 
Percentage point difference in state share between preliminary first 
quarter 2010 increased FMAP and 2011 regular FMAP: 11.59. 

State: North Carolina; 
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 74.98; 
Fiscal year 2011 regular FMAP[B]: 64.71; 
Percentage difference in state share between preliminary first quarter 
2010 increased FMAP and 2011 regular FMAP: 41.0; 
Percentage point difference in state share between preliminary first 
quarter 2010 increased FMAP and 2011 regular FMAP: 10.27. 

State: Ohio; 
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 73.47; 
Fiscal year 2011 regular FMAP[B]: 63.69; 
Percentage difference in state share between preliminary first quarter 
2010 increased FMAP and 2011 regular FMAP: 36.9; 
Percentage point difference in state share between preliminary first 
quarter 2010 increased FMAP and 2011 regular FMAP: 9.78. 

State: Pennsylvania; 
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 65.85; 
Fiscal year 2011 regular FMAP[B]: 55.64; 
Percentage difference in state share between preliminary first quarter 
2010 increased FMAP and 2011 regular FMAP: 29.9; 
Percentage point difference in state share between preliminary first 
quarter 2010 increased FMAP and 2011 regular FMAP: 10.21. 

State: Texas; 
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 70.94; 
Fiscal year 2011 regular FMAP[B]: 60.56; 
Percentage difference in state share between preliminary first quarter 
2010 increased FMAP and 2011 regular FMAP: 35.7; 
Percentage point difference in state share between preliminary first 
quarter 2010 increased FMAP and 2011 regular FMAP: 10.38. 

State: Average difference; 
Percentage difference in state share between preliminary first quarter 
2010 increased FMAP and 2011 regular FMAP: 36.4; 
Percentage point difference in state share between preliminary first 
quarter 2010 increased FMAP and 2011 regular FMAP: 10.53. 

Source: GAO analysis of HHS data. 

[A] The preliminary increased FMAP rates listed for the first quarter 
of federal fiscal year 2010 were provided by CMS on November 13, 2009. 

[B] The fiscal year 2011 FMAP rates were published in the Federal 
Register on November 27, 2009. 

[End of table] 

Due to these concerns, 11 states and the District reported that they 
were considering reducing eligibility, benefits and services, or 
provider rates in fiscal year 2011. Specifically, 5 states and the 
District reported they were considering eligibility reductions; 
8 states and the District reported considering reductions to benefits 
and services; and 10 states and the District reported considering 
reductions to provider payment rates. In terms of federal action that 
would best address their concerns about program sustainability, nearly 
all states and the District identified an extension in the availability 
of the increased FMAP beyond December 2010. In addition, most states 
and the District identified greater flexibility in the Recovery Act's 
maintenance of eligibility requirement or prompt payment requirement as 
actions that would also help address their concerns. 

Most Highway and Transit Recovery Act Funding Has Been Obligated: 

The majority of the approximately $35 billion that the Recovery Act 
provided for highway infrastructure projects and public transportation 
has been obligated nationwide and in the 16 states and the District of 
Columbia (District) that are the focus of our review. For example, as 
of November 16, 2009, $20.4 billion of the funds had been obligated for 
just over 8,800 projects nationwide and $4.2 billion had been 
reimbursed.[Footnote 19] In the 16 states and the District, $11.9 
billion had been obligated for nearly 4,600 projects and $1.9 billion 
had been reimbursed. Almost half of Recovery Act highway obligations 
nationally and in the 16 states and the District have been for pavement 
improvements--including resurfacing, rehabilitating, and reconstructing 
roadways. 

For Recovery Act transit funds, we focused our review on the Transit 
Capital Assistance Program and the Fixed Guideway Infrastructure 
Investment program, which received approximately 91 percent of the 
Recovery Act transit funds, and on seven selected states that received 
funds from these programs. As of November 5, 2009, about $6.7 billion 
of the Recovery Act's Transit Capital Assistance Program and the Fixed 
Guideway Infrastructure Investment program funds had been obligated 
nationwide.[Footnote 20] Almost 88 percent of Recovery Act Transit 
Capital Assistance Program obligations are being used for upgrading 
transit facilities, improving bus fleets, and conducting preventive 
maintenance. 

Three Quarters of Highway Funds Have Been Obligated, and Reimbursements 
Are Increasing: 

The Recovery Act provides funding to states for restoration, repair, 
and construction of highways and other activities allowed under the 
Federal-Aid Highway Surface Transportation Program and for other 
eligible surface transportation projects. The Recovery Act requires 
that 30 percent of these funds be suballocated, primarily based on 
population, for metropolitan, regional, and local use. Highway funds 
are apportioned to states through federal-aid highway program 
mechanisms, and states must follow existing program requirements, which 
include ensuring the project meets all environmental requirements 
associated with the National Environmental Policy Act (NEPA), paying a 
prevailing wage consistent with federal Davis-Bacon Act requirements, 
complying with goals to ensure disadvantaged businesses are not 
discriminated against in the awarding of construction contracts, and 
using American-made iron and steel in accordance with Buy America 
program requirements. While the maximum federal fund share of highway 
infrastructure investment projects under the existing federal-aid 
highway program is generally 80 percent, under the Recovery Act, it is 
100 percent. 

In March 2009, $26.7 billion was apportioned to all 50 states and the 
District for highway infrastructure and other eligible projects. Table 
4 shows the funds apportioned and obligated nationwide and in selected 
states as of November 16, 2009. 

Table 4: Recovery Act Highway Apportionments and Obligations Nationwide 
and in Selected States as of November 16, 2009 (dollars in millions): 

State: Arizona; 
Apportionment: $522; 
Obligation: $299; 
Obligation: Percentage of apportionment obligated: 57. 

State: California; 
Apportionment: $2,570; 
Obligation: $2,085; 
Obligation: Percentage of apportionment obligated: 81. 

State: Colorado; 
Apportionment: $404; 
Obligation: $346; 
Obligation: Percentage of apportionment obligated: 86. 

State: District of Columbia; 
Apportionment: $124; 
Obligation: $106; 
Obligation: Percentage of apportionment obligated: 86. 

State: Florida; 
Apportionment: $1,347; 
Obligation: $1,123; 
Obligation: Percentage of apportionment obligated: 83. 

State: Georgia; 
Apportionment: $932; 
Obligation: $710; 
Obligation: Percentage of apportionment obligated: 76. 

State: Illinois; 
Apportionment: $936; 
Obligation: $784; 
Obligation: Percentage of apportionment obligated: 84. 

State: Iowa; 
Apportionment: $358; 
Obligation: $342; 
Obligation: Percentage of apportionment obligated: 96. 

State: Massachusetts; 
Apportionment: 438; 
Obligation: 252; 
Obligation: Percentage of apportionment obligated: 58. 

State: Michigan; 
Apportionment: $847; 
Obligation: $716; 
Obligation: Percentage of apportionment obligated: 84. 

State: Mississippi; 
Apportionment: $355; 
Obligation: $306; 
Obligation: Percentage of apportionment obligated: 86. 

State: New Jersey; 
Apportionment: $652; 
Obligation: $492; 
Obligation: Percentage of apportionment obligated: 75. 

State: New York; 
Apportionment: $1,121; 
Obligation: $833; 
Obligation: Percentage of apportionment obligated: 74. 

State: North Carolina; 
Apportionment: $736; 
Obligation: $659; 
Obligation: Percentage of apportionment obligated: 90. 

State: Ohio; 
Apportionment: $936; 
Obligation: $488; 
Obligation: Percentage of apportionment obligated: 52. 

State: Pennsylvania; 
Apportionment: $1,026; 
Obligation: $925; 
Obligation: Percentage of apportionment obligated: 90. 

State: Texas; 
Apportionment: $2,250; 
Obligation: $1,396; 
Obligation: Percentage of apportionment obligated: 62. 

State: Selected states total; 
Apportionment: $15,551; 
Obligation: $11,864; 
Obligation: Percentage of apportionment obligated: 76. 

State: U.S. total; 
Apportionment: $26,660; 
Obligation: $20,422; 
Obligation: Percentage of apportionment obligated: 77. 

Source: GAO analysis of FHWA data. 

Note: Obligation data does not include obligations associated with $290 
million of apportioned funds that were transferred from the Federal 
Highway Administration (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. 

[End of table] 

As of November 16, 2009, $4.2 billion had been reimbursed nationwide by 
Federal Highway Administration (FHWA), including $1.9 billion 
reimbursed to the 16 states and the District. These amounts represent 
20 percent of the Recovery Act highway funding obligated nationwide and 
16 percent of the funding obligated in the 16 states and the District. 
As we reported in our September report, because it can take 2 or more 
months for a state to bid and award the work to a contractor and have 
work begin after funds have been obligated for specific projects, it 
may take months before states request reimbursement from FHWA.[Footnote 
21] However reimbursements have increased considerably over time, from 
$10 million in April to $4.2 billion in mid-November. Reimbursements 
have also increased considerably since we last reported in September 
when $604 million had been reimbursed to the 16 states and the District 
and $1.4 billion had been reimbursed nationwide. This is shown in 
figure 5. 

Figure 5: Cumulative Recovery Act Highway Funds Obligated and 
Reimbursed by FHWA Nationwide from March 31, 2009, to November 16, 
2009: 

[Refer to PDF for image: vertical bar graph] 

Date: March, 2009; 
Reimbursements: $1,705,416; 
Obligations: $4,692,139,093. 

Date: April, 2009; 
Reimbursements: $9,782,097; 
Obligations: $8,915,848,872. 

Date: May, 2009; 
Reimbursements: $71,086,535; 
Obligations: $12,966,048,380. 

Date: June, 2009; 
Reimbursements: $264,185,470; 
Obligations: $16,144,532,636. 

Date: July, 2009; 
Reimbursements: $676,187,129; 
Obligations: $117,204,099,101. 

Date: August, 2009; 
Reimbursements: $1,436,789,848; 
Obligations: $17,963,530,785. 

Date: September, 2009; 
Reimbursements: $2,376,188,829; 
Obligations: $19,119,020,465. 

Date: October, 2009; 
Reimbursements: $3,660,703,759; 
Obligations: $19,877,442,367. 

Date: November, 2009; 
Reimbursements: $4,184,688,197; 
Obligations: $20,421,830,237. 

Source: GAO analysis of FHWA data. 

Note: Obligation and reimbursement data does not include obligations or 
reimbursements associated with $290 million of apportioned funds that 
were transferred from FHWA to 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. November data is only for the 
first 16 days of the month and not a full month. 

[End of figure] 

While reimbursement rates have been increasing, wide differences exist 
across states. Some differences we observed among the states were 
related to the complexity of the types of projects states were 
undertaking and the extent to which projects were being administered by 
local governments. For example, Illinois and Iowa have the highest 
reimbursement rates--36 percent and 53 percent of obligations, 
respectively--far above the national average. Illinois and Iowa also 
have a far larger percentage of funds devoted to resurfacing projects 
than other states--as discussed in the next section, resurfacing 
projects can be quickly obligated and bid. Florida and California have 
among the lowest reimbursement rates, less than 2 percent and 4 percent 
of obligations, respectively. As discussed in the next section, Florida 
is using Recovery Act funds for more complex projects, such as 
constructing new roads and bridges and adding lanes to existing 
highways. Florida officials also told us that the pace of awarding 
contracts has been generally slower in areas where large numbers of 
projects are being administered by local agencies (see GAO-10-232SP). 
In California, state officials said that projects administered by local 
agencies may take longer to reach the reimbursement phase than state 
projects due to additional steps required to approve local highway 
projects. For example, highway construction contracts administrated by 
local agencies in California call for a local public notice and review 
period, which can add nearly 6 weeks to the process. In addition, 
California state officials stated that localities tend to seek 
reimbursement in one lump sum at the end of a project, which can 
contribute to reimbursement rates not matching levels of ongoing 
construction. 

States Continue to Dedicate Most Recovery Act Highway Funds for 
Pavement Projects, but Use of Funds May Vary Depending on State 
Transportation Goals: 

Almost half of Recovery Act highway obligations nationally have been 
for pavement improvements--including resurfacing, rehabilitating, and 
reconstructing roadways--consistent with the use of Recovery Act funds 
in our previous reports. Specifically, $4.5 billion, or 22 percent, is 
being used for road resurfacing projects, while $5.2 billion, or 26 
percent, is being used for reconstructing or rehabilitating 
deteriorated roads.[Footnote 22] As we have reported, many state 
officials told us they selected a large percentage of resurfacing and 
other pavement improvement projects because those projects did not 
require extensive environmental clearances, were quick to design, could 
be quickly obligated and bid, could employ people quickly, and could be 
completed within 3 years. In addition to pavement improvement, other 
projects that have significant funds obligated include pavement 
widening (reconstruction that includes new capacity to existing roads), 
with $3 billion (15 percent) obligated, and bridge replacement and 
improvements, with $2 billion (10 percent) obligated. Construction of 
new roads and bridges accounted for 6 percent and 3 percent of funds 
obligated, respectively. Figure 6 shows obligations by the types of 
road and bridge improvements being made. 

Figure 6: National Recovery Act Highway Obligations by Project 
Improvement Type as of October 31, 2009: 

[Refer to PDF for image: pie-chart] 

Pavement projects total (70 percent, $13.99 billion): 

Pavement improvement: reconstruction/rehabilitation ($5.18 billion): 
26%; 
Pavement improvement: resurface ($4.46 billion): 22%; 
Pavement widening ($3.07 billion): 15%; 
New road construction ($1.28 billion): 6%. 

Bridge projects total (13 percent, $2.51 billion): 

Bridge improvement ($1.02 billion): 5%; 
Bridge replacement ($983 million): 5%; 
New bridge construction ($511 million): 3%. 

Other (17 percent, $3.37 billion): 

Other ($3.37 billion): 17%. 

Source: GAO analysis of Federal Highway Administration data. 

Note: Totals may not add due to rounding. "Other" includes safety 
projects, such as improving safety at railroad grade crossing, and 
transportation enhancement projects, such as pedestrian and bicycle 
facilities, engineering, and right-of-way purchases. 

[End of figure] 

The total distribution of project funds by improvement type among the 
16 states and the District closely mirrors the distribution nationally--
however, we noted wide differences in how funds were used in these 
states. States have considerable latitude to select projects under both 
the Recovery Act and the regular Federal-Aid Highway Program, and as a 
result, states have adopted different strategies to use Recovery Act 
funding to meet the states' transportation goals and needs and promote 
long-term investment in infrastructure. The following are some 
examples: 

* Illinois and Iowa have had a significant portion of their Recovery 
Act funds obligated for resurfacing projects--63 percent and 59 percent 
of funds, respectively, compared with 10 percent and 12 percent of 
funds in Pennsylvania and Florida, respectively (the national average 
is 22 percent). Iowa officials told us that focusing on pavement 
projects allowed them to advance a significant number of needed 
projects, which will reduce the demand for these types of projects and 
free up federal and state funding for larger, more complex projects in 
the near future. 

* According to California officials, under a state law enacted in March 
2009, 62.5 percent of funds went directly to local governments for 
projects of their selection, while the remaining 37.5 percent is being 
used mainly for state highway rehabilitation and maintenance projects 
that, due to significant funding limitations, would not have otherwise 
been funded. According to California officials, distributing a majority 
of funds to localities allow a number of locally important projects to 
be funded. 

* Mississippi used over half its Recovery Act funds for pavement 
improvement projects and around 14 percent of funds for pavement 
widening. The Executive Director of the state transportation department 
told us the Recovery Act allowed Mississippi to undertake needed 
projects and to enhance the safety and performance of the state's 
highway system. However, the Executive Director also said that the 
act's requirements that priority be given to projects that could be 
completed in 3 years resulted in missed opportunities to address long 
term needs, such as upgrading a state roadway to interstate highway 
standards that would have likely had a more lasting impact on 
Mississippi's infrastructure and economic development. 

* In Florida, 36 percent of funds have been obligated for pavement- 
widening projects (compared with 15 percent nationally) and 23 percent 
for construction of new roads and bridges (compared with 9 percent 
nationally), while in Ohio, 32 percent of funds have been obligated for 
new road and bridge construction. 

* Pennsylvania targeted Recovery Act funds to reduce the number of 
structurally deficient bridges in the state.[Footnote 23] As of October 
2009, 31 percent of funds in Pennsylvania were obligated for bridge 
improvement and replacement (compared with 10 percent nationally), in 
part because a significant percentage (about 26 percent, as of 2008) of 
the state's bridges are structurally deficient.[Footnote 24] 

* Massachusetts has used most of its Recovery Act funds to date for 
pavement improvement projects, including 30 percent of funds for 
resurfacing projects and 43 percent of funds for reconstructing or 
rehabilitating deteriorated roads. Massachusetts officials told us that 
the focus of its projects for reconstructing and rehabilitating roads, 
as well as the focus of future project selections, is to select 
projects that promote the state's broader long-term economic 
development goals. For example, according to Massachusetts officials, 
the Fall River development park project supports an economic 
development project and includes construction of a new highway 
interchange and new access roadways to a proposed executive park. FHWA 
officials expressed concern that Massachusetts may be pursuing 
ambitious projects that run the risk of not meeting Recovery Act 
requirements that all funds be obligated by March 2010. 

States Are Taking Additional Steps to Meet Recovery Act Highway 
Requirements, Including the Obligation Deadline and the Economically 
Distressed Area and Maintenance of Effort Requirements: 

Recovery Act highway funding is apportioned under the rules governing 
the Federal-Aid Highway Program generally and its Surface 
Transportation Program in particular, and states have wide latitude and 
flexibility in which projects are selected for federal funding. 
However, the Recovery Act tempers that latitude with requirements that 
do not exist in the regular program, including the following 
requirements: 

* States are required to ensure that all apportioned Recovery Act 
funds--including suballocated funds--are obligated within 1 year 
(before Mar. 2, 2010). The Secretary of Transportation is to withdraw 
and redistribute to eligible states any amount that is not obligated 
within this time frame.[Footnote 25] Any Recovery Act funds that are 
withdrawn and redistributed are available for obligation until 
September 30, 2010.[Footnote 26] 

* Give priority to projects that can be completed within 3 years and to 
projects located in economically distressed areas. Distressed areas are 
defined by the Public Works and Economic Development Act of 1965, as 
amended.[Footnote 27] According to this act, to qualify as an 
economically distressed area, the area must (1) have a per capita 
income of 80 percent or less of the national average; (2) have an 
unemployment rate that is, for the most recent 24-month period for 
which data are available, at least 1 percent greater than the national 
average unemployment rate; or (3) be an area the Secretary of Commerce 
determines has experienced or is about to experience a "special need" 
arising from actual or threatened severe unemployment or economic 
adjustment problems resulting from severe short-or long-term changes in 
economic conditions. In response to our recommendation, FHWA, in 
consultation with the Department of Commerce, issued guidance on August 
24, 2009, that provided criteria for states to use for designating 
special needs areas for the purpose of Recovery Act funding.[Footnote 
28] 

* Certify that the state will maintain the level of spending for the 
types of transportation projects funded by the Recovery Act that it 
planned to spend the day the Recovery Act was enacted. As part of this 
certification, the governor of each state is required to identify the 
amount of funds the state plans to expend from state sources from 
February 17, 2009, through September 30, 2010.[Footnote 29] 

The first Recovery Act requirement is that states have to ensure that 
all apportioned Recovery Act funds--including suballocated funds--are 
obligated within 1 year. Over seventy-five percent of apportioned 
Recovery Act highway funds had been obligated as of November 16, 2009, 
both nationwide and among the 16 states and the District. Nine states 
and the District have higher obligation rates than the national 
average, including Iowa and the District--for which FHWA has obligated 
96 percent and 86 percent of funds, respectively. Conversely, Arizona, 
Massachusetts, Ohio, and Texas have obligation rates of between 52 
percent and 62 percent of apportioned funds. Officials at FHWA and 
state department of transportation officials in the states we reviewed 
generally believe that these states are on track to meet the March 2010 
1-year deadline. 

However, two factors may affect some states' ability to meet the 1-year 
requirement. First, many state and local governments are awarding 
contracts for less than the original estimated cost. This allows states 
to use the savings from lower contract awards for other projects, but 
additional projects funded with deobligated funds must be identified 
quickly. In order to use the savings resulting from the lower contract 
awards, a state must request FHWA to deobligate the difference between 
the official estimate and the contract award amount and then obligate 
funds for a new project. 

Our analysis of contract award data shows that for the 10 states and 
the District, the majority of contracts are being awarded for less than 
the original cost estimates.[Footnote 30] While there is a variation in 
the number of contracts being awarded for lower than their original 
estimates, every state we collected information from awarded at least 
half of its contracts for less than the original cost estimates. Some 
states had an extremely high number of contracts awarded at lower 
amounts. For example, California, Georgia, and Texas awarded more than 
90 percent of their contracts for less than their cost estimates. We 
also found a significant variation in both the average amount and the 
range of the savings from contracts awarded at lower amounts. For 
example, in the District and Georgia, such contracts averaged more than 
30 percent less than original state estimates, while in Colorado and 
Massachusetts, such contracts averaged under 15 percent less than 
original state estimates. In addition, there is also a significant 
range in individual projects, with the savings ranging from less then 1 
percent under estimates in a number of states to almost 55 percent 
under estimates in New York and over 90 percent under in Illinois. 

Federal regulations require states to promptly review and adjust 
project cost estimates on an ongoing basis and at key decision points, 
such as when the bid is approved.[Footnote 31] Many state officials 
told us that their state has already started the process of ensuring 
funds are deobligated and obligated to other highway programs and 
projects by the 1-year deadline. For example, in Colorado, officials 
are planning to use Recovery Act funds that are being deobligated by 
FHWA for 5 new projects, while in California, FHWA deobligated 
approximately $108.5 million and the state has identified 16 new state 
projects for Recovery Act funding. FHWA officials told us they 
recognize the need to develop a process to monitor and ensure 
deobligation of Recovery Act funds from known savings before the 1-year 
deadline. 

A second factor that may affect some states' ability to meet the 1-year 
requirement is that obligations for projects in suballocated areas, 
while increasing, are generally lagging behind obligations for 
statewide projects in most states and lagging considerably behind in a 
few states. In the 16 states and the District, 79 percent of 
apportioned statewide funds had been obligated as of October 31, 2009, 
while 65 percent of suballocated funds had been obligated. Figure 7 
shows obligations for statewide and suballocated areas in the 16 states 
and the District. 

Figure 7: Percentage of Recovery Act Highway Apportionments That Have 
Been Obligated for Statewide and Suballocated Areas in Selected States 
as of October 31, 2009: 

[Refer to PDF for image: vertical bar graph] 

State: Arizona;
Total obligations of statewide funds: 72%; 
Total obligations of suballocated funds: 19%. 

State: California;
Total obligations of statewide funds: 82%; 
Total obligations of suballocated funds: 82%.  

State: Colorado;
Total obligations of statewide funds: 90%; 
Total obligations of suballocated funds: 80%.  

State: District of Columbia;
Total obligations of statewide funds: 91%; 
Total obligations of suballocated funds: 7%.  

State: Florida;
Total obligations of statewide funds: 75%; 
Total obligations of suballocated funds: 82%.  

State: Georgia;
Total obligations of statewide funds: 80%; 
Total obligations of suballocated funds: 71%. 

State: Illinois;
Total obligations of statewide funds: 94%; 
Total obligations of suballocated funds: 55%. 

State: Iowa;
Total obligations of statewide funds: 95%;  
Total obligations of suballocated funds: 91%. 

State: Massachusetts;
Total obligations of statewide funds: 72%; 
Total obligations of suballocated funds: 31%. 

State: Michigan;
Total obligations of statewide funds: 93%; 
Total obligations of suballocated funds: 61%. 

State: Mississippi;
Total obligations of statewide funds: 98%; 
Total obligations of suballocated funds: 55%. 

State: New Jersey;
Total obligations of statewide funds: 93%; 
Total obligations of suballocated funds: 34%. 

State: New York;
Total obligations of statewide funds: 88%; 
Total obligations of suballocated funds: 89%. 

State: North Carolina; 
Total obligations of statewide funds: 81%; 
Total obligations of suballocated funds: 85%. 

State: Ohio; 
Total obligations of statewide funds: 48v
Total obligations of suballocated funds: 57%. 

State: Pennsylvania; 
Total obligations of statewide funds: 82%; 
Total obligations of suballocated funds: 97%. 

State: Texas; 
Total obligations of statewide funds: 66%; 
Total obligations of suballocated funds: 57%. 

Source: GAO analysis of FHWA data. 

Note: This figure includes only apportioned funds available for 
highways and excludes $290 million of apportioned funds that were 
transferred from FHWA to FTA for transit projects in 9 states. 
Generally, FHWA has authority pursuant to 23 U.S.C. § 104(k)(1) to 
transfer funds made available for transit projects to FTA. 

[End of figure] 

As shown in figure 7, and as we reported in September 2009, FHWA has 
obligated substantially fewer funds suballocated for metropolitan and 
local areas in three states. While the national average for obligations 
of Recovery Act funds for suballocated areas is 63 percent, as of 
October 31, New Jersey, Massachusetts, and Arizona had obligation rates 
of 34 percent, 31 percent, and 18 percent of these funds, respectively. 
Officials in these three states cited a number of reasons for this-- 
including lack of familiarity by local officials with federal 
requirements and increased staff workload associated with Recovery Act 
projects--and reported they were taking a number of actions to increase 
obligations, such as imposing internal deadlines on local governments 
to identify and submit projects.[Footnote 32] As of October 2009, 
Arizona had awarded four contracts (one more than it had as of 
September 2009) representing $29 million of the $157 million of 
suballocated funds. This represents 18 percent of suballocated funds--a 
decline from the 21 percent of suballocated funds that had been 
obligated when we reported in September 2009. Arizona Department of 
Transportation officials told us that although one new contract had 
been awarded, the state's total obligation of suballocated funds had 
declined because some suballocated funds were deobligated after more 
contracts were awarded for less than the estimated amount. Officials 
also told us that if local governments are not able to advertise 
contracts for construction in suballocated areas prior to the March 
2010 deadline, the state would use Recovery Act funds on "ready-to-go" 
statewide highway projects in those areas. Similarly, officials in two 
localities told us that if projects intended for Recovery Act funds 
were in danger of not having funds obligated by the deadline, they 
would use those funds on projects now slated to be funded with state 
dollars and use state funding for other projects. 

Although states are working to have all of their suballocated funds 
obligated before March 2010, failure to do so will not prohibit them 
from participating in the redistribution of Recovery Act funds after 
March 2, 2010. The Secretary of Transportation is to withdraw highway 
funds, including suballocated funds, which are not obligated before 
March 2, 2010. States that have obligated all of the funds that were 
apportioned for use by the state (those that were not suballocated) are 
eligible to participate in this redistribution, regardless of whether 
all of the state's suballocated funds have been obligated. FHWA is in 
the process of developing guidance on the redistribution of any 
Recovery Act funding that remains unobligated one year after 
apportionment. According to DOT officials, consistent with the Recovery 
Act, FHWA currently plans to model this redistribution after the 
process used each year in the regular federal-aid highway program to 
redistribute obligation authority, allowing Recovery Act funds 
redistributed to the states to be available for any qualified project 
in a state. 

The second Recovery Act requirement is to give priority to projects 
that are project to be completed in three years or are located in 
economically distressed areas. In July and September 2009, we 
identified substantial variation in the extent to which states 
prioritized projects in economically distressed areas and how they 
identified these areas. For example, we found instances of states 
developing their own eligibility requirements for economically 
distressed areas using data or criteria not specified in the Public 
Works and Economic Development Act. State officials told us they did so 
to respond to rapidly changing economic conditions. In response to our 
recommendation, FHWA, in consultation with the Department of Commerce, 
issued guidance to the states in August 2009 on identifying and giving 
priority to economically distressed areas and criteria to identify 
"special need" economically distressed areas that do not meet the 
statutory criteria in the Public Works Act.[Footnote 33] In its 
guidance, FHWA directed states to maintain information as to how they 
identified, vetted, examined, and selected projects located in 
economically distressed areas and to provide FHWA's division offices 
with documentation that demonstrates satisfaction of the "special need" 
criteria. FHWA issued additional questions and answers relating to 
economically distressed areas in November 2009. 

Widespread designations of special needs areas give added preference to 
highway projects for Recovery Act funding; 
however, they also make it more difficult to target Recovery Act 
highway funding to areas that have been the most severely impacted by 
the economic downturn. Three of the states we reviewed--Arizona, 
California, and Illinois--had each developed and applied its own 
criteria for identifying economically distressed areas, and in two of 
the three states, applying the new criteria increased the number of 
areas considered distressed. [Footnote 34] In California, the number of 
counties considered distressed rose from 49 to all 58 counties, while 
in Illinois, the number of distressed areas increased from 74 to 92 of 
the state's 102 counties. All 15 counties in Arizona were considered 
distressed under the state's original determination and remained so 
when the state applied the revised criteria. FHWA officials told us 
they expected the number of "special needs" distressed areas to 
increase when the new guidance was applied. We plan to continue to 
monitor the states' implementation of DOT's economically distressed 
area guidance. 

The third Recovery Act requirement is for states to certify that they 
will maintain the level of state effort for programs covered by the 
Recovery Act. As we reported in September 2009, most states revised the 
initial explanatory or conditional certifications they submitted to DOT 
after DOT's April 22, 2009, guidance required states to recertify 
without conditions. All states that submitted conditional 
certifications submitted a second maintenance of effort certification 
to DOT without conditions, and DOT concluded that the form of each 
state certification was consistent with its April guidance. In June 
2009, FHWA began to review each state's maintenance of effort 
calculation to determine whether the method of calculation was 
consistent with DOT guidance and the amounts reported by the states for 
planned expenditures for highway investment was reasonable. For 
example, FHWA division offices evaluated, among other things, whether 
the amount certified (1) covered the period from February 17, 2009, 
through September 30, 2010, and (2) included in-kind contributions. 
FHWA division staff then determined whether the state certification 
needed (1) no further action, (2) further assessment, or (3) additional 
information. In addition, according to FHWA officials, their 
assessments indicated that FHWA needed to clarify the types of projects 
funded by the appropriations and the types of state expenditures that 
should be included in the maintenance of effort certifications. As a 
result of these findings, DOT issued guidance in June, July, and 
September 2009 and plans to issue additional guidance on these issues. 

In August 2009, FHWA staff in headquarters reviewed the FHWA division 
staff findings for each sate and proceeded to work with each FHWA 
division office to make sure their states submit revised certifications 
that will include the correct planned expenditures for highway 
investment--including aid to local agencies. FHWA officials said that 
of the 16 states and the District that we reviewed for this study, they 
currently expect to have 12 states submit revised certifications for 
state highway spending, while an additional 2 states are currently 
under review and may have to revise their certifications. DOT officials 
stated they have not determined when they will require the states to 
submit their revised consolidated certification. According to these 
officials, they want to ensure that the states have enough guidance to 
ensure that all programs covered by the Recovery Act maintenance of 
effort provisions have completed their maintenance of effort 
assessments and that the states have enough guidance to ensure that 
this is the last time that states have to amend their certifications. 

Most state officials we spoke with are committed to trying to meet 
their maintenance of effort requirements, but some are concerned about 
meeting the requirements. As we have previously reported, states face 
drastic fiscal challenges. States' fiscal year 2009 revenue collections 
fell below fiscal year 2008 collections and revenue collections are 
expected to continue their decline in fiscal 2010. Although the state 
officials we spoke with are committed to trying to meet the maintenance 
of effort requirements, officials from seven state departments of 
transportation told us the current decline in state revenues creates 
major challenges in doing so. For example, Iowa, North Carolina, and 
Pennsylvania transportation officials said their departments may be 
more difficult to maintain their levels of transportation spending if 
state gas tax and other revenues, which are used to fund state highway 
and state-funded transportation projects, decline. In addition, Georgia 
officials also stated that reduced state gas tax revenues pose a 
challenge to meeting its certified level of effort. Lastly, Mississippi 
and Ohio transportation officials stated that if their state 
legislatures reduce their respective department's budget for fiscal 
year 2010 or 2011, the department may have difficulty maintaining its 
certified spending levels. 

FTA Reports That the Majority of Transit Funds Have Been Obligated, 
with Most Funding Being Used for Transit Facilities, Bus Fleets, and 
Preventive Maintenance: 

The Recovery Act appropriated $8.4 billion to fund public transit 
throughout the country mainly through three existing Federal Transit 
Administration (FTA) grant programs, including the Transit Capital 
Assistance Program and the Fixed Guideway Infrastructure Investment 
program.[Footnote 35] The majority of the public transit funds--$6.9 
billion (82 percent)--was apportioned for the Transit Capital 
Assistance Program, with $6 billion designated for the urbanized area 
formula grant program and $766 million designated for the nonurbanized 
area formula grant program.[Footnote 36] Under the urbanized area 
formula grant program, Recovery Act funds were apportioned to large and 
medium urbanized areas--which in some cases include a metropolitan area 
that spans multiple states--throughout the country according to 
existing program formulas. Recovery Act funds were also apportioned to 
states for small urbanized areas and nonurbanized areas under the 
formula grant programs using the program's existing formula. Transit 
Capital Assistance Program funds may be used for such activities as 
facilities renovation or construction, vehicle replacements, preventive 
maintenance, and paratransit services. Up to 10 percent of apportioned 
Recovery Act Transit Capital Assistance funds may also be used for 
operating expenses.[Footnote 37] The Fixed Guideway Infrastructure 
Investment program was appropriated $750 million, of which $742.5 
million was apportioned by formula directly to qualifying urbanized 
areas.[Footnote 38] The funds may be used for any capital projects to 
maintain, modernize, or improve fixed guideway systems.[Footnote 39] 
The maximum federal fund share for projects under the Recovery Act's 
Transit Capital Assistance Program and the Fixed Guideway 
Infrastructure Investment program is 100 percent; 
the federal share under the existing programs is generally 80 percent. 

As they work through the state and regional transportation planning 
process, designated recipients of the apportioned funds--typically 
public transit agencies and metropolitan planning organizations (MPO)-
-develop a list of transit projects that project sponsors (typically 
transit agencies) submit to FTA for Recovery Act funding.[Footnote 40] 
FTA reviews the project sponsors' grant applications to ensure that 
projects meet eligibility requirements and then obligates Recovery Act 
funds by approving the grant application. Project sponsors must follow 
the requirements of the existing programs, which include ensuring the 
projects funded meet all regulations and guidance pertaining to the 
Americans with Disabilities Act (ADA), pay a prevailing wage consistent 
with federal Davis-Bacon Act requirements, and comply with goals to 
ensure disadvantaged businesses are not discriminated against in the 
awarding of contracts. 

In March 2009, $6.9 billion was apportioned to states and urbanized 
areas in all 50 states, the District, and five territories for transit 
projects and eligible transit expenses under the Recovery Act's Transit 
Capital Assistance Program and $750 million was apportioned to 
qualifying urbanized areas under the Recovery Act's Fixed Guideway 
Infrastructure Investment program. As of November 5, 2009, almost $6 
billion of the Transit Capital Assistance Program funds had been 
obligated nationwide and $738 million of the Fixed Guideway 
Infrastructure Investment program funds has been obligated nationwide. 

Almost 88 percent of Recovery Act Transit Capital Assistance Program 
obligations are being used for upgrading transit facilities, improving 
bus fleets, and conducting preventive maintenance. As we reported in 
September 2009, many transit agency officials told us they decided to 
use Recovery Act funding for these types of projects since they are 
high-priority projects that support their agencies short-and long-term 
goals, can be started quickly, improve safety, or would otherwise not 
have been funded. This continues to be the case. In particular: 

* Transit infrastructure facilities: $2.8 billion, or 47 percent, of 
these funds obligated nationally have been for transit infrastructure 
construction projects and related activities, which range from large- 
scale projects, such as upgrading power substations, to a series of 
smaller projects, such as installing enhanced bus shelters. For 
example, in Pennsylvania, the Lehigh and Northampton Transportation 
Authority will implement a new passenger information technology system, 
install enhanced bus shelters and signage, and fund a new maintenance 
facility. Elsewhere, in North Carolina, the Charlotte Area Transit 
System will renovate its bus operating and maintenance facilities. In 
addition, in California, the San Diego Association of Governments plans 
to upgrade stations on a light-rail line and replace a section of a 
railroad trestle bridge. 

* Bus fleets: $2 billion, or 33 percent, of Recovery Act Funds 
obligated nationally have been for bus purchases or rehabilitation to 
replace aging vehicles or expand an agency's fleet. For example, in 
Pennsylvania, the Lehigh and Northampton Transportation Authority plans 
to purchase 5 heavy-duty hybrid buses and the Southeastern Pennsylvania 
Transportation Authority plans to purchase 40 hybrid buses. In Iowa, 
the state's smaller transit agencies are combining bus orders through 
the state's department of transportation for 160 replacement buses and 
20 buses to expand bus fleets in areas of growth around the state. In 
Colorado, both the Regional Transportation District in Denver and the 
Fort Collins-Transfort agency plan to purchase 6 buses each. 

* Preventive maintenance: Another $515 million, or 9 percent, has been 
obligated for preventive maintenance. FTA considers preventive 
maintenance projects eligible capital expenditures under the Transit 
Capital Assistance Program. 

The remaining funds have been used for rail car purchases and 
rehabilitation, leases, training, financing costs, and, in some limited 
cases, operating expenses--all of which are eligible expenditures. In 
particular, transit agencies reported using $5.2 million, or less than 
1 percent, of the Transit Capital Assistance Program funds obligated by 
FTA for operating expenses. For example, the Des Moines transit agency 
has proposed to use approximately $788,800 for operating expenses, such 
as costs associated with personnel, facilities, and fuel. 

Figure 8: Nationwide Transit Capital Assistance Program Recovery Act 
Obligations by Project Type as of November 5, 2009: 

[Refer to PDF for image: pie-chart] 

Transit infrastructure construction, $2.8 billion: 47%; 
Bus purchases and rehabilitation,$2 billion: 33%; 
Other capital expenses, $510 million: 9%; 
Preventive maintenance, $515 million: 9%; 
Rail car purchases and rehabilitation, $209 million: 4%; 
Operating expense, $5.2 million: Less than 1%. 

Source: GAO analysis of Federal Transit Administration data. 

Note: Percentages may not add to 100 due to rounding. "Transit 
Infrastructure Construction" includes engineering and design, 
acquisition, construction, and rehabilitation and renovation 
activities. "Other capital expenses" includes item, such as leases, 
training, finance costs, mobility management project administration, 
and other capital projects. 

[End of figure] 

Funds from the Recovery Act Fixed Guideway Infrastructure Investment 
program may also be used for transit improvement projects, which could 
include fixed guideway transit facilities and equipment. Recipients may 
use the funding on any capital purpose to include purchasing of rolling 
stock, improvements to rail tracks, signals and communications, and 
preventive maintenance. For example, in New York, FTA approved a $254.4 
million grant from Recovery Act Fixed Guideway Infrastructure 
Investment funds to Metropolitan Transportation Authority for a variety 
of maintenance and safety improvement projects, including the Jackson 
Avenue Vent Plant Rehabilitation project in Long Island City. In 
addition, the northeastern Illinois's Regional Transportation Authority 
is planning on using $95.5 million that was obligated from the Fixed 
Guideway Infrastructure Investment program to provide capital 
assistance for the modernization of existing fixed guideway systems. 
Metra (a regional commuter rail system that is part of the authority) 
plans to use these funds, in part, to repair tracks and rehabilitate 
stations. 

Some State Transit Officials and Bus Manufacturers Are Using Different 
Criteria to Measure Job Creation and Retention: 

As we reported in September, recipients of transit Recovery Act funds, 
such as state departments of transportation and transit agencies, are 
subject to multiple reporting requirements. First, under section 
1201(c) of the Recovery Act, recipients of transportation funds must 
submit periodic reports to DOT on the amount of federal funds 
appropriated, allocated, obligated, and reimbursed; the number of 
projects put out to bid, awarded, or for which work has begun or been 
completed; and the number of direct and indirect jobs created or 
sustained, among other things. DOT is required to collect and compile 
this information for Congress, and it issued its first report to 
Congress in May 2009. Second, under section 1512, recipients of 
Recovery Act funds, including but not limited to transportation funds, 
are to report quarterly on a number of measures, such as the use of 
funds and the number of jobs created or retained. 

To help recipients meet these reporting requirements, DOT and OMB have 
provided training and guidance. For example, DOT, through FTA, 
conducted a training session consisting of six webinars to provide 
information on the 1201(c) reporting requirements, such as who should 
submit these reports and what information is required. In addition, FTA 
issued guidance in September 2009 that provided a variety of 
information, including definitions of data elements. OMB also issued 
implementing guidance for section 1512 recipient reporting. For 
example, on June 22, 2009, OMB issued guidance to dispel some confusion 
related to reporting on jobs created and retained by providing, among 
other information, additional detail on how to calculate the relevant 
numbers. Despite this guidance, we reported in September that transit 
officials expressed concerns and confusion about the reporting 
requirement, and therefore we recommended that DOT continue its 
outreach to transit agencies to identify common problems in accurately 
fulfilling reporting requirements and provided additional guidance, as 
appropriate. In responding to our recommendation, DOT said that it had 
conducted outreach, including providing technical assistance, training 
and guidance, to recipients and will continue to assess the need to 
provide additional information. 

Through our ongoing audit work, we continued to find confusion among 
recipients about how to calculate the numbers of jobs created and saved 
that is required by DOT and OMB for their reporting requirements. 
First, a number of transit agencies continue to express confusion about 
calculating the number of jobs resulting from Recovery Act funding, 
especially with regard to using Recovery Act funds for purchasing 
equipment, such as new buses. For the section 1201(c) reporting 
requirement, transit agencies are not to report any jobs created or 
sustained from the purchase of buses.[Footnote 41] However, for the 
section 1512 recipient reporting requirement, transit agencies were 
required to report jobs created or retained from bus purchases, as long 
as these purchases were directly from the bus manufacturers and not 
from dealer lots. FTA held an outreach session in September 2009 with 
representatives from bus manufacturers and the American Public 
Transportation Association in an effort to standardize 1512 reporting 
methods and clarify recipient responsibilities under the federal 
recipient reporting requirements. FTA, the represented manufacturers, 
and American Public Transportation Association discussed a standardized 
methodology that was established by the Office of Management and Budget 
for calculating the number of jobs created or retained by a bus 
purchase with Recovery Act funds. Under the agreed-upon methodology, 
bus manufacturers are to divide their total U.S. employment by their 
total U.S. production to determine a standard "full-time equivalents" 
(FTE)-to-production ratio. The bus manufactures would then multiple 
that FTE-to-production ratio by a standard full-time schedule in order 
to provide transit agencies with a standard 'direct job hours"-to- 
production ratio. This ratio is to include hours worked by 
administrative and support staff, so that the ratio reflects total 
employment. Bus manufacturers are to provide this ratio to the 
grantees, usually transit agencies, which then the grantee can use to 
calculate the number of jobs created or retained by a bus purchase. FTA 
officials told us that the selected group of bus manufacturers and FTA 
agreed that this methodology--which allows manufacturers to report on 
all purchases, regardless of size--simplifies the job reporting 
process. According to guidance, it is the responsibility of the transit 
agency to contact the manufacturer and ask how many jobs were related 
to that order. The manufacturers, in turn, are responsible for 
providing the transit agencies with information on the jobs per bus 
ratio at the time when buses are delivered. If the manufacturers cannot 
give the agencies a jobs estimate, the transit agencies must develop 
their own estimate. 

While representatives from the bus manufacturers we interviewed were 
using the agreed-upon methodology, there were a number of different 
issues that were highlighted. 

* Representatives from two bus manufacturers reported not knowing about 
the FTA methodology and used their own measures for jobs created or 
retained. For example, representatives from two manufacturers told us 
that the labor-hours required to produce a bus formed the basis for 
their calculation of FTEs and was then pro-rated based upon the amount 
of production taking place in the United States and the purchase amount 
funded by Recovery Act dollars. 

* One bus manufacturer representative said it was difficult to pro-rate 
the jobs calculation by the proportion funded by the Recovery Act, as 
the agreed-upon methodology requires, since they did not always receive 
this information from the transit agencies. 

* According to FTA officials, the manufacturer is only responsible for 
reporting the ratio of jobs created or retained per bus produced; 
the purchasing transit agencies are responsible for the pro-rating and 
final calculation of jobs created or retained. However, even bus 
manufacturers that were otherwise aware of FTA guidance and following 
FTA's methodology would sometimes calculate the total number of jobs 
created or retained by a purchase. 

The second area of confusion we found involved the methodology 
recipients were using to calculate full-time equivalents for the 
recipient reporting requirements. As we reported in our November 2009 
report on recipient reporting, the data element on jobs created or 
retained expressed in FTEs raised questions and concerns for some 
recipients.[Footnote 42] In section 5.2 of the June 22 guidance, OMB 
states that "the estimate of the number of jobs required by the 
Recovery Act should be expressed as FTE, which is calculated as the 
total hours worked in jobs retained divided by the number of hours in a 
full-time schedule, as defined by the recipient." Further, "the FTE 
estimates must be reported cumulatively each calendar quarter." In 
addition to issuing guidance, OMB and DOT provided several types of 
clarifying information to recipients as well as opportunities to 
interact and ask questions or receive help with the reporting process. 
However, FTE calculations varied depending on the period of performance 
the recipient reported on, and we found examples where the issue of a 
project period of performance created significant variation in the FTE 
calculation. For example, in Pennsylvania, each of four transit 
entities we interviewed used a different denominator to calculate the 
number of full-time equivalent jobs they reported on their recipients 
reports for the period ending September 30, 2009. Southeastern 
Pennsylvania Transportation Authority in Philadelphia used 1,040 hours 
as its denominator, since it had projects under way in two previous 
quarters. Port Authority of Allegheny County prorated the hours based 
on the contractors' start date, as well as to reflect that hours worked 
from September were not included due to lag time in invoice processing; 
Port Authority used 1,127 hours for contractors starting before April, 
867 hours for contractors starting in the second quarter, and 347 hours 
for contractors starting in the third quarter. Lehigh and Northampton 
Transportation Authority in Allentown used 40 hours in the 1512 report 
they tried to submit, but, due to some confusion about the need for 
corrective action, the report was not filed. Finally, the Pennsylvania 
Department of Transportation in the report for nonurbanized transit 
agencies reported using 1,248 hours, which was prorated by multiplying 
8 hours per workday times the 156 workdays between February 17 and 
September 30, 2009. In several other of our selected states, this 
variation across transit programs' period of performance for the FTE 
calculation also occurred. Our November report provided additional 
detail and recommendations to address the problems and confusion 
associated with how FTEs were calculated in the October recipient 
report. 

As Many LEAs Are Facing Budget Cuts and Fiscal Pressures, Job Retention 
Is the Primary Planned Use of Education Recovery Act Funds: 

GAO's review of states' use of Recovery Act funds covers three programs 
administered by the U.S. Department of Education (Education)--the State 
Fiscal Stabilization Fund (SFSF); Title I, Part A of the Elementary and 
Secondary Education Act of 1965 (ESEA), as amended; and the Individuals 
with Disabilities Education Act (IDEA), as amended. As part of this 
review, GAO surveyed a representative sample of local education 
agencies (LEA)--generally, school districts--nationally and in 16 
states and the District of Columbia about their planned uses of 
Recovery Act funds for each of these programs.[Footnote 43] 

* State Fiscal Stabilization Fund. The State Fiscal Stabilization Fund 
(SFSF) included approximately $48.6 billion to award to states by 
formula and up to $5 billion to award to states as competitive grants. 
The Recovery Act created the SFSF in part to help state and local 
governments stabilize their budgets by minimizing budgetary cuts in 
education and other essential government services, such as public 
safety. Stabilization funds for education distributed under the 
Recovery Act must first be used to alleviate shortfalls in state 
support for education to LEAs and public institutions of higher 
education (IHE). States must use 81.8 percent of their SFSF formula 
grant funds to support education (these funds are referred to as 
education stabilization funds) and must use the remaining 18.2 percent 
for public safety and other government services, which may include 
education (these funds are referred to as government services funds). 
For the initial award of SFSF formula grant funds, Education awarded at 
least 67 percent of the total amount allocated to each state,[Footnote 
44] but states had to submit an application to Education to receive the 
funds. The application required each state to provide several 
assurances, including that the state will meet maintenance-of-effort 
requirements (or will be able to comply with the relevant waiver 
provisions) and that it will implement strategies to advance four core 
areas of education reform, as described by Education: (1) increase 
teacher effectiveness and address inequities in the distribution of 
highly qualified teachers; (2) establish a pre-K-through-college data 
system to track student progress and foster improvement; (3) make 
progress toward rigorous college-and career-ready standards and high- 
quality assessments that are valid and reliable for all students, 
including students with limited English proficiency and students with 
disabilities; and (4) provide targeted, intensive support and effective 
interventions to turn around schools identified for corrective action 
or restructuring.[Footnote 45] In addition, states were required to 
make assurances concerning accountability, transparency, reporting, and 
compliance with certain federal laws and regulations. After maintaining 
state support for education at fiscal year 2006 levels, states must use 
education stabilization funds to restore state funding to the greater 
of fiscal year 2008 or 2009 levels for state support to LEAs and public 
IHEs. On November 12, 2009, Education published final requirements for 
Phase II applications for SFSF, which states must submit by January 11, 
2010. The Department also published additional guidance for Phase II 
applications in December 2009. According to the Phase II application, 
in order to receive the remainder of their SFSF allocation, states must 
agree to collect and publicly report on over 30 indicators and 
descriptors related to the four core areas of education reform 
described above. Additionally, states generally must, among other 
things, provide confirmation that they maintained support for education 
in 2009 at least at the level of such support in fiscal year 2006 and 
reaffirm or provide updated information that they will maintain state 
support in 2010 and 2011. When distributing these funds to LEAs, states 
must use their primary education funding formula, but they can 
determine how to allocate funds to public IHEs. In general, LEAs have 
broad discretion in how they can use education stabilization funds, but 
states have some ability to direct IHEs in how to use these funds. 

* ESEA Title I, Part A. The Recovery Act provides $10 billion to help 
LEAs educate disadvantaged youth by making additional funds available 
beyond those regularly allocated through Title I, Part A of the 
Elementary and Secondary Education Act of 1965 (ESEA), as amended. 
[Footnote 46] The Recovery Act requires these additional funds to be 
distributed through states to LEAs using existing federal funding 
formulas, which target funds based on such factors as high 
concentrations of students from families living in poverty. In using 
the funds, LEAs are required to comply with applicable statutory and 
regulatory requirements and must obligate 85 percent of the funds by 
September 30, 2010.[Footnote 47] Education is advising LEAs to use the 
funds in ways that will build the agencies' long-term capacity to serve 
disadvantaged youth, such as through providing professional development 
to teachers. 

* IDEA, Parts B and C.[Footnote 48] The Recovery Act provided 
supplemental funding for programs authorized by Parts B and C of the 
Individuals with Disabilities Education Act (IDEA) as amended, the 
major federal statute that supports early intervention and special 
education and related services for children, and youth with 
disabilities. Part B provides funds to ensure that preschool and school-
age children with disabilities have access to a free and appropriate 
public education and is divided into two separate grant programs--Part 
B grants to states (for school-age children) and Part B preschool 
grants. Part C funds programs that provide early intervention and 
related services for infants and toddlers with disabilities--or at risk 
of developing a disability--and their families. 

Even with Recovery Act Funds, a High Percentage of School Districts in 
Some States Are Facing Budget Cuts, but in Other States, Budget 
Increases Are More Common: 

Education funding in the United States primarily comes from state and 
local governments. Prior to the influx of Recovery Act funding for 
education from the federal government, LEAs, on average, derived about 
48 percent of their fiscal year 2007 funding budget from state funds, 
44 percent from local funds, and 9 percent from federal funds.[Footnote 
49] These percentages, however, likely shifted due to increased federal 
Recovery Act funds and reductions in some state budgets for education. 
While the federal role in financing public education has historically 
been a limited one, the federal funds appropriated under the Recovery 
Act provide a significant but temporary increase in federal support for 
education to states and localities in part to help them address budget 
shortfalls. According to CRS, the Recovery Act provided approximately 
$100 billion for discretionary education programs--elementary, 
secondary, and postsecondary--in fiscal year 2009, which, when combined 
with regular appropriations, represents about a 235 percent increase in 
federal funding compared to fiscal year 2008. 

According to our survey, however, even with the current infusion of 
Recovery Act funding for education programs, the budget condition of 
LEAs across the country is mixed. Based on our national survey results, 
we estimate that approximately the same amount of LEAs--17 percent-- 
face decreases of 5 percent or more in total education funding[Footnote 
50] as face funding increases for the current school year. On the other 
hand, an estimated 57 percent of LEAs reported smaller or no funding 
changes for the current school year.[Footnote 51] 

Changes to LEA budgets for the current school year varied substantially 
depending on the source of the funding--federal, state, or local 
government. Figure 9 shows the estimated percentage of LEAs nationally 
that are facing budget fluctuations of 5 percent or more by funding 
source. For the current school year, we estimate that 50 percent of 
LEAs nationwide received such funding increases from the federal 
government. By contrast, however, state funding cuts of 5 percent or 
more were common for many LEAs across the country. According to our 
survey, an estimated 41 percent of LEAs across the country are seeing 
state funding cuts of 5 percent or more for education. By contrast, an 
estimated 6 percent of LEAs report similar decreases from the federal 
government for the current school year. Regarding local funds, an 
estimated 9 percent of LEAs reported increases of 5 percent or more and 
17 percent reported decreases of the same magnitude. For LEAs, a cut in 
state or local funds may only be partially offset by an increase in 
federal funds because LEAs, on average, receive a much higher 
proportion of their funds from state and local governments than from 
the federal government. 

Figure 9: Estimated Percentage of LEAs Nationally with Funding 
Decreases and Increases of 5 Percent or More for School Year 2009-2010, 
by Source of Funding: 

[Refer to PDF for image: horizontal bar graph] 

Source of funding: State; 
Percentage of LEAs with decrease of 5 percent or more: 41; 
Percentage of LEAs with increase of 5 percent or more: 7. 

Source of funding: Local; 
Percentage of LEAs with decrease of 5 percent or more: 17; 
Percentage of LEAs with increase of 5 percent or more: 9. 

Source of funding: Federal; 
Percentage of LEAs with decrease of 5 percent or more: 6; 
Percentage of LEAs with increase of 5 percent or more: 50. 

Total funding: 
Percentage of LEAs with decrease of 5 percent or more: 17; 
Percentage of LEAs with increase of 5 percent or more: 17. 

Source: GAO survey of LEAs. 

Notes: Percentage estimates for these nationwide estimates have margins 
of error, at the 95 percent confidence level, of plus or minus 5 
percentage points or less. 

[End of figure] 

A high percentage of the LEAs reporting a decrease in federal funding 
were in California. California officials offered several possible 
reasons why some LEAs in California reported federal funding decreases 
of 5 percent or more for education. 

While the national results of our survey show a mixed budgetary picture 
for LEAs, sizable funding cuts to LEA overall budgets were concentrated 
in a few of the states on which we are focusing our Recovery Act 
review--California, North Carolina, and Georgia (see figure 10). 
[Footnote 52] In California, for example, a majority of LEAs in the 
state--an estimated 67 percent--are experiencing declines of 5 percent 
or more in their overall education budgets this year. We previously 
reported that, in California, the state legislature authorized 
substantial budget cuts in order to balance the fiscal year 2009-2010 
budget, with funding for education making up a large part of the 
reduction--$6.5 billion was cut from K-12 and community college funding 
in July alone. According to officials at Los Angeles Unified School 
District--the largest LEA in the state--the LEA faces steep drops in 
state revenue in education in fiscal year 2009-2010. In addition to 
California, we estimate that nearly 40 percent of LEAs in both Georgia 
and North Carolina face overall funding cuts of 5 percent or more, well 
above the national average of 17 percent. According to the Department 
of Public Instruction in North Carolina, the economic recession has 
resulted in significant declines in state revenues for education, with 
federal Recovery Act funding offsetting only a portion of the state 
cuts. For example, one North Carolina LEA reported that the current 
year budget process was difficult, with federal Recovery Act funding 
"softening the blow" of state and local funding cuts but not completely 
compensating for the reductions. In other states, however, many LEAs 
report total funding increases for education of 5 percent or more for 
the current school year. According to our survey, about 30 percent of 
LEAs in Texas, Mississippi, and New Jersey reported total education 
funding increases of 5 percent or more. 

Figure 10: Estimated Percentage of LEAs with Budget Increases and 
Decreases of 5 Percent of More for School Year 2009-2010, by State: 

National average: 
Percentage of LEAs with decrease of 5 percent or more: 17; 
Percentage of LEAs with increase of 5 percent or more: 17. 

California: 
Percentage of LEAs with decrease of 5 percent or more: 67; 
Percentage of LEAs with increase of 5 percent or more: 5. 

Georgia: 
Percentage of LEAs with decrease of 5 percent or more: 39; 
Percentage of LEAs with increase of 5 percent or more: 6. 

North Carolina: 
Percentage of LEAs with decrease of 5 percent or more: 37; 
Percentage of LEAs with increase of 5 percent or more: 3. 

Illinois: 
Percentage of LEAs with decrease of 5 percent or more: 15; 
Percentage of LEAs with increase of 5 percent or more: 22. 

Colorado: 
Percentage of LEAs with decrease of 5 percent or more: 13; 
Percentage of LEAs with increase of 5 percent or more: 15. 

Massachusetts: 
Percentage of LEAs with decrease of 5 percent or more: 12; 
Percentage of LEAs with increase of 5 percent or more: 11. 

Florida: 
Percentage of LEAs with decrease of 5 percent or more: 11; 
Percentage of LEAs with increase of 5 percent or more: 19. 

Iowa: 
Percentage of LEAs with decrease of 5 percent or more: 10; 
Percentage of LEAs with increase of 5 percent or more: 10. 

Texas: 
Percentage of LEAs with decrease of 5 percent or more: 9; 
Percentage of LEAs with increase of 5 percent or more: 30. 

New York: 
Percentage of LEAs with decrease of 5 percent or more: 7; 
Percentage of LEAs with increase of 5 percent or more: 15. 

Ohio: 
Percentage of LEAs with decrease of 5 percent or more: 4; 
Percentage of LEAs with increase of 5 percent or more: 16. 

Mississippi: 
Percentage of LEAs with decrease of 5 percent or more: 3; 
Percentage of LEAs with increase of 5 percent or more: 30. 

New Jersey: 
Percentage of LEAs with decrease of 5 percent or more: 2; 
Percentage of LEAs with increase of 5 percent or more: 29. 

Source: GAO survey of LEAs. 

Notes: This graphic does not include Pennsylvania, Michigan and Arizona 
because at the time our survey was available--from August to October 
2009--their state budgets had not been finalized, and therefore, a 
large percentage of LEAs responded "don't know" to this funding 
question on the survey. 

Percentage estimates for states have margins of error, at the 95 
percent confidence level, of plus or minus 12 percentage points or 
less, with the exception of Florida, which has a margin of error of 14 
percent. The nation-wide percentage estimates have a margin of error of 
plus or minus 4 percentage points. 

[End of figure] 

LEAs Planned to Use Recovery Act Funds for Job Retention, but about a 
Third Expect to Lose Jobs Overall: 

Our survey results indicate that much of the Recovery Act funds for 
education are being used by LEAs to retain staff. An estimated 64 
percent of LEAs nationally reported giving very great or great 
importance to retaining jobs when deciding how to spend Recovery Act 
funds. Because employee-related expenditures are the largest category 
of school expenditures--with salaries and benefits accounting for more 
than 80 percent of local school expenditures, according to Education's 
most recent estimates [Footnote 53]--it is understandable that LEAs 
would use some of their Recovery Act funds for staff salaries. Also, 
given the fiscal uncertainty and substantial budget shortfalls facing 
states, federal funds authorized by the Recovery Act provide LEAs with 
additional support for the retention of education staff. Overall, the 
impact of Recovery Act education funds on job retention may be 
significant because K-12 public school systems employ about 6.2 million 
staff, based on Education's estimates, and make up about 4 percent of 
the nation's workforce.[Footnote 54] 

Retaining Jobs Was LEAs' Top Use for Recovery Act Funds across Three 
Education Programs: 

Job retention was the top planned use for Recovery Act funds for LEAs 
across the three federal Education programs GAO reviewed. Figure 11 
shows the national results of the estimated percentages of LEAs that 
reported planning to use more than 50 percent of their Recovery Act 
funds under SFSF, IDEA, Part B, and ESEA Title I, Part A to retain and 
create education jobs. An estimated 63 percent of LEAs, the highest 
percentage among the 3 programs we reviewed, plan to use Recovery Act 
SFSF funds to retain jobs. In contrast, an estimated 25 percent and 19 
percent of LEAs said they planned to use over half of their Recovery 
Act funds on job retention under ESEA Title I, Part A and IDEA, Part B, 
respectively. Overall, the percentages of LEAs that reported planning 
to use Recovery Act funds to create jobs were lower than the 
percentages planning to retain jobs, with an estimated 11 percent under 
ESEA Title I, 7 percent under IDEA, and 3 percent under SFSF planning 
to create jobs. 

Figure 11: Estimated Percentage of LEAs Nationally Planning to Use More 
Than 50 Percent of Their Recovery Act Funds to Retain and Create Jobs 
for SFSF, ESEA Title I, and IDEA Programs: 

[Refer to PDF for image: vertical bar graph] 

Funding source: SFSF; 
Funds to retain jobs: 63%; 
Funds to create new jobs (instructional and noninstructional): 3%. 

Funding source: Title I; 
Funds to retain jobs: 25%; 
Funds to create new jobs (instructional and noninstructional): 11%. 

Funding source: IDEA; 
Funds to retain jobs: 19%; 
Funds to create new jobs (instructional and noninstructional): 7%. 

Source: GAO survey of LEAs. 

Note: The nationwide percentage estimates have a margin of error of 
plus or minus 5 percentage points. 

[End of figure] 

State education officials reported a variety of factors that may help 
explain why LEAs reported planning to use Recovery Act funds to retain 
jobs. In particular, officials noted that SFSF funds provided 
flexibility in how they could be used. For example, one state education 
official noted that LEAs have more flexibility in spending SFSF funds 
for general education expenses because ESEA Title I and IDEA programs 
target special populations---disadvantaged youth and students with 
disabilities, respectively. This official said that because funding 
levels for general education programs in his state have decreased while 
federal funding levels for ESEA Title I and IDEA programs have 
increased, LEAs have used SFSF funds to shore up funding for general 
education and, in particular, preserve jobs. 

The percentage of LEAs reporting they planned to use over 50 percent of 
their Recovery Act education funds to retain jobs varied considerably 
by state. In particular, Georgia, Michigan, Florida, New Jersey, New 
York and North Carolina were among the states with the highest 
percentages of LEAs that reported planning to use over half their SFSF 
funds for job retention (see figure 12). North Carolina, Iowa, New 
York, Georgia, Florida and Michigan were among the states with the 
highest percentages of LEAs that reported they planned to use over half 
of their ESEA Title I or IDEA Recovery Act funds for this purpose (see 
figure 12). 

Figure 12: Estimated Percentage of LEAs Planning to Use More Than 50 
Percent of Their Recovery Act Funds to Retain Jobs, by State for SFSF, 
ESEA Title I, and IDEA Programs: 

[Refer to PDF for image: 3 vertical bar graphs] 

Percentage of LEAs - SFSF: 
Georgia: 92.3%; 
Michigan: 86.9%; 
Florida: 86.4%; 
New Jersey: 78.8%; 
New York: 78.0%; 
North Carolina: 72.7%; 
Iowa: 64.9%; 
Mississippi: 67.8%; 
Illinois: 64.9%; 
Arizona: 61.5%; 
California: 52.2%; 
Ohio: 46.1%; 
Massachusetts: 36.6%; 
Texas: 32.4%; 
Pennsylvania: 19.4%; 
National average: approximately 64%. 

Percentage of LEAs - Title I: 
North Carolina: 49.1%; 
Iowa: 45.9%; 
New York: 39.8%; 
Georgia: 38.1%; 
Florida: 34.2%; 
California: 29.1%; 
Michigan: 22.9%; 
Arizona: 22.8%; 
Pennsylvania: 19.1%; 
Illinois: 15.5%; 
Colorado: 14.5%; 
Texas: 11.9%; 
Ohio: 10.7%; 
Massachusetts: 10.2%; 
New Jersey: 9.8%; 
Mississippi: 4.7%; 
National average: approximately 25%. 

Percentage of LEAs - IDEA: 
North Carolina: 51.5%; 
New York: 37.3%; 
Michigan: 36.8%; 
Georgia: 35.8v
Florida: 34.2%; 
Iowa: 31.7%; 
Arizona: 28.7%; 
California: 16.6%; 
Ohio: 15.0%; 
Colorado: 14.4%; 
Massachusetts: 7.8%; 
Illinois: 7.1%; 
Texas: 6.9%; 
Pennsylvania: 6.0%; 
New Jersey: 2.5%; 
Mississippi: 1.6%; 
National average: approximately 20%. 

Source: GAO survey of LEAs. 

Notes: Percentage estimates for states have margins of error, at the 95 
percent confidence level, of plus or minus 12 percentage points or less 
(Florida has a margin of error of 15 percent, Massachusetts, 
Pennsylvania, and New Jersey have margins of error of 16 percent, and 
Colorado has a margin of error of 23 percent). The nationwide 
percentage estimates have a margin of error of plus or minus 5 
percentage points. 

At the time our survey was conducted, from August 21 to October 4, 
2009, Pennsylvania did not have an approved SFSF application. An 
estimated 28 percent of surveyed LEAs in Pennsylvania reported they did 
not know if they would receive SFSF funds and were therefore not 
included in the SFSF fund use estimate. 

Colorado was not included in our analysis of SFSF fund use because the 
state did not allocate these funds to LEAs. 

[End of figure] 

LEA officials described the use of Recovery Act funds to retain staff 
in the context of decreasing state and local education funds. For 
example, education officials in New York City told us that Recovery Act 
funds helped the city reduce a total education budget gap of nearly 
$1.46 billion to $400 million for the current school year and avoid 
teacher layoffs. In the small, rural school district of Jasper- 
Troupsburg in upstate New York, district officials told us they were 
facing a budget gap of $250,000. They said they would use 95 percent of 
their Recovery Act funds to retain jobs. Without these funds, the 
district would have been forced to cut teachers' salaries and reduce 
work hours, as well as lay off 8 to 10 teachers out of 60 teachers, 
according to LEA officials. Similarly in Charlotte-Mecklenburg, North 
Carolina, LEA officials told us that Recovery Act funds allowed the 
district to compensate for reductions in state aid and local funds and 
that a large portion of these funds enabled the district to retain 
education jobs. In another LEA in Arizona, officials explained that 
with Recovery Act funds, they were able to offer contracts to all 
teachers who were returning, but without these funds the extent to 
which they would have had to reduce staff positions is unclear. They 
speculated that, absent Recovery Act funds, other cost-cutting measures 
might have included decreasing staff salaries and benefits. 

Some LEAs used Recovery Act funds to hire new staff. When planning how 
to spend Recovery Act funds, an estimated 17 percent of LEAs nationally 
reported creating jobs as of very great or great importance during the 
decision-making process. Officials at the Arlington Elementary School 
District, a rural LEA in Arizona containing a single school, said that 
IDEA Recovery Act funds would help the district add a special education 
teacher to the one they currently have. They said the timing of the 
Recovery Act funds was important to their district because of the 
addition of three new students with disabilities to the school. Without 
the IDEA Recovery Act funds they received, they said they would have 
had to draw funds away from general education needs, which would have 
meant combining classes and eliminating a position. Similarly, in 
Weldon City Schools in North Carolina, officials reported that IDEA 
Recovery Act funds allowed the LEA to create teaching and teaching 
assistant positions for severely emotionally disturbed students. 
Without these funds, officials said they would have had to lay off two 
special education staff and would have been unable to provide the 
intensive support for students with disabilities. Education officials 
in some states said they are concerned about funding cliffs if LEAs use 
Recovery Act funds to create new positions. For example, an official at 
one LEA in New York state said district officials are concerned that 
using Recovery Act Title I funds may lead to a funding cliff and that 
the district may be unable to retain teachers hired with those funds 
once they expire. 

About a Third of LEAs Expected to Lose Jobs, Even with SFSF Funds: 

An estimated 32 percent of LEAs nationally expected to lose jobs, even 
with SFSF funds,[Footnote 55] but the percentage of LEAs expecting to 
lose jobs varies by state. (See figure 13.) Among the states with 
higher percentages of LEAs expecting job losses even with SFSF funds 
were Georgia, Florida, North Carolina, and California. According to our 
analysis, in all of these states except for Florida, the proportion of 
LEAs that experienced decreases of 5 percent or more in total education 
funding from last year was larger than the national average of 17 
percent. For example, in Georgia 65 percent of LEAs reported that they 
expected to lose jobs even with SFSF funds, and 39 percent of LEAs also 
reported they experienced a total decrease in funds of 5 percent or 
more. State education officials in Georgia said that declining state 
and local revenues have forced many LEAs to cut their budgets and 
eliminate programs, resulting in a loss of jobs. Our analysis also 
found that the estimated percentage of the largest LEAs that reported 
expecting to lose jobs even with SFSF funds was higher than the 
national average.[Footnote 56] For example, officials at Charlotte- 
Mecklenburg Schools, the largest LEA in North Carolina, said the 
district was facing an $87 million reduction in state and county 
funding and sustained a net reduction of 769 positions after Recovery 
Act funds had been applied. While budget gaps may help explain the loss 
of jobs in some states and localities, there may be other factors that 
contribute to job loss. For example, Florida state officials noted that 
Florida's declining student enrollment has meant that LEAs are 
retaining fewer staff. 

Figure 13: Estimated Percentage of LEAs Expecting Decreases in the 
Number of Jobs, Even with SFSF Recovery Act Funds, by State: 

[Refer to PDF for image: vertical bar graph] 

Georgia: 64.6%; 
Florida: 55.5%; 
North Carolina: 54.4%; 
California: 49.5%; 
Michigan: 44.7%; 
Arizona: 34.2%; 
New York: 33.9%; 
Iowa: 31.5%; 
Massachusetts: 28.1%; 
Texas: 20.2%; 
Mississippi: 19.7%; 
Ohio: 12.5%; 
New Jersey: 12.5%; 
Illinois: 10.1%; 
Pennsylvania: 6.2%; 
National average: approximately 32%. 

Source: GAO survey of LEAs. 

Notes: Colorado was not included in our analysis of SFSF fund use 
because the state did not allocate these funds to LEAs. 

Percentage estimates for states have margins of error, at the 95 
percent confidence level, of plus or minus 12 percentage points or less 
(Arizona, Iowa, Mississippi, and Pennsylvania have a margin of error of 
13 percent; New Jersey has a margin of error of 15 percent; and 
Massachusetts has a margin of error of 16 percent). The nationwide 
percentage estimates have a margin of error of plus or minus 5 
percentage points. 

[End of figure] 

Most LEAs Consider Educational Goals Important When Planning for 
Recovery Act Funds: 

In planning how to spend Recovery Act funds for their LEAs, most local 
officials reported placing great importance on advancing educational 
goals and reform set forth in Education's guidance on how best to use 
the funds (see fig 14).[Footnote 57] Specifically, we estimate that 
most LEAs--about 80 percent--gave great or very great importance to 
"improving results for students" in deciding how to use Recovery Act 
funds for their school districts. "Increasing educators' long term 
capacity" was the next most cited, with approximately 70 percent of 
LEAs giving very great or great importance to this factor. A majority 
of LEAs considered "advancing district/reform and avoid recurring 
costs" as important factors when planning how to utilize the Recovery 
Act funding at their LEAs. 

Figure 14: Estimated Percentage of LEAs That Placed Very Great or Great 
Importance on Education Reform When Planning for Uses of Education 
Funding: 

[Refer to PDF for image: horizontal bar graph] 

National average: 

Improve results for students (including students in poverty, students 
with disabilities, and English language learners): 78%; 

Increase educators’ long-term capacity to improve results for students: 
71%; 

Avoid recurring costs that your LEA and schools are unprepared to 
assume when Recovery Act funding ends: 64%; 

Advance district or school improvement/reform plans encompassed in the 
Recovery Act: 56%; 

Measure and track implementation of the Recovery Act and results for 
students: 44%. 

Source: GAO survey of LEAs. 

Note: Percentage estimates for these nation-wide estimates have margins 
of error, at the 95 percent confidence level, of plus or minus 5 
percentage points or less. 

[End of figure] 

According to our survey, LEAs planned to spend some of their Recovery 
Act funds on items that could help build long-term capacity and advance 
educational goals and reform while also avoiding recurring costs for 
LEAs. Overall, LEAs reported several nonrecurring items such as 
purchasing technological equipment, including new computers; 
providing professional development for instructional staff; 
and purchasing instructional materials as among the highest uses of 
funds after job retention and creation. Figure 15 shows the national 
estimated percentages of LEAs that reported planning to use more than a 
quarter of their Recovery Act funds for these three nonrecurring 
budgetary items across the three education programs.[Footnote 58] 

Figure 15: Estimated Percentage of LEAs Nationally Planning to Use More 
Than 25 Percent of Their Recovery Act Funds for Professional 
Development, Technological Equipment, and Instructional Materials for 
SFSF, ESEA Title I, and IDEA Programs: 

[Refer to PDF for image: vertical bar graph] 

Recovery act funding source: IDEA; 
Providing professional development for instructional staff: 12.7%; 
Purchasing technological equipment: 21.7%; 
Purchasing instructional materials: 11.4%. 

Recovery act funding source: Title I: 
Providing professional development for instructional staff: 15.1%; 
Purchasing technological equipment: 18.4%; 
Purchasing instructional materials: 12.5%. 

Recovery act funding source: SFSF:
Providing professional development for instructional staff: 8.4%; 
Purchasing technological equipment: 8.9%; 
Purchasing instructional materials: 8.2%. 

Source: GAO survey of LEAs. 

Note: Percentage estimates for these nation-wide estimates have margins 
of error, at the 95 percent confidence level, of plus or minus 5 
percentage points or less. 

[End of figure] 

Interviews with LEAs in a number of states illustrate the range of 
reform-oriented and capacity-building projects in these areas being 
supported with Recovery Act funds. For example, in the Los Angeles 
Unified School District, officials described using Recovery Act funds 
for a special education leadership academy for assistant principals to 
instruct them on compliance with special education requirements and 
working with teachers to implement effective instructional programs. In 
Weldon City Schools in North Carolina, LEA officials reported that IDEA 
Recovery Act funds would enable the district to provide more technology 
for children in their special education program, including updated 
computers and transition kits for occupational course study classrooms. 
Without these Recovery Act funds, officials said that technology funds 
for such a program would have been unavailable. At Buckeye Elementary 
School District in Arizona, officials said they used some of their IDEA 
Recovery Act funds as seed money for acquiring software needed to 
implement an educational initiative focusing on preventing the need for 
special education interventions and serving approximately 600 students 
with disabilities. 

In Part Because of Fiscal Pressures, Many Local Education Agencies Plan 
to Use IDEA Flexibility to Decrease their Local Spending on IDEA 
Activities This Year, Including a Majority of LEAs in Some States: 

This year, many LEAs will take advantage of flexibility under IDEA that 
allows them to reduce their local, or state and local,[Footnote 59] 
spending on students with disabilities, which could have implications 
for future spending. As provided for in IDEA, in any fiscal year in 
which an LEA's federal IDEA, Part B, allocation exceeds the amount the 
LEA received in the previous year, an eligible LEA may reduce local 
spending on students with disabilities by up to 50 percent of the 
amount of the increase, as long as the LEA uses those freed-up funds 
for activities authorized under the Elementary and Secondary Education 
Act of 1965, as amended, which supports activities for general 
education. Because Recovery Act funds for IDEA are counted as part of 
the LEA's overall federal IDEA allocation, this year, the total 
increase in IDEA funding for LEAs is far larger than the increases in 
previous years. The decision by LEAs to decrease their local spending 
may have implications for future spending on special education. Because 
LEAs are required to maintain their previous year's level of local 
spending[Footnote 60] on special education and related services to 
continue to receive IDEA funds, LEAs taking advantage of the spending 
flexibility will only be required to maintain these expenditures at the 
reduced level in subsequent years. If LEAs that use the flexibility to 
decrease their local spending do not voluntarily increase their 
spending in future years, and federal IDEA allocations decrease-- 
specifically by returning to levels comparable to those before the 
Recovery Act--the total federal, state, and local spending for the 
education of students with disabilities will decrease compared to 
spending before the Recovery Act. 

To be eligible to exercise this flexibility, the LEA must meet the 
requirements of IDEA, Part B, including meeting targets in its state's 
performance plan, and this year, almost all of the states in our sample 
have had an increase in the number of LEAs that have met requirements-
-and are therefore eligible--compared to last year. Under IDEA, each 
state is required to have in place a performance plan, which 
establishes targets for LEAs. Overall, among the 15 states in our study 
that had made LEA determinations related to their state performance 
plan this year, all but New York, Georgia, and Texas[Footnote 61] had 
experienced an increase in the number of LEAs that met requirements. 
State officials in states that experienced such increases attributed 
these increases to training, technical assistance and monitoring of 
indicators that were problematic for LEAs to meet in previous years. 
However, officials in some states also told us they had changed the 
criteria in their state performance plan this year.[Footnote 62] Others 
changed the determinations process by increasing the minimum number of 
students--called an "n" size or cell size--required for making 
calculations related to the state performance plan, which could 
effectively prevent some LEAs with small numbers of students from being 
evaluated in certain areas. If an LEA has fewer than the minimum number 
of special education students required for a particular target, the 
LEA's data on that target would be considered "not applicable" and 
would not have bearing on the determination of whether the LEA met 
requirements. 

Officials in states that changed their determinations processes or 
criteria said that doing so made their plans and targets comparable to 
other states' targets and helped ensure that expectations placed on 
LEAs were reasonable.[Footnote 63] Three states changed their 
determinations criteria and experienced large increases in the number 
of LEAs meeting requirements--Arizona, Michigan, and Ohio--while two 
others that increased their minimum "n" size also experienced large 
increases--California and Illinois. (See table 5.) Officials in Ohio 
told us that they changed the determinations criteria with the goal of 
increasing the number of LEAs that were determined to meet 
requirements, thereby giving most LEAs in the state the option to 
reduce their local spending. States have some discretion over their 
determinations process and criteria, but the Secretary of Education 
issued a letter to state education officials in October 2009 
encouraging them to implement the LEA determinations process in a 
rigorous manner, with a focus on improving results for students with 
disabilities and ensuring that appropriate special education and 
related services are provided. 

Table 5: Change in Percentage of LEAs Meeting Requirements of IDEA, 
Part B, and Eligible for Flexibility to Reduce Local Expenditures: 

State: Arizona; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2008-2009 school year: 22; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2009-2010 school year: 81; 
Percentage increase (decrease): 59. 

State: California; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2008-2009 school year: 48; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2009-2010 school year: 99.7; 
Percentage increase (decrease): 51.7. 

State: Colorado; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2008-2009 school year: 18; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2009-2010 school year: 46; 
Percentage increase (decrease): 28. 

State: District of Columbia[B]; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2008-2009 school year: [Empty]; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2009-2010 school year: [Empty]; 
Percentage increase (decrease): [Empty]. 

State: Florida; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2008-2009 school year: 67; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2009-2010 school year: 76; 
Percentage increase (decrease): 9. 

State: Georgia; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2008-2009 school year: 81; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2009-2010 school year: 76; 
Percentage increase (decrease): (5). 

State: Illinois; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2008-2009 school year: 44; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2009-2010 school year: 82; 
Percentage increase (decrease): 38. 

State: Iowa; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2008-2009 school year: 98; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2009-2010 school year: 99; 
Percentage increase (decrease): 1. 

State: Massachusetts[A]; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2008-2009 school year: 80; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2009-2010 school year: 90; 
Percentage increase (decrease): 10. 

State: Michigan; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2008-2009 school year: 57; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2009-2010 school year: 100; 
Percentage increase (decrease): 43. 

State: Mississippi; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2008-2009 school year: 97; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2009-2010 school year: b; 
Percentage increase (decrease): [Empty]. 

State: New Jersey; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2008-2009 school year: 91; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2009-2010 school year: 93; 
Percentage increase (decrease): 2. 

State: New York; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2008-2009 school year: 95; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2009-2010 school year: 90; 
Percentage increase (decrease): (5). 

State: North Carolina; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2008-2009 school year: 45; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2009-2010 school year: 58; 
Percentage increase (decrease): 13. 

State: Ohio; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2008-2009 school year: 8; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2009-2010 school year: 99; 
Percentage increase (decrease): 91. 

State: Pennsylvania; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2008-2009 school year: 99; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2009-2010 school year: 99.5; 
Percentage increase (decrease): 0.5. 

State: Texas; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2008-2009 school year: 58; 
Percentage of LEAs eligible for flexibility to reduce local 
expenditures[A]: 2009-2010 school year: 36; 
Percentage increase (decrease): (22). 

Source: GAO analysis of data provided by state officials during October 
and November 2009. 

Notes: States determined the number of LEAs meeting requirements and 
therefore eligible for funding flexibility in school year 2008-2009 
based on data from the 2006-2007 school year. Similarly, for 2009-2010 
funding flexibility, states use data from the 2007-2008 school year. 
The total number of LEAs includes districts, state-operated programs, 
charter schools, and administrative units that receive a determination 
of whether State Performance Plan targets have been achieved. In 
Florida and New Jersey, percentage calculations reflect GAO's 
assumption that there were the same total number of LEAs in both years. 

[A] IDEA section 613(a)(2)(C)(iii) (codified at 20 U.S.C § 
1413(a)(2)(C)(iii)) provides that if the state educational agency 
determines that an LEA is not meeting the requirements of Part B, it 
shall prohibit the LEA from reducing its local maintenance-of-effort 
spending. However, Massachusetts prohibits the funding flexibility only 
for districts that are determined as "needs substantial intervention." 
All Massachusetts LEAs actually had the funding flexibility in both 
school years 2008-2009 and 2009-2010, but the numbers in the table 
represent the percentage of LEAs that were determined to have met 
requirements. 

[B] At the time of our interview, District of Columbia officials 
reported that the state educational agency has not performed 
determinations in prior years and were in the process of making 
determinations for this year. Mississippi officials also said they were 
in the process of making determinations this year and will use the most 
recent determinations to establish eligibility for the funding 
flexibility. 

[End of table] 

According to some state officials, some LEAs were hesitant to utilize 
the reduced local expenditure flexibility in the past, because the 
increase in their allocation--and the amount of local or state funding 
that could be "freed up"--was small. However, this year, the amount of 
funding that can be "freed up" is larger than in prior years, and using 
this flexibility will give LEAs, some facing budgetary pressures, more 
flexibility in deciding how to spend their local funds. According to 
state officials, LEAs that take advantage of this flexibility will not 
necessarily reduce their local spending by the entire 50 percent 
allowed under the law, but some state officials said that some LEAs may 
reduce local spending because they have concerns about creating 
unsustainable funding commitments for special education, because 
services cannot be easily cut after Recovery Act funds are gone. In 
Ohio and Colorado, state officials said that this flexibility will 
allow LEAs to fund important services that will benefit both general 
education and special education students. Another option for LEAs 
seeking to benefit students in both general education and special 
education settings is to set aside up to 15 percent of their IDEA funds 
for Coordinated Early Intervening Services (CEIS), which can be used to 
serve students who have not been identified as having a disability. 
Mississippi state officials said that some of their LEAs plan to set 
aside funds for CEIS instead of using the flexibility to decrease local 
spending. 

This year, according to our survey, an estimated 44 percent of LEAs 
plan to use the reduced local expenditure flexibility to decrease local 
spending on students with disabilities, although the percentages vary 
across states: from 14 percent in New York to 72 percent in Iowa. (See 
figure 16.) An estimated 48 percent of the largest LEAs planned to do 
so.[Footnote 64] However, officials in some states said they had 
advised LEAs about whether to use the flexibility, and state education 
officials in Colorado, Iowa, and Georgia said they expect many or all 
eligible LEAs to utilize the flexibility, whereas officials in the 
District of Columbia, Arizona, Mississippi, and Texas said they expect 
few, if any, to do so. 

Figure 16: Estimated Percentage of LEAs Planning to Take Advantage of 
Flexibility to Reduce Local Spending on IDEA, by State: 

[Refer to PDF for image: stacked vertical bar graph] 

Estimated percentages: 

State: Iowa; 
Yes: 72.4%; 
Don't know: 14.7%; 
No: 13.0%. 

State: California; 
Yes: 66.5%; 
Don't know: 25.7%; 
No: 7.82%. 

State: Georgia; 
Yes: 58.3%; 
Don't know: 18.0%; 
No: 23.8%. 

State: Michigan; 
Yes: 52.0%; 
Don't know: 25.7%; 
No: 22.4%. 

State: Pennsylvania; 
Yes: 49.8%; 
Don't know: 22.0%; 
No: 28.2%. 

State: Illinois; 
Yes: 49.0%; 
Don't know: 18.0%; 
No: 32.9%. 

State: Colorado; 
Yes: 49.0%; 
Don't know: 13.6%; 
No: 37.4%. 

State: Florida; 
Yes: 40%; 
Don't know: 14.9%; 
No: 45.1%. 

State: New Jersey; 
Yes: 36.0%; 
Don't know: 19.3%; 
No: 44.7%. 

State: Arizona; 
Yes: 33.2%; 
Don't know: 35.6%; 
No: 31.2%. 

State: Ohio; 
Yes: 28.2%; 
Don't know: 47.6%; 
No: 24.2%. 

State: North Carolina; 
Yes: 21.6%; 
Don't know: 33.2%; 
No: 45.2%. 

State: Massachusetts; 
Yes: 18.1%; 
Don't know: 25.%; 
No: 56.7%. 

State: Mississippi; 
Yes: 17.4%; 
Don't know: 40.2%; 
No: 42.5%. 

State: Texas; 
Yes: 15.2%; 
Don't know: 38.9%; 
No: 45.9%. 

State: New York; 
Yes: 14.4%; 
Don't know: 30.1%; 
No: 55.6%. 

State: National average: 
Yes: approximately 43%. 

Source: GAO survey of LEAs. 

Note: Estimates for states have margins of error, at the 95 percent 
confidence level, of plus or minus 12 percentage points or less 
(Colorado and Florida have margins of error of 15 percent). Percentage 
estimates for these nation-wide estimates have margins of error, at the 
95 percent confidence level, of plus or minus 5 percentage points or 
less. 

[End of figure] 

States Vary in the Rate at Which They Draw Down Recovery Act Funds for 
Education Programs, and Some States and LEAs Have Questions about 
Proper Cash Management Practices: 

As of November 6, 2009, states covered by our review had drawn down 46 
percent ($8.4 billion) of the awarded education stabilization 
funds,[Footnote 65] 11 percent ($735 million) of Recovery Act funds for 
ESEA Title I, and 10 percent ($755 million) of Recovery Act funds for 
IDEA. Some states had drawn down a much larger portion of their funds 
than other states. For example, Arizona, California, Georgia, and 
Illinois had drawn down 83 percent or more of their awarded education 
stabilization funds, while the District of Columbia and Pennsylvania 
had not drawn down any funds. Pennsylvania had little time to draw down 
funds because it had just received approval for its SFSF application a 
few days earlier. The District of Columbia had not yet requested 
assurances from the LEAs that education stabilization funds would be 
used in accordance with federal requirements--the District requires 
such assurances before the LEAs obligate federal funds. In addition, 
the District of Columbia had not drawn down any of its Recovery Act 
funds for ESEA Title I or IDEA, Part B, in part, because it had not 
completed its review of LEA applications for these funds, according to 
District of Columbia officials. Although New Jersey had not drawn down 
any of its ESEA, Title I or IDEA Recovery Act funds as of November 6, 
the state drew down funds later in November. 

Table 6: Percentage of Awarded Education Stabilization, ESEA Title I, 
and IDEA, Part B Recovery Act Funds Drawn Down by States as of November 
6, 2009: 

Percentage of awarded Recovery Act funds drawn down: 

State: Arizona; 
Education stabilization funds: 90%; 
ESEA Title I: 9%; 
IDEA, Part B: 7%. 

State: California; 
Education stabilization funds: 85%; 
ESEA Title I: 41%; 
IDEA, Part B: 21%. 

State: Colorado; 
Education stabilization funds: 56%; 
ESEA Title I: 0; 
IDEA, Part B: 3%. 

State: District of Columbia; 
Education stabilization funds: 0; 
ESEA Title I: 0; 
IDEA, Part B: 0. 

State: Florida; 
Education stabilization funds: 14%; 
ESEA Title I: 11%; 
IDEA, Part B: 15%. 

State: Georgia; 
Education stabilization funds: 83%; 
ESEA Title I: 3%; 
IDEA, Part B: 4%. 

State: Illinois; 
Education stabilization funds: 92%; 
ESEA Title I: 0; 
IDEA, Part B: 7%. 

State: Iowa; 
Education stabilization funds: 50%; 
ESEA Title I: 16%; 
IDEA, Part B: 39%. 

State: Massachusetts; 
Education stabilization funds: 61%; 
ESEA Title I: 4%; 
IDEA, Part B: 7%. 

State: Michigan; 
Education stabilization funds: 71%; 
ESEA Title I: 1%; 
IDEA, Part B: 2%. 

State: Mississippi; 
Education stabilization funds: 9%; 
ESEA Title I: 2%; 
IDEA, Part B: 0. 

State: New Jersey; 
Education stabilization funds: 45%; 
ESEA Title I: 0; 
IDEA, Part B: 0. 

State: New York; 
Education stabilization funds: 2%; 
ESEA Title I: 0; 
IDEA, Part B: 3%. 

State: North Carolina; 
Education stabilization funds: 28%; 
ESEA Title I: 11%; 
IDEA, Part B: 16%. 

State: Ohio; 
Education stabilization funds: 25%; 
ESEA Title I: 7%; 
IDEA, Part B: 8%. 

State: Pennsylvania; 
Education stabilization funds: 0; 
ESEA Title I: 18%; 
IDEA, Part B: 17%. 

State: Texas; 
Education stabilization funds: 2%; 
ESEA Title I: 5%; 
IDEA, Part B: 6%. 

State: Total; 
Education stabilization funds: 46%; 
ESEA Title I: 11%; 
IDEA, Part B: 10%. 

Source: GAO analysis of U.S. Department of Education data. 

[End of table] 

Education Continues to Work with Some States to Address Federal Cash 
Management Requirements under the New SFSF Program: 

Department of Education officials report they continue to work with 
several states to provide clarification on the appropriate methods for 
managing cash flows under the newly created SFSF program. However, some 
state educational agencies (SEA) report that they need clarifying 
guidance on cash management issues before moving forward with guidance 
to LEAs. As we have reported, Recovery Act cash management issues in a 
number of states have been a concern to Education and the Education 
Office of Inspector General, and Education officials report that they 
are monitoring drawdowns of Recovery Act funds to help ensure that 
states are complying with federal requirements. 

In our recent discussions with Education officials regarding cash 
management, they said their guidance to SEAs and LEAs is to minimize 
the amount of time they hold federal funds before they need to spend 
them. Department of Education regulations require states to minimize 
the time elapsing between the transfer of the grant funds from the U.S. 
Treasury and disbursement by the states, and similarly require LEAs to 
minimize the time they hold funds before disbursing them. Regulations 
generally require subgrantees to calculate and remit any interest 
earned on advance payments made to them by states on at least a 
quarterly basis.[Footnote 66] In other words, the goal is to draw down 
the funds when they are needed and spend them immediately. Education 
officials told us that if LEAs retain federal cash balances of SFSF or 
other federal funds in interest bearing accounts, they are to calculate 
the interest due using the actual interest the funds have earned. These 
officials stated, however, that Education does not require LEAs to keep 
federal funds in interest bearing accounts. Further, according to 
Education officials, regulations do not require that LEAs calculate the 
interest due on each federal funding program separately. 

However, as we have previously reported, several states do not have 
cash management systems in place for SFSF funds that can disburse funds 
to LEAs when they are needed and ensure the calculation and remittance 
of any interest due. Officials in some of these states told us they are 
seeking clarifying guidance from Education on how to properly track and 
report on cash balances and interest earned. 

* The Illinois State Board of Education (ISBE) does not have a 
mechanism in place to allow LEAs to draw down SFSF funds on an as- 
needed basis. As a result, the ISBE distributes the state's share of 
SFSF funds as General State Aid payments--these payments are made based 
on a predetermined schedule (semimonthly, in equal installments). 
According to Education officials, the agency is working with the ISBE 
to develop a procedure to withhold future SFSF payments from LEAs that 
carry SFSF cash balances. 

* In Arizona, state distribution of funding raised concerns at one LEA. 
LEA officials told us they had planned to pay the salaries of 15 
teachers over the course of the school year with their SFSF funds, and 
they submitted a drawdown request for 1 month's funding. However, the 
state unexpectedly sent the funding all at one time, and the LEA 
officials were concerned about having excess SFSF cash on hand at 
month's end. LEA officials said they used the SFSF funds to pay all 
district salaries for that month, in order to be able to expend all 
funds in a timely manner. In our discussions with Education officials, 
they acknowledged there could be a cash management issue if an SEA is 
sending SFSF funds to LEAs in advance of the LEAs' needing it. 
Education officials said they would need to look into this matter. 

* As we previously reported, the California Department of Education 
(CDE) has recently implemented a pilot program to monitor LEA cash 
balances. CDE officials report they are currently developing interest 
calculation procedures for LEAs, including for Recovery Act SFSF fund 
balances. Education officials said they have been in communication with 
CDE about that agency's efforts to develop procedures for LEA 
calculation of interest on SFSF funds and other federal cash balances. 
Education officials told us they are waiting to make a decision on 
CDE's proposed interest calculation procedures until they receive the 
proposal in writing from CDE. CDE officials told us they would issue 
further cash management instruction to LEAs when the issue is resolved. 

* New Jersey Department of Education (NJED) officials reported that 
they currently have a system in place to monitor SFSF cash balances. 
They said they instruct LEAs to remit any interest over $100 earned on 
SFSF cash balances back to the federal government; however, they do not 
expect LEAs to accrue interest on SFSF funds because the LEAs plan to 
use the funds each month to pay salaries. State officials told us they 
monitor LEA SFSF expenditures on a quarterly basis to determine LEA 
cash needs for the following quarter. If an LEA spends less than 90 
percent of the payments issued that quarter, the NJED withholds 
payments until the LEA's expenditures exceed 90 percent. 

LEAs' Views of Federal Guidance Is Correlated with Their Views of State 
Guidance, and Some States with High Levels of Satisfaction Have Similar 
State Practices in Developing and Distributing Guidance: 

Starting on April 1, 2009, about a month and a half after enactment of 
the Recovery Act, Education began issuing guidance related to uses of 
Recovery Act funds for ESEA Title I, IDEA, Part B, and SFSF, as well as 
other programs. Since then Education has issued guidance updates, has 
hosted webinars on a variety of topics of significance under the 
Recovery Act, and has made all these resources available on its Web 
site. According to Education officials, before the department issues 
written guidance, it conducts a series of internal and other reviews 
that contribute to the total amount of time needed to develop and 
disburse written guidance. Within Education, generally, both the Office 
of the General Counsel and the Office of the Secretary review proposed 
guidance documents, and, depending on the topic covered, other offices 
are also involved in the review process. After Education completes its 
internal review, it submits its proposed guidance documents to the 
Office of Management and Budget for an external review,[Footnote 67] 
and generally OMB has been able to provide its review on an expedited 
basis, depending on the volume of documents OMB has received to review 
from all executive agencies. Figure 17 shows major Recovery Act 
guidance that Education has issued since the Recovery Act was enacted, 
including both cross-cutting topics such as cash management, recipient 
reporting, and educational reform, as well as program-specific guidance 
pertaining to ESEA Title I, IDEA, and SFSF. To provide context for the 
discussion on survey results concerning guidance, we have included in 
figure 17 the period when LEAs responded to the survey. 

Figure 17: Timeline of Major Department of Education Recovery Act 
Guidance and Period LEAs Could Respond to GAO's Survey: 

[Refer to PDF for image: illustrated timeline] 

February: 
Cross-cutting: 
* February 17: Recovery Act signed into law. 

April: 
Cross-cutting: 
* April 1: SFSF, IDEA, and Title I Recovery Act funds made available; 
* April 24: Education guidance on using Recovery Act funds to drive 
reform; 
IDEA Part B grants to states and preschools: 
* April 1: Initial IDEA Recovery Act guidance; 
* April 13: IDEA Part B Recovery Act guidance update; 
ESEA Title I, Part A: 
* April 1: Initial Title I Recovery Act guidance; 
SFSF: 
* April 1: Initial SFSF Recovery Act guidance; 
* April 7: SFSF guidance update. 

May: 
SFSF: 
* May 1: SFSF maintenance of effort(MOE) guidance released; 
* May 11: SFSF guidance update. 

July: 
Cross-cutting: 
* July 27: Webinar on new Recovery Act programs; 
* July 30: Webinar on fraud prevention in Recovery Act programs; 
IDEA Part B grants to states and preschools: 
* July 1: IDEA Part B Recovery Act guidance update; 
ESEA Title I, Part A: 
* Title I waiver guidance released. 

August: 
Cross-cutting: 
* August 10: Education Webinar on completing section 1512 quarterly 
reports; 
* August 24: Webinar on cash management; 
IDEA Part B grants to states and preschools: 
* August 28: Recovery Act reporting tip sheet for IDEA, Part B 
released; 
ESEA Title I, Part A: 
* August 28 Recovery Act reporting tip sheet for Title I released; 
SFSF: 
* August 27 E-mail reminding states of requirement for SFSF 
subrecipient monitoring; 
* August 28: Recovery Act reporting tip sheet for SFSF released. 

September: 
IDEA Part B grants to states and preschools: 
* September 10: IDEA Part B uses of Recovery Act funds guidance 
released; 
ESEA Title I, Part A: 
* September 3: Title I uses of Recovery Act funds guidance released; 
* September 3: Recovery Act reporting tip sheet for Title I updated; 
* September 14: Webinar on Title I MOE requirements; 
SFSF: 
* September 3: Recovery Act reporting tip sheet for SFSF updated. 

October: 
Cross-cutting: 
* October 5: Education guidance on Recovery Act 1512 Quarterly 
Reporting revised; 
* October reporting 5: Webinar on using strategic planning to link 
Title I and IDEA Recovery Act funds to Education Technology and 
Statewide Longitudinal Data System Grants. 

November: 
Cross-cutting: 
* November 2: Webinar on cost allocations and indirect costs; 
ESEA Title I, Part A: 
* Title I Recovery Act guidance updated; 
SFSF: 
* November 9: SFSF phase II applications released; 
* November 12: Final Race to the Top fund applications released; 
* Week of November 16: Webinars on Phase II SFSF application; 
* November 24: Webinar on Race to the Top. 

All activities between August 21 and October 4 are included in the GAO 
survey. 

Source: GAO analysis of Department of Education Guidance documents and 
events. 

[End of figure] 

Our survey estimates show that a majority of LEAs nationwide found 
Education's guidance on allowable uses for IDEA, ESEA Title I, and SFSF 
Recovery Act funds to be very adequate, adequate, or neither adequate 
nor inadequate.[Footnote 68] For example, officials in two LEAs we 
interviewed after the survey was completed told us they had found 
Education's guidance adequate. An official in another district we 
visited said that at the time of the survey, he had assessed 
Education's guidance as neither adequate nor inadequate but later 
considered Education's guidance adequate because Education has issued 
additional guidance. A much smaller percentage of LEAs found the 
guidance to be inadequate or very inadequate. Specifically, as shown in 
figure 18, we estimate that the percentage of LEAs reporting that 
guidance was very adequate, adequate, or neither adequate nor 
inadequate was 69 percent for IDEA, 75 percent for ESEA Title I, and 60 
percent for SFSF.[Footnote 69] 

Figure 18: How LEAs Assessed the Content of Education's Guidance on 
Allowable Uses: 

[Refer to PDF for image: vertical bar graph] 

Recovery Act funds: IDEA; 
Neither adequate nor inadequate: 22.4%; 
Very adequate or adequate: 46.4%; 
Very inadequate or inadequate: 25.2%. 

Recovery Act funds: Title I; 
Neither adequate nor inadequate: 27.2%; 
Very adequate or adequate: 47.9%; 
Very inadequate or inadequate: 18.3%. 

Recovery Act funds: SFSF; 
Neither adequate nor inadequate: 23.9%; 
Very adequate or adequate: 36.2%; 
Very inadequate or inadequate: 26.1%. 

Source: GAO survey of LEAs. 

Notes: This figure excludes the estimated percentages of survey 
respondents that did not respond to this question or responded "don't 
know" or "not applicable." 

Percentage estimates for these nation-wide estimates have margins of 
error, at the 95 percent confidence level, of plus or minus 5 
percentage points or less. 

[End of figure] 

We found a statistically significant relationship for all three 
Education programs we reviewed showing that LEAs with favorable 
assessments of state guidance also tend to have favorable assessments 
of federal guidance. For example, in Florida, where 87 percent of LEAs 
indicated that their state's IDEA Recovery Act guidance was very 
adequate or adequate, 72 percent of LEAs indicated that Education's 
guidance on this subject was very adequate or adequate. Both of these 
estimates are statistically higher than the national averages of 58 
percent for state guidance and 46 percent for Education's guidance. 
Further, our survey results indicate that LEAs' assessment of both 
Education's guidance and their state's guidance varied by the size of 
LEAs--with larger LEAs assessing guidance more favorably than smaller 
LEAs. This difference was statistically significant for SFSF as well as 
for IDEA and ESEA Title I Recovery Act guidance. For example, an 
estimated 63 percent of the largest LEAs[Footnote 70] said Education's 
ESEA Title I Recovery Act guidance was very adequate or adequate 
compared to 48 percent of all other LEAs nationally. 

Three states--Florida, Massachusetts, and Georgia--were among the best 
in terms of the percentage of LEAs assessing their state's Recovery Act 
guidance for ESEA Title I, IDEA, and SFSF as adequate or very adequate. 
Our interviews with state officials in these three states revealed 
three common themes: (1) continuous communication between state 
officials and LEA program and financial staff; (2) collaboration 
between state and local program and financial officials in developing 
brief, navigable guidance documents to ease use; and (3) use of various 
media (or technology) to enhance efficiency in delivering guidance. 
Education officials agreed that states can play a critical role in 
disseminating and explaining federal guidance. In particular, Education 
officials were interested in knowing more about promising practices in 
states where LEAs were satisfied with guidance, so that they could help 
disseminate those practices to other states. 

First, regarding communication, officials in Georgia said there is 
continuous dialogue between state officials and LEA officials, and a 
state official in Massachusetts reported that the state has developed 
an organizational culture that placed a high priority on communication 
with the field. Further, officials in Florida said that their frequent 
communication with LEAs helped them keep LEAs abreast of important 
updates and was particularly helpful because it helped state officials 
generate a list of LEA questions and concerns that they were able to 
draw on in deciding what guidance to develop. In contrast, officials in 
a school district we visited in another state told us that when they 
call their state's Department of Education for guidance, they often do 
not get their calls returned. 

Second, regarding collaboration in developing guidance, state officials 
in Florida said they directly involved a group of superintendents in 
developing user-friendly guidance documents and later invited all 
superintendents to give feedback on the guidance. These guidance 
documents are posted on the state's Web site, highlight 21 possible 
strategies for using Recovery Act funds, and indicate which strategies 
correspond to particular Recovery Act programs. Further, officials in 
all three states said they had brought state and local programmatic and 
financial officials together as part of their guidance efforts. One 
state official in Florida said that this effort had been critical to 
making sure the guidance was understood by both program and financial 
staff at the LEA level. 

Finally, regarding strategies to enhance efficiency in delivering 
guidance, Florida, Georgia, and Massachusetts used webinars to directly 
answer questions from LEAs and used LISTERV e-mail lists, so that they 
could compose a single e-mail message alert including new guidance and 
send it to all superintendents at once. Both strategies have allowed 
state officials to provide consistent information to many 
superintendents simultaneously. In contrast, officials in one district 
we visited in another state told us there had been times they had 
needed to call around the school district to see who had received 
guidance from state officials because there was no consistency in which 
local officials were receiving guidance from state officials. Florida 
officials also told us they had created summaries of Education's 
guidance that highlighted the most important information to make it 
easier for superintendents to find the information they needed. In 
contrast, a school superintendent in another state who reported on 
GAO's survey that his state's guidance for ESEA Title I and SFSF was 
very inadequate said he felt "stranded on a desert island" because he 
did not receive updates when new guidance was made available on the 
state Web site and did not have time to check the Web site daily to see 
what had changed or to search for answers to his questions in 
Education's guidance documents. 

Education Is Continuing to Provide Technical Assistance and Monitor 
States' Use of Recovery Act Funds: 

Education continues to provide intensive technical assistance to six 
states and territories that the department felt could benefit the most 
from additional assistance. Education identified the six states and 
territories that would be most likely to benefit from intensive 
technical assistance by using a risk-based approach that assessed 
factors such as high funding levels and recent monitoring or audit 
findings. Four of the states--California, Illinois, Michigan, and 
Texas--and the District of Columbia are part of our review.[Footnote 
71] Education officials have made site visits and held conference calls 
with these states and involved officials from multiple offices in the 
department to provide programmatic and financial expertise to answer 
the states' questions. Education officials said that in planning these 
meetings, they worked with each state to identify the types of 
technical assistance that would be needed to address state-specific 
concerns. Education also provides technical assistance to other states 
on issues related to the Recovery Act, but this technical assistance is 
provided separately by individual program offices. Education also hosts 
biweekly webinars open to any states and school districts on Recovery 
Act-related topics, such as quarterly reporting and cash management, 
and it makes the presentations available on its Web site for 
downloading. 

Education officials told us they have been conducting on-site 
monitoring visits concerning ESEA Title I and IDEA that include 
monitoring of Recovery Act-related issues, and have been monitoring 
SFSF in other ways as it continues development of a comprehensive 
monitoring plan for this new program. Education officials told us they 
have asked specific questions related to the Recovery Act during ESEA 
Title I and IDEA monitoring visits. In addition, the program office 
responsible for IDEA has been piloting a desk review tool specifically 
related to the Recovery Act and shared an early draft with states to 
help inform them about how they will be monitored. According to 
Education officials, to date, the department has been monitoring the 
use of SFSF funds through its review of SFSF applications, waiver 
applications, and quarterly Recovery Act reporting and through 
telephone calls with states. Officials said their upcoming review of 
Phase II SFSF applications to be submitted by states will help identify 
states that may be having problems related to SFSF, so that the 
department can conduct on-site monitoring visits to those states. 

Education officials said they plan to collect states' SFSF subrecipient 
monitoring plans in the future but have not yet begun to collect these 
plans; in our last report, GAO recommended that Education take further 
action, such as collecting and reviewing documentation of state 
monitoring plans, to ensure that states understand and fulfill their 
responsibility to monitor subrecipients of SFSF funds. Department 
officials sent an e-mail reminding states of their responsibility to 
conduct subrecipient monitoring on SFSF and specifying what should be 
in states' monitoring plans. Education officials said they routinely 
discuss the requirement for subrecipient monitoring during their site 
visits and conference calls with states. Our work in states continues 
to indicate a need for Education's oversight of state subrecipient 
monitoring plans. For example, we found that officials in Massachusetts 
do not have a comprehensive monitoring plan and are instead planning to 
rely on their state's Single Audit report,[Footnote 72] alterations to 
their LEA reporting requirements, and reviews of LEAs' funding 
applications to monitor SFSF sub-recipients. However, Education 
officials told us they consistently tell states that the Single Audit 
is not enough for subrecipient monitoring and that states have to be 
active with ongoing subrecipient monitoring. 

Housing Agencies Continue to Make Progress on Recovery Act Projects, 
Although Less Than Half of the Funds Have Been Obligated: 

The Recovery Act requires the U.S. Department of Housing and Urban 
Development (HUD) to allocate $3 billion through the Public Housing 
Capital Fund to public housing agencies using the same formula for 
amounts made available in fiscal year 2008. HUD allocated Capital Fund 
formula dollars to public housing agencies shortly after passage of the 
Recovery Act and, after entering into agreements with more than 3,100 
public housing agencies, obligated these funds on March 18, 2009. 
[Footnote 73] As of November 14, 2009, 2,598 public housing agencies 
(83 percent of the housing agencies that entered into agreements with 
HUD for Recovery Act funds) had reported to HUD that they had obligated 
a total of $1.46 billion, an increase of over $500 million from the 
level reported as of September 5, 2009. In total, public housing 
agencies reported obligating about 49 percent of the total Capital Fund 
formula funds HUD allocated to them (see figure 19). According to HUD 
officials, housing agencies report obligations after they have entered 
into binding commitments to undertake specific projects. A majority of 
housing agencies that had obligated funds--2,113 of 2,598 housing 
agencies--had also drawn down funds in order to pay for project 
expenses already incurred. In total, as of November 14, 2009, public 
housing agencies had drawn down almost $350 million, or about 12 
percent of the total HUD allocated to them. Funds drawn down more than 
doubled, increasing by $204 million from the level reported as of 
September 5, 2009. 

Figure 19: Percentage of Public Housing Capital Fund Formula Grants 
Allocated by HUD That Have Been Obligated and Drawn Down Nationwide as 
of November 14, 2009: 

[Refer to PDF for image: 3 pie-charts, horizontal bar graph] 

Funds obligated by HUD: 99.9%; $2,981,981,614. 

Funds obligated by public housing agencies: 48.9%; $1,459,530,334. 

Funds drawn down by public housing agencies: 11.7%; $349,998,639. 

Number of public housing agencies: 
Entering into agreements for funds: 3,121; 
Obligating funds: 2,598; 
Drawing down funds: 2,113. 

Source: GAO analysis of HUD data. 

Note: According to HUD officials, housing agencies are required to 
report obligations once per month and generally report as of the end of 
the previous month. Most of the obligations reported as of November 14, 
2009, would reflect activity as of October 31, 2009, but some housing 
agencies report data late and may include obligations that occurred 
after the month ended, according to a HUD official. Throughout this 
report we use data reported as of November 14, 2009. 

[End of figure] 

The Recovery Act requires that housing agencies obligate 100 percent of 
their funds within 1 year from when the funds became available, which 
means they have until March 17, 2010, to obligate 100 percent of their 
funds. More than 1,000 housing agencies (33 percent) had reported 
obligating 25 percent of their funds or less as of November 14, 2009, 
including 523 (17 percent) that had reported obligating none of their 
Recovery Act funds (see figure 20). However, 1,055 housing agencies (34 
percent) had reported obligating 100 percent of their funds as of 
November 14, 2009, placing them well ahead of the Recovery Act's 12- 
month deadline. An additional 467 housing agencies (15 percent) had 
reported obligating more than 75 percent of their funds as of November 
14, 2009. The size of the grant and the number, size, and complexity of 
projects that housing agencies selected may account for some of the 
differences in obligation rates. Although HUD is making efforts to 
assist housing agencies with meeting the deadline, officials expect 
some housing agencies probably will not obligate all of their funds in 
time. 

Figure 20: Housing Agencies' Obligations of Recovery Act Funds by 
Quartile as of November 14, 2009: 

[Refer to PDF for image: vertical bar graph] 

Percent of funds obligated: 0-25%; 
Percentage of housing agencies: 33%. 

Percent of funds obligated: 25.01-50%; 
Percentage of housing agencies: 8%. 

Percent of funds obligated: 50.01-75%; 
Percentage of housing agencies: 10%. 

Percent of funds obligated: 75.01-100%; 
Percentage of housing agencies: 49%. 

Source: GAO analysis of HUD data. 

[End of figure] 

HUD officials stated they have been emphasizing the 1-year deadline to 
housing agencies, and they pointed to notices, frequently asked 
questions, and Web seminars as evidence. In addition, they have 
stressed that the Recovery Act does not provide HUD with any way to 
grant exceptions or extensions. HUD will recapture any funds not 
obligated by March 17, 2010, and will reallocate those funds to other 
housing agencies. According to HUD officials, in November 2009 HUD 
field staff began contacting housing agencies that had not obligated 
any Recovery Act funds by phone, by e-mail, or in person in order to 
understand where these housing agencies are in the process of awarding 
contracts and obligating funds. They said they will repeat the process 
for housing agencies below certain obligation levels, such as 25 
percent or 50 percent, beginning in early December. Field staff will be 
preparing status reports for each housing agency, which HUD will review 
in order to determine what additional steps HUD should take to assist 
housing agencies in meeting the March 2010 deadline. HUD headquarters 
staff are also preparing an e-mail notification to all housing agencies 
that are below the level of obligations at which HUD expects them to be 
at this point in the year. HUD officials said they will send these 
notifications each month. For housing agencies that continue to 
struggle to obligate their funds, HUD officials said they plan to 
provide additional technical assistance, including possibly sending 
staff on site to help the process along. HUD plans to ask housing 
agencies to report obligations as funds are obligated--agencies report 
monthly--so that HUD can have up-to-date information to determine 
ongoing outreach and monitoring efforts. As they get closer to the 
March deadline, HUD officials expect more housing agencies will achieve 
100 percent obligations, allowing HUD to better target its outreach 
efforts. While HUD's goal is that agencies achieve 100 percent 
obligations, officials said that realistically some housing agencies 
probably will not obligate all of their funds in time. They said that 
part of the process of reaching out to housing agencies with low 
obligations is to identify which housing agencies do not expect to make 
the deadline, so that HUD can begin planning for recapturing and 
reallocating the funds. They hope to have an estimate of how much will 
not be obligated in time by early February 2010. The officials stated 
HUD has not yet determined how it will reallocate funds that are 
recaptured. It will be important for HUD to follow through on these 
efforts to ensure housing agencies obligate the funds in a timely 
manner. 

Of the 47 housing agencies in 16 states and the District of Columbia we 
selected for in-depth review throughout our Recovery Act work, as of 
November 14, 2009, 45 had reported obligating funds totaling $207 
million, or about 39 percent of the total Capital Fund formula funds 
HUD had allocated to the agencies (see figure 21). Obligations had 
increased by about $60 million from the level we reported in September. 
A majority of housing agencies that had obligated funds--43 of 45 
housing agencies--had also drawn down funds. In total, these housing 
agencies had drawn down about $34 million, or about 6 percent of the 
total allocated to them by HUD, an increase of about $21 million from 
the level we reported in September 2009. 

Figure 21: Percentage of Public Housing Capital Fund Formula Grants 
Allocated by HUD That Have Been Obligated and Drawn Down by 47 Public 
Housing Agencies Selected by GAO as of November 14, 2009: 

[Refer to PDF for image: 3 pie-charts, horizontal bar graph] 

Funds obligated by HUD: 100%; $531,001,215. 

Funds obligated by public housing agencies: 39.1%; $207,477,611. 

Funds drawn down by public housing agencies: 6.4%; $34,025,199. 

Number of public housing agencies: 
Entering into agreements for funds: 47; 
Obligating funds: 45; 
Drawing down funds: 43. 

Source: GAO analysis of HUD data. 

[End of figure] 

Housing Agencies Receiving Smaller Recovery Act Grants Are Obligating 
and Drawing Down Funds Faster Than Housing Agencies Receiving Larger 
Grants: 

Housing agencies that received Recovery Act formula grants of less than 
$100,000 continue to obligate and draw down funds at a faster rate than 
housing agencies that received grants of more than $500,000.[Footnote 
74] The difference between these groups of housing agencies has 
remained about the same--13 percentage points--as when we reported in 
September 2009. For housing agencies with smaller grants--that is, less 
than $100,000--the average percentage of Recovery Act funds obligated 
was about 63 percent, while for housing agencies with larger grants-- 
that is, more than $500,000--the average percentage of Recovery Act 
funds obligated was 50 percent (see table 7). Similarly, the average 
percentage of Recovery Act funds drawn down was 41 percent for housing 
agencies with smaller grants, compared with 17 percent for housing 
agencies with larger grants. 

Table 7: Comparison of the Average Percentage of Funds Obligated and 
Drawn Down among Housing Agencies Grouped by Size of Recovery Act 
Grant, as of November 14, 2009: 

Number of housing agencies: 
Amount of Recovery Act grant: Less than $100,000: 924; 
Amount of Recovery Act grant: $100,000 to $500,000: 1,397; 
Amount of Recovery Act grant: More than $500,000: 800; 
Total: 3,121. 

Portion of total Recovery Act formula grant funds:
Amount of Recovery Act grant: Less than $100,000: 2%; 
Amount of Recovery Act grant: $100,000 to $500,000: 11%; 
Amount of Recovery Act grant: More than $500,000: 87%; 
Total: 100%. 

Average percentage of funds obligated: 
Amount of Recovery Act grant: Less than $100,000: 62.6%; 
Amount of Recovery Act grant: $100,000 to $500,000: 59.8%; 
Amount of Recovery Act grant: More than $500,000: 50.0%; 
Total: 58.1%. 

Average percentage of funds drawn down: 
Amount of Recovery Act grant: Less than $100,000: 41.3%; 
Amount of Recovery Act grant: $100,000 to $500,000: 29.6%; 
Amount of Recovery Act grant: More than $500,000: 16.7%; 
Total: 29.7%. 

Source: GAO analysis of HUD data. 

[End of table] 

As we reported in September 2009, housing agencies with smaller grants 
are often able to take advantage of simplified and less formal 
procurement procedures, which could help them obligate funds more 
quickly. In addition, we found that housing agencies with smaller 
grants are using their Recovery Act funds on a limited number of small 
and narrowly focused projects, while housing agencies with larger 
grants are using Recovery Act funds on either a larger number of 
projects or projects with a broader scope, some of which may require 
additional layers of HUD review and approval. 

More Projects Are Under Way; Lower-Than-Expected Bid Amounts Could 
Result in Housing Agencies Needing Additional Projects to Use All 
Recovery Act Funds: 

Housing agencies we visited reported that more of their projects had 
begun since our prior visits for the July 2009 report, and several 
housing agencies reported they had completed one or more projects 
during that time. For this report, we selected 47 Recovery Act-funded 
projects at 25 housing agencies in nine states--11 of which had not 
started, 22 of which were under way, and 14 of which were already 
completed (see figure 22). Many of the completed projects involved roof 
replacement, including projects in Iowa, New Jersey, and Arizona. We 
visited several projects under way that involved replacing windows and 
siding, repainting building exteriors, or repairing sidewalks. As we 
previously reported, other planned uses of Recovery Act funds include 
heating, ventilation, and air conditioning (HVAC) system upgrades or 
replacements; interior rehabilitation work, such as kitchen or bathroom 
renovations and flooring or carpet replacements; and demolition and 
construction of new units. The estimated costs for the projects we 
selected ranged from $4,500 for one roof replacement to more than $32 
million for the complete rehabilitation of 172 rental units--$28 
million of which will be Recovery Act funds. Housing agencies reported 
that 62 of the 77 contracts they planned to award for these projects-- 
some projects had more than one contract--had already been awarded or 
were in the process of soliciting bids. 

Figure 22: Roof Repairs to an Iowa Public Housing Facility, Before Work 
Began and Work in Progress: 

[Refer to PDF for image: 2 photographs] 

Source: GAO. 

[End of figure] 

Officials from at least four housing agencies stated that they received 
bids that were lower than expected, which will allow them to complete 
more projects with these funds. They said that, due to economic 
conditions, contractors have little work and are submitting lower bids 
in order to have projects and keep their staff employed. As a result, 
housing agencies may have to identify additional projects on which to 
use Recovery Act funds in order to obligate all their funds, although 
officials from these agencies did not anticipate having difficulties in 
obligating all their Recovery Act funds before the deadline. For 
example, officials from Mississippi Regional Housing Authority VIII 
were considering expanding the scope of an interior renovation project 
after awarding a contract for less than half of what they had budgeted 
for roofing, siding, and other exterior improvements at another 
property. 

Housing Agencies Report Few Challenges Meeting the Priorities of the 
Recovery Act: 

The Recovery Act required housing agencies to give priority to projects 
already under way or in the 5-year plan, projects that can award 
contracts based on bids within 120 days, and projects that rehabilitate 
vacant rental units, and in many cases housing agencies were able to 
meet one or more of these priorities. As we reported in July 2009, 
housing agencies generally selected projects that were on their 5-year 
plans. Others, such as Boston Housing Authority, also selected projects 
that were already under way but that could be expanded or accelerated 
with additional funds. Eighteen housing agencies we visited were able 
to award at least one contract based on bids within 120 days of the 
funds becoming available. For example, Rahway Housing Authority in New 
Jersey awarded seven of its nine contracts, representing 87 percent of 
its Recovery Act funds, within 120 days. In addition, two housing 
agencies each had only one project and one contract for that project, 
which they were able to award within 120 days. However, housing 
agencies with larger projects or a larger number of projects were at 
times unable to meet this time frame due to extensive design work that 
needed to be done first or to internal and external policies and 
procedures that are not easily sped up. For example, officials at 
Boston Housing Authority said that the design work to meet the 
extensive and complex building codes takes time. In addition, housing 
agencies that HUD put on "zero threshold" or that were troubled 
performers said they had difficulty meeting this priority because of 
the additional monitoring steps HUD had put in place for them. Finally, 
housing agencies reported having few vacant units and therefore did not 
have many projects to rehabilitate vacant units. One exception was 
Newark Housing Authority in New Jersey, which had rehabilitated 313 
vacant units using Recovery Act funds and expected to rehabilitate 109 
more. Newark Housing Authority officials said they had about 700 long- 
term vacant units, as well as 300 units vacant as a result of normal 
turnover. 

The Recovery Act also required that housing agencies use Recovery Act 
funds to supplement rather than supplant funds from other sources. 
Housing agency officials we spoke with generally did not see 
supplanting as a major challenge and thought they would have no trouble 
abiding by the requirement. Officials at several housing agencies noted 
they had many more projects that needed to be done than could be 
completed with only their regular Capital Fund grants, so it was not 
difficult to identify projects that did not have any other funding. In 
addition, housing agency officials told us they were keeping track of 
their Recovery Act funds separately from their regular Capital Fund 
grants in order to make clear that the Recovery Act funds were not 
supplanting other funds that had already been obligated. Other housing 
agency officials stated that annual statements and 5-year plans are 
reviewed multiple times--by the public, by the housing agency's board, 
and by HUD--and that these layers of review serve as a check to ensure 
that supplanting does not occur. 

HUD Continues to Monitor Troubled Housing Agencies' Use of Recovery Act 
Funds: 

As we noted in our September 2009 report, HUD has designated 172 
housing agencies as troubled under its Public Housing Assessment System 
(PHAS) and has implemented a strategy for monitoring these housing 
agencies.[Footnote 75] Of these 172 troubled housing agencies, 106 
(61.6 percent) were considered by HUD to be low-risk troubled, 53 (30.8 
percent) were considered medium-risk troubled, and the remaining 13 
(7.6 percent) were considered high-risk troubled. HUD officials stated 
they have completed remote reviews of these housing agencies' 
administration of the Recovery Act and plan to complete on-site reviews 
on the premises of these housing agencies by December 31, 2009. HUD 
analyzed a sample of 45 remote reviews and 45 on-site reviews. Among 
other things, HUD remote reviews found that many housing agencies had 
not amended their procurement polices as required by HUD. On-site 
reviews found that most sampled agencies had not yet awarded contracts 
at the time of the review. HUD also found that agencies were moving 
cautiously on contracting as they awaited HUD's August 2009 guidance on 
implementing the "Buy American" provision of the Recovery Act. HUD's 
remote reviews also raised questions about proposed work items that do 
not appear in previously approved annual statements or 5-year plans. As 
a result, according to HUD, field staff contacted housing agencies to 
ensure that they appropriately amended their plans to reflect these 
projects. As of November 14, 2009, troubled housing agencies accounted 
for 6 percent of all Recovery Act funds provided by HUD, and they 
continue to obligate and draw down Recovery Act funds at a slower rate 
than nontroubled housing agencies (see figure 23). 

Figure 23: Comparison of Obligation and Drawdown Rates for Troubled and 
Nontroubled Housing Agencies: 

[Refer to PDF for image: 7 pie-charts] 

Recovery Act funds obligated by HUD (Total: $2,981,981,614): 

Troubled housing agencies (172 agencies): $185,944,247: 
Funds obligated by HUD: 100%; $185,944,247; 
Funds obligated by housing agencies: 27.0%; $50,195,249; 
Funds drawn down by housing agencies: 5.5%; $10,151,830. 

Nontroubled housing agencies (2,949 agencies): $2,796,037,367: 
Funds obligated by HUD: 100%; $2,796,037,367; 
Funds obligated by housing agencies: 50.4%; 1,409,335,085; 
Funds drawn down by housing agencies: 12.2%; $339,846,809. 

Source: GAO analysis of HUD data. 

Note: According to HUD officials, 13 nontroubled housing agencies had 
not entered into agreements with HUD for Recovery Act funds, and 
therefore HUD did not obligate funds to them. 

[End of figure] 

Further, when obligation rates are broken down by quartiles (see figure 
24), as of November 14, 2009, 65 percent of all troubled housing 
agencies have obligated 25 percent or less of their Recovery Act funds. 
More than one-third, almost 37 percent, of the troubled housing 
agencies have not obligated any Recovery Act funds. As noted above, 
according to HUD officials, HUD is in the process of contacting all 
housing agencies that had not obligated any funds, including troubled 
housing agencies, as well as housing agencies with low obligation 
rates, in order to determine what assistance HUD could provide to these 
agencies. 

Figure 24: Troubled versus Nontroubled Housing Agencies' Obligations of 
Recovery Act Funds by Quartile as of November 14, 2009: 

[Refer to PDF for image: vertical bar graph] 

Percent of funds obligated: 0-25%; 
Percentage of housing agencies: Nontroubled PHAs: 
Percentage of housing agencies: Troubled PHAs: 

Percent of funds obligated: 25.01-50%; 
Percentage of housing agencies: Nontroubled PHAs: 
Percentage of housing agencies: Troubled PHAs: 

Percent of funds obligated: 50.01-75%; 
Percentage of housing agencies: Nontroubled PHAs: 
Percentage of housing agencies: Troubled PHAs: 

Percent of funds obligated: 75.01-100%; 
Percentage of housing agencies: Nontroubled PHAs: 
Percentage of housing agencies: Troubled PHAs: 

Source: GAO analysis of HUD data. 

[End of figure] 

One possible reason for these slower obligation and draw-down rates is 
the additional monitoring that HUD is implementing for housing agencies 
that are designated as troubled performers under PHAS. For example, 
according to HUD officials, all 172 troubled public housing agencies-- 
regardless of risk category--have been placed on a "zero threshold" 
status, which means HUD has not allowed them to draw down Recovery Act 
funds without HUD field office approval.[Footnote 76] HUD officials 
said the ability to place housing agencies on "zero threshold" has 
always been available and had been used for housing agencies that have 
had problems obligating and expending their Capital Fund grants 
appropriately prior to the Recovery Act. However, as we previously 
reported, HUD has implemented more extensive monitoring for all 
troubled housing agencies, including requiring that HUD field office 
staff review all award documents (such as solicitations, contracts, or 
board resolutions, where applicable) prior to obligation of Recovery 
Act funds. According to HUD officials, also contributing to the low 
obligation percentages is the fact that many troubled housing agencies 
routinely struggle with procurement processes. 

HUD Is Implementing Its Strategy for Monitoring Nontroubled Housing 
Agencies: 

Building on its efforts to more closely monitor the use of Recovery Act 
funds by troubled housing agencies, HUD is implementing a strategy for 
monitoring nontroubled housing agencies, as well. Under its nontroubled 
strategy, HUD has taken the 2,949 nontroubled housing agencies that 
received Recovery Act funds and separated them into two groups for the 
purposes of monitoring and oversight: high risk and low risk.[Footnote 
77] The high-risk group is composed of the 332 housing agencies that 
have been identified as the highest risk based in part on the amount of 
their Recovery Act funding. The low-risk group consists of the 
remaining 2,617 nontroubled housing agencies. HUD's nontroubled 
strategy calls for remote reviews to be completed by January 15, 2010, 
on all nontroubled housing agencies. In addition, HUD's strategy calls 
for on-site reviews for a sample of nontroubled housing agencies from 
each of the two risk groups, with the objective of reaching those at 
greatest risk and ensuring coverage of grantees constituting the 
greatest amount of formula grant dollars. Remote reviews are to focus 
on four main components: grant initiation, environmental compliance, 
procurement, and grant administration. On-site reviews of a sample of 
housing agencies provide follow up to outstanding issues from the 
remote reviews and also include a review of contract administration for 
procurements related to the use of Recovery Act funds. 

HUD's nontroubled strategy calls for on-site reviews for a sample of 
252 high-risk nontroubled housing agencies to be completed by February 
15, 2010. For the remaining 2,617 housing agencies in the low-risk 
group, HUD's strategy calls for on-site reviews for a sample of 286 
housing agencies to be completed by February 15, 2010. In September 
2009, we recommended that HUD expand the criteria for selecting housing 
agencies for on-site reviews to include housing agencies with open 
Single Audit findings that may affect the use of Recovery Act funds. In 
October 2009, HUD implemented this recommendation by expanding its 
criteria for selecting housing agencies for on-site reviews to include 
all housing agencies with open 2007 and 2008 Single Audit findings as 
of July 7, 2009, relevant to the administration of Recovery Act funds. 
HUD has identified 27 such housing agencies and plans to complete these 
on-site reviews by February 15, 2010. 

Technical Challenges with FederalReporting.gov Delayed Housing 
Agencies' Processing of Recipient Reports: 

HUD officials said that even though many of the data elements requested 
for Recovery Act recipient reporting were new to housing agencies, 
approximately 96 percent of housing agencies had successfully reported 
into federalreporting.gov. Initial reports suggested a lower reporting 
rate of approximately 84 percent, but this was due to a substantial 
number of housing agencies incorrectly entering values into certain 
identification fields, such as the award ID number, the awarding 
agency, or the type of funding received. HUD officials said the system 
did not have validation measures in place to ensure the correct award 
ID numbers were entered. In addition, housing agencies could not edit 
the award ID number without submitting a new report. According to a HUD 
official, OMB initially termed reports that could not be matched with a 
federal agency as "orphaned." A HUD official said that HUD program and 
Recovery team staff reviewed reports submitted with nonmatching award 
ID numbers and OMB's list of reports that could not be matched to a 
federal agency to determine if they matched HUD awards. As a result of 
these efforts by HUD staff, HUD was able to achieve a rate of reporting 
of approximately 96 percent. 

According to HUD officials, public housing agencies encountered 
challenges related to registration and system accessibility. For 
example, a HUD official said the registration process for 
federalreporting.gov requires several steps such as obtaining a DUNS 
number, registering with the Central Contractor Registration (CCR) and 
obtaining a Federal Reporting Personal Identification Number (FRPIN). 
The HUD official told us these steps are necessary for validating the 
recipient reports because they ensure the appropriate points of contact 
at the appropriate organizations--in this case, public housing 
agencies--are reporting for each program. Federalreporting.gov states 
that each recipient's point of contact information is taken directly 
from the CCR, and if an organization changes its point of contact 
information, it will take 48 hours for federalreporting.gov to receive 
the change and e-mail the FRPIN and temporary password to the new point 
of contact. According to the HUD official, a housing agency's contact 
information in CCR is sometimes outdated, and the systems are often not 
updated in time for access to be correctly transferred. Additionally, 
one housing agency official in Mississippi reported saving his data 
entry as a draft before being timed out of the system but was unable to 
retrieve the data when he re-entered the reporting Web site. A HUD 
official said that, in the future, HUD and OMB will need to improve the 
function of the system and that the agencies are working to ensure all 
housing agencies have access to the reporting systems. 

Housing Agencies' Confusion about the Methodology for Calculating Jobs 
Created and Retained May Have Resulted in Reporting Errors: 

According to a HUD official, there was widespread misunderstanding by 
public housing agencies about OMB's methodology for calculating the 
number of jobs created or retained by the Recovery Act, in part because 
housing agencies are not familiar with reporting jobs information. In a 
few cases, we found that public housing agencies had reported the 
number of jobs created or retained into federalreporting.gov without 
converting the number into full-time equivalents. For example, 
officials from a housing agency in Illinois reported the number of 
people, by trade, who worked on Recovery Act-related projects but did 
not apply the full-time equivalent calculation outlined by OMB in the 
June 22 reporting guidance. Additionally, officials from a public 
housing agency in Mississippi told us that they based the number of 
jobs they reported into federalreporting.gov on letters from their 
contractors detailing the number of positions rather than full-time 
equivalents created as a result of their Recovery Act-funded projects. 
In another case, a housing agency official in Massachusetts told of 
having difficulty locating guidance on calculating job creation. As a 
result, the housing agency may have underreported jobs data from an 
architectural firm providing design services for a Recovery Act window 
replacement project at a public housing complex. 

OMB published guidance on calculating jobs created and retained using 
full-time equivalents (FTE) on June 22, 2009. In early September, HUD 
posted the OMB guidance to its Web site and provided information by e- 
mail to housing agencies on registration for federalreporting.gov, as 
well as links to Web seminars and training provided by OMB. In the 
meantime, as HUD was developing program-specific guidance, HUD and OMB 
discussed clarifying portions of OMB's guidance right up to the end of 
September, according to a HUD official. HUD issued further guidance to 
public housing agencies by e-mail on September 25, 2009, approximately 
2 weeks before the October 10, 2009, deadline for recipient reporting, 
providing templates and data dictionaries tailored to the Public 
Housing Capital Fund. The guidance also reiterated the recipient 
reporting responsibilities for public housing agencies. 

HUD officials told us they did not have enough time to translate some 
of the terminology into concrete terms that would be clearer to housing 
agency officials, partly due to their continuing discussions with OMB 
on clarifying its guidance. For example, HUD posted a jobs calculator 
spreadsheet to its Web site, and HUD field staff would direct housing 
agencies to this guidance when they asked specific questions about how 
to calculate jobs. A HUD official said it seemed like some housing 
agencies may have pulled information for the recipient reports from the 
wrong fields in the job calculator, which produced errors. Therefore, 
greater instruction may be needed beyond what was provided to housing 
agencies on the job calculator's instructions page. A HUD official 
stated they will work with OMB to improve housing agencies' 
understanding of the methodology for reporting in full-time equivalents 
prior to the next round of recipient reporting in January 2010. This is 
consistent with recommendations we recently made. We reported in 
November 2009 that recipients of Recovery Act funds were inconsistent 
in their interpretation of OMB guidance on reporting FTEs.[Footnote 78] 
We recommended that OMB, among other things, clarify the definition and 
standardize the period of measurement for FTEs and work with federal 
agencies to align this guidance with OMB's guidance and across 
agencies. 

HUD has taken a number of steps to ensure recipient reported data are 
correct, including developing a data quality review plan, automated 
data checks, flags for duplicate entries, awards entered incorrectly as 
contracts, and incorrect award identification numbers. Overall, HUD 
entered approximately 2,700 comments into federalreporting.gov through 
its data quality checks of housing agency recipient reports. We 
continue to monitor these efforts as part of our ongoing assessment of 
recipient reporting requirements. 

HUD Is Seeking to Improve Registration and Accessibility for RAMPS 
Reporting: 

As we reported in September 2009, HUD developed the Recovery Act 
Management and Performance System (RAMPS) for Recovery Act reporting 
purposes, including public housing agencies' compliance information for 
the National Environmental Policy Act (NEPA), as required by the 
Recovery Act. Section 1609 of the Recovery Act requires that adequate 
resources must be devoted to ensuring that applicable environmental 
reviews under NEPA are completed expeditiously and that the shortest 
existing applicable process under NEPA shall be used. HUD officials 
said that while public housing agencies have had to comply with NEPA 
since it was enacted in 1970, reporting on environmental assessments is 
a new requirement for public housing agencies. 

A HUD official said most of the challenges that housing agencies faced 
were related to registration and accessing RAMPS rather than entering 
data. For example, some housing agencies reported having difficulty 
gaining access to RAMPS. According to a HUD official, this may be due 
to housing agencies' unfamiliarity with electronic reporting and 
frustration with the amount of reporting required. The official said 
that for RAMPS, HUD provided screenshot-by-screenshot guidance to 
housing agencies to assist them through the reporting system. However, 
the HUD official also said there was no self-registration for RAMPS. 
Instead, HUD provided registration information to housing agencies 
using data elements from HUD systems, including information on active 
users combined with recipient groups, tax identification numbers and 
grant numbers. According to the HUD official, if any of these elements 
did not line up across systems, housing agencies were not registered to 
use RAMPS and could not access the system. The official said HUD is 
working to clean up the data in RAMPS to make sure the registration 
process is successful for the next round of recipient reporting. 

According to a HUD official, in some cases HUD field offices are 
responsible for conducting the environmental reviews under NEPA and 
therefore are responsible for reporting into RAMPS. The official said a 
consequence of this is that it takes staff away from other 
responsibilities, such as monitoring and oversight. In other cases, 
housing agencies that complete environmental reviews under NEPA must 
report data directly into HUD's RAMPS. 

Competitive Grants for Public Housing Have Been Awarded, and Projects 
Will Begin Soon: 

Under the Recovery Act, HUD was required to award nearly $1 billion to 
public housing agencies based on competition for priority investments, 
including investments that leverage private sector funding or financing 
for renovations and energy conservation retrofitting. HUD accepted 
applications from June 22 to August 18, 2009, and according to a HUD 
official, 746 housing agencies submitted 1,817 applications for these 
competitive grants. In September 2009, HUD awarded competitive grants 
to housing agencies that successfully addressed the requirements of the 
notice of funding availability under the following four categories: 

* For the creation of energy-efficient communities, 36 grants totaling 
$299.7 million were awarded for substantial rehabilitation or new 
construction, and 226 grants totaling $305.8 million were awarded for 
moderate rehabilitation. 

* For gap financing for projects that are stalled due to financing 
issues, 38 grants totaling $198.8 million were awarded. 

* For public housing transformation, 15 grants totaling $95.9 million 
were awarded to revitalize distressed or obsolete public housing 
projects. 

* For improvements addressing the needs of the elderly or persons with 
disabilities, 81 grants totaling $94.8 million were awarded. 

According to data provided by HUD, larger housing agencies (that is, 
those with more than 250 public housing units) were more successful in 
obtaining competitive grants. Although smaller housing agencies (those 
with fewer than 250 units) outnumber larger housing agencies by three 
to one, larger agencies submitted about three applications for every 
one submitted by smaller agencies. A HUD official said that some small 
housing agencies have only one or two projects, and because one 
competitive grant may be awarded for a given project, these agencies 
had fewer opportunities to apply. Further, applications from larger 
housing agencies were more likely to be successful. Specifically, while 
about 26 percent of applications from larger housing agencies resulted 
in competitive grant awards, 11 percent of applications from smaller 
housing agencies resulted in awards. Housing agencies with more than 
250 units represent about one-fourth of all housing agencies but manage 
most of the public housing units nationally. As a result, because these 
housing agencies likely have more needs and more projects to be funded, 
it was no surprise to the HUD official they were so successful. He said 
HUD was satisfied by the participation and successful applications of 
housing agencies of all sizes. 

We selected one competitive grant from each of eight housing agencies. 
Six of the grants we selected were multimillion-dollar efforts, while 
five grants had an energy-efficiency focus. Four projects involve at 
least 100 units, including one involving 281 units. See table 8 for a 
summary of the projects. Housing agency officials said these projects 
would begin in the coming months. 

Table 8: Summary of Selected Projects Funded by Capital Fund Recovery 
Competition Grants: 

State and housing agency: Arizona--City of Phoenix Housing Department; 
Category: Creating energy-efficient communities, moderate 
rehabilitation; 
Amount: $3,408,000; 
Description of project: Rehabilitate and retrofit 281 units of a 374-
unit complex with low-flow faucets, showerhead, and toilets, and energy-
efficient exhaust fans and appliances (among other improvements). 

State and housing agency: Colorado--Housing Authority of the City and 
County of Denver; 
Category: Public housing transformation; 
Amount: $10,000,000; 
Description of project: Install rooftop photovoltaic panels and energy-
efficient water heaters, furnaces, ranges, refrigerators, and windows, 
and upgrade electrical systems for a 25-building, 192-unit complex. 

State and housing agency: Georgia--Housing Authority of the City of 
Macon; 
Category: Creating energy-efficient communities, substantial 
rehabilitation or new construction; 
Amount: $8,579,227; 
Description of project: Install exterior insulation, new roofs, 
photovoltaic panels, and energy-efficient appliances, heat pumps, and 
windows for 50 duplexes. 

State and housing agency: Illinois--Chicago Housing Authority; 
Category: Public housing transformation; 
Amount: $9,900,000; 
Description of project: Develop 60 new replacement public housing units 
and 77 nonpublic housing rental units, 123 for-sale homes, a community 
space, and a management and maintenance facility. 

State and housing agency: Iowa--Ottumwa Housing Authority; 
Category: Creating energy-efficient communities, moderate 
rehabilitation; 
Amount: $78,300; 
Description of project: Install energy-efficient lighting and 
refrigerators for five sites. 

State and housing agency: Massachusetts--Boston Housing Authority; 
Category: Creating energy-efficient communities, substantial 
rehabilitation or new construction; 
Amount: $22,196,000; 
Description of project: Construct 96 new units and a community center 
with recycled materials, photovoltaics, or other renewable energy 
sources, energy recovery systems, and energy-efficient windows, 
lighting, appliances, and roofs. 

State and housing agency: New Jersey--Newark Housing Authority; 
Category: Creating energy-efficient communities, substantial 
rehabilitation or new construction; 
Amount: $11,171,981; 
Description of project: Raze and build a new 90-unit complex designed 
using "green" (energy efficient) materials. 

State and housing agency: Texas--San Antonio Housing Authority; 
Category: Addressing the needs of the elderly or persons with 
disabilities; 
Amount: $265,528; 
Description of project: Redesign layout for recreational areas and 
install new floors, brighter lighting, and new elevators for a 66-unit 
facility. 

Source: GAO analysis of HUD and public housing agency data. 

[End of table] 

Housing Agencies Had Mixed Views about the Competition and Faced 
Capacity Issues Applying for Competitive Grants: 

We found mixed views of the competition among housing agency officials 
that had applied for competitive grants. We visited 15 housing agencies 
that applied for competitive grants, including 8 that received 
competitive grant awards. Officials at three agencies said they were 
very satisfied with the application process, while five others said 
they were somewhat satisfied, including two that were not awarded a 
competitive grant. Only one official was very dissatisfied, and another 
was somewhat dissatisfied, and in both cases, their housing agencies 
were not awarded a competitive grant. Both officials said they had not 
received feedback on why their applications were not successful and 
thought the requirements may have favored agencies with more resources. 
HUD officials said they recently notified housing agencies that had 
unsuccessful applications why they were not selected, the most common 
reason being insufficient funds. In addition, officials from two 
housing agencies thought the competition was not fair because housing 
agencies that had already made certain improvements, such as increasing 
energy efficiency or completing lead-paint abatement, were not able to 
accumulate as many points for those types of activities as housing 
agencies that had been less proactive. 

Capacity was a substantial barrier to applying for competitive grants 
for a variety of agencies we visited, including at least one housing 
agency that was awarded a competitive grant. For example, officials in 
Phoenix stated they had a contractor assist with the application 
because their staff did not have the time or capacity to complete it in 
time. Officials from two other housing agencies stated they did not 
apply because they did not have enough time or staff to pull together 
the information required before the deadline. Officials from another 
agency believed that larger housing agencies were able to put together 
better applications that were more likely to be awarded grants because 
they had professional staff in house to put the applications together. 
Other housing agency officials said they did not apply because they 
were not sure that they had the capacity to administer the competitive 
grant within the time frames specified in the Recovery Act. 

DOE's Weatherization Assistance Program Is Just Beginning to Spend 
Recovery Act Funds: 

The Recovery Act appropriated $5 billion for the Weatherization 
Assistance Program, which the Department of Energy (DOE) is 
distributing to each of the states, the District of Columbia 
(District), and seven territories and Indian tribes; 
the funds are to be spent over a 3-year period. During the past 32 
years, the program has helped more than 6.2 million low-income families 
by making such long-term energy-efficiency improvements to their homes 
as installing insulation; sealing leaks; and modernizing heating 
equipment, air circulation fans, and air conditioning equipment. These 
improvements enable families to reduce energy bills, allowing these 
households to spend their money on other needs, according to DOE. The 
Recovery Act appropriation represents a significant increase for a 
program that has received about $225 million per year in recent years. 

DOE has approved the weatherization plan of each of the states, the 
District, and seven territories and Indian tribes. DOE has obligated 
about $4.76 billion of the Recovery Act's weatherization funding to the 
states, while retaining about 5 percent of funds to cover the 
department's expenses. Each state has access to 50 percent of its 
funds, and DOE plans to provide access to the remaining funds once a 
state meets a certain target.[Footnote 79] As of September 30, 2009, 43 
states and territories reported they had begun to use Recovery Act 
weatherization funds, while 15 states and territories reported they had 
not used any Recovery Act funds.[Footnote 80] The 43 states and 
territories also reported that, as of September 30, 2009, they had 
outlaid $113 million, or about 2 percent, of the $5 billion for 
weatherization activities and had completed weatherizing about 7,300, 
or about 1 percent, of the 593,000 housing units planned. In addition, 
they reported that about 2,800 jobs had been created and about 2,400 
jobs had been retained through the use of the Recovery Act's 
weatherization funds. 

As shown in table 9, as of November 30, 2009, six of the states in our 
review had begun spending Recovery Act funds to weatherize homes, while 
California and the District had not.[Footnote 81] A key factor slowing 
the start of weatherization activities is the act's requirement that 
all laborers and mechanics employed by contractors and subcontractors 
on Recovery Act projects be paid at least the prevailing wage, 
including fringe benefits, as determined under the Davis-Bacon Act. 
Because the Weatherization Assistance Program, funded through annual 
appropriations, is not subject to the Davis-Bacon Act, the Department 
of Labor (Labor) had not previously determined prevailing wage rates 
for weatherization workers. On September 3, 2009, Labor completed its 
determination of wage rates for weatherization work conducted on 
residential housing units in each county of the 50 states and the 
District. 

Table 9: Use of the Recovery Act's Weatherization Funds by Seven States 
and the District, as of November 30, 2009: 

State: California; 
Funds used to weatherize homes?: No; 
When funds were first used: N/A. 

State: District of Columbia; 
Funds used to weatherize homes?: No; 
When funds were first used: N/A. 

State: Iowa; 
Funds used to weatherize homes?: Yes; 
When funds were first used: September 2009. 

State: Massachusetts; 
Funds used to weatherize homes?: Yes; 
When funds were first used: September 2009. 

State: Michigan; 
Funds used to weatherize homes?: Yes; 
When funds were first used: August 2009. 

State: New York; 
Funds used to weatherize homes?: Yes; 
When funds were first used: September 2009. 

State: Ohio; 
Funds used to weatherize homes?: Yes; 
When funds were first used: July 2009. 

State: Pennsylvania; 
Funds used to weatherize homes?: Yes; 
When funds were first used: November 2009. 

Source: GAO analysis of state information. 

Note: As of November 30, 2009, California and the District of Columbia 
had not begun to weatherize homes using Recovery Act funds. 

[End of table] 

While Prevailing Wage Rates Have Largely Been Resolved, Ensuring 
Compliance with Recovery Act Requirements Has Delayed Weatherization 
Activities in Some States: 

Officials in each of the states and the District in our review said 
that, overall, Labor's county-by-county prevailing wage rates for 
weatherization work were about what they had expected. About two-thirds 
of these officials told us Labor's wage rates are similar to what local 
agencies had previously been paying. Many representatives of the local 
agencies we interviewed confirmed that these rates generally were about 
what they had been paying for weatherization work. 

However, many weatherization contracts between states and local 
agencies have been delayed because of concerns about complying with 
Recovery Act requirements--including Davis-Bacon Act requirements that 
contractors pay workers weekly and submit weekly certified payroll 
records--and OMB's reporting requirements. Some state agencies have 
delayed disbursing Recovery Act funds to local agencies because they 
were not satisfied that local agencies had the proper infrastructure in 
place to comply with these requirements. Pennsylvania officials told us 
that delays occurred because some local agencies had initially 
submitted management plans that had not included language describing 
how they would comply with the Davis-Bacon Act. The state agencies of 
California and the District of Columbia, which had not spent any 
Recovery Act funds to weatherize homes, were finalizing Recovery Act 
weatherization contracts with their local agencies as of November 30, 
2009. California's state agency requires local agencies to adopt 
Recovery Act requirements in their weatherization contracts, including 
certifying that they can comply with the Davis-Bacon Act, before these 
agencies are provided with Recovery Act funds to weatherize homes. Only 
2 of California's 35 local agencies that have been awarded Recovery Act 
funds had accepted these required amendments by the initial October 30, 
2009, deadline. According to California officials, many local agencies 
pursued negotiations due to concerns about some provisions of these 
amendments. 

Several state and local agency officials expressed concern about the 
administrative burden to state and local agencies of complying with 
Recovery Act requirements, and many of these agencies were taking the 
time to hire additional staff to better ensure compliance. For example, 
Michigan officials told us their agency planned to add 22 staff, 
including a Davis-Bacon analyst, to ensure compliance with Recovery Act 
requirements. They also told us that federal administrative 
requirements, such as a weekly certified payroll, required them to make 
technological upgrades in their weatherization division. Ohio officials 
told us that ensuring compliance with the Davis-Bacon Act documentation 
was a significant undertaking. District officials told us that their 
agency had not expended Recovery Act funds to weatherize homes because 
they have been developing the infrastructure to administer the program 
by, for example, hiring new staff. Local agencies in California, 
Michigan, New York, and Ohio had also hired new staff to process Davis- 
Bacon paperwork. Several state and local officials expressed concern 
about the administrative burden on small contractors of complying with 
Recovery Act requirements because these contractors generally have 
fewer resources and less experience with accounting processes. 

According to DOE officials, some local agencies have been hesitant to 
use Recovery Act funding to weatherize homes until they are certain 
they are in compliance with the Davis-Bacon Act. The DOE officials had 
expected to receive fewer questions from local agencies about Davis- 
Bacon Act requirements after Labor had determined prevailing wages, but 
in fact they continue to receive frequent questions about these 
requirements. The DOE officials explained that many local agencies have 
been expending their DOE annual appropriation funds--which are not 
subject to Davis-Bacon Act requirements--to weatherize homes before 
using their Recovery Act funds. 

State and local officials in California, New York, and Ohio also 
expressed concern about Labor's determination that the new prevailing 
wage rates for weatherization workers are limited to multifamily 
residential buildings of four or fewer stories, while Labor's 
commercial building construction wage rates (for plumbers, carpenters, 
and other laborers) apply to multifamily residential buildings of five 
or more stories. As a result, local agencies conducting weatherization 
work on multifamily units in high rise buildings must pay their workers 
wage rates that can be significantly higher than what local agencies 
pay weatherization workers for residential housing units. For example, 
in New York County (Manhattan), commercial prevailing wages were three 
times more than the rates for residential weatherization laborers. 
Representatives of two local agencies in New York told us that they 
intend to subcontract out all weatherization work conducted on 
buildings over four stories because they could not pay their workers 
vastly different wages based on the type of building involved. 
According to Ohio officials, some local agencies had delayed projects 
in larger multifamily buildings until they could better estimate 
project costs. In response to states' concerns, DOE's November 10, 
2009, guidance states that the wage rates for the new weatherization 
laborer category do not apply to weatherization work performed on 
buildings of five or more stories. The guidance allows the states to 
calculate the cost effectiveness over the lifetime of a project by 
using the new weatherization wage rates rather than the prevailing 
wages for plumbers, carpenters, and other laborers working on 
multifamily buildings.[Footnote 82] 

Some States Are Concerned That Compliance with the National Historic 
Preservation Act Will Slow Weatherization Activities: 

Compliance with the National Historic Preservation Act could also slow 
the use of the Recovery Act's weatherization funds. First enacted in 
1966, the National Historic Preservation Act requires federal agencies 
to, among other things, take into account the effect of any federal or 
federally assisted undertaking on historical properties included in a 
national register of historic sites, buildings, structures, and 
objects.[Footnote 83] Michigan state officials told us that, under the 
act, its State Historic Preservation Office is allowed to conduct a 
historic review of every home over 50 years of age if any work is to be 
conducted. They explained that, in Michigan, this could mean an 
estimated 90 percent of the homes to be weatherized would need such a 
review, which could cause significant delays. However, in November 
2009, Michigan state officials signed an agreement with the State 
Historic Preservation Office that is designed to expedite the review 
process. With this agreement in place, state officials said they are 
confident that the historic preservation requirements can be met 
without causing further delays. New York officials told us that several 
entire neighborhoods in their state fall under the protection of the 
act and noted that the State Historic Preservation Office may have to 
conduct a review before any residential units in such a neighborhood 
can be weatherized. State officials in Iowa expressed similar concerns. 
State officials in New York and Iowa have contacted their respective 
historic preservation offices to develop approaches for addressing the 
review process. 

State and Local Agencies Have Begun to Report on the Impacts of 
Recovery Act Funds; While All Submitted Timely Reports, Two Cited 
Issues with the Reporting Requirements: 

DOE's guidance directs the states to report on the number of housing 
units weatherized and the resulting impacts to energy savings and jobs 
created and retained at both the state and local agency level. While 
state officials have estimated the number of housing units that they 
expect to weatherize using Recovery Act funds, only a few of the states 
have begun collecting data about actual impacts. Although many local 
officials have collected data about new hires, none could provide us 
with data on energy savings. This lack of information about impacts 
exists primarily because most state and local agencies either are just 
beginning to use Recovery Act funds to weatherize homes or have not yet 
begun to do so. Some of the local agencies, however, either collect or 
plan to collect information about other impacts. For example, local 
agencies in both California and Michigan collect data about customer 
satisfaction. In addition, a local agency in California plans to report 
about obstacles, while an agency in New York will track and report the 
number of units on the waiting list. 

In regard to recipient reporting, weatherization officials in all eight 
states that we reviewed said they submitted these reports on schedule. 
However, Massachusetts and Ohio officials cited issues with the 
reporting requirements. In Massachusetts, state officials told us of 
confusion associated with terminology related to new or retained jobs, 
and local officials said that the Massachusetts Recovery and 
Reinvestment Office requires additional information about demographics 
not required by OMB. Ohio officials told us that for reporting 
purposes, they estimated the number of jobs that could potentially be 
created. The inconsistency between potential positions and actual hours 
worked resulted in an inaccurate reporting of jobs created. One of the 
local agencies we visited reported 36 jobs created, but officials 
acknowledged they had only filled 20 positions at the time of our 
visit. Another local agency reported 14 agency and 8 contractor jobs 
created, but an official confirmed that only 6 agency and 7 contractor 
positions had been filled. 

Federal, State, and Local Agencies Plan to Monitor the Use of Recovery 
Act Weatherization Funds but Face Challenges: 

States plan to monitor the use of the Recovery Act's weatherization 
funds through fiscal and programmatic reviews of the local agencies 
providing weatherization service. DOE requires that state agencies 
collect information from their local agencies and submit programmatic 
and fiscal reports. Only a few states we reviewed expressed concerns 
that a small number of their local agencies did not have adequate 
controls. 

Most states reported that the primary tools for evaluating a local 
agency's internal controls will be the fiscal reviews and program 
monitoring. This includes reviews of client files and financial 
information, on-site monitoring of local service providers, and site 
inspections of at least 5 percent of weatherized homes. State officials 
in Iowa reported that controls were in place prior to the Recovery Act 
and that the demonstrated success of these programs is proof of 
sufficient internal controls. Other state officials reported that 
Single Audits provided insight into a local agency's internal controls. 
Five of the eight states we reviewed reported that they had adequate 
resources to monitor the status of Recovery Act funds and evaluate the 
program's success. However, some states noted they would need to hire 
staff to meet the increased workload. 

Local agencies plan to use a variety of controls to ensure that the 
Recovery Act's weatherization funds are used for the intended purposes. 
The most frequently mentioned controls were to separate Recovery Act 
funds from annually appropriated weatherization funds, pre-and post- 
weatherization evaluations, tracking job costs, and unannounced site 
inspections. Most local agencies also have procedures in place to 
ensure they do not contract with service providers that have been 
placed on the "Excluded Parties List" due to a history of fraudulent 
business practices.[Footnote 84] Local agencies reported the most 
common procedure to evaluate a contractor's reputation was to check the 
contractor's name online against the "Excluded Parties List." Other 
local agencies require contractors to sign documentation stating that 
they have not been debarred or bankrupt. Risk assessments also serve as 
a procedure to prevent fraudulent or wasteful use of Recovery Act 
funds. For example, some local agencies reported that new contractors 
are subjected to a higher level of scrutiny than more experienced 
contractors. Local agency officials in New York, California, and Ohio 
told us a long history of weatherization service mitigates the risk 
that a contractor will improperly use funds. 

Our review has started to examine the states' efforts to monitor the 
performance and reporting of local agencies. While the states have 
spent relatively few funds and we have reviewed weatherization 
activities in only a few locales, we have identified challenges for DOE 
and the states to ensure that Recovery Act funds are spent prudently 
and that the performance of local agencies is well-managed. For 
example, in Ohio we found during our site visits that grantees had 
inconsistent practices for reporting the number of homes weatherized 
and, in one case, a grantee used Recovery Act funds to weatherize the 
home of an ineligible applicant. Faced with these early implementation 
challenges, Ohio officials indicated that administrative monitoring 
will begin in December 2009 and fiscal monitoring in January 2010, and 
on November 20, 2009, the state issued new guidance to all state 
agencies regarding reporting requirements. Challenges in Pennsylvania 
include expanding the state's oversight capacity, training and 
certifying weatherization workers, and implementing a statewide 
procurement system for weatherization materials purchased with Recovery 
Act funds. In addition, California's Inspector General reported that 
one local agency has been designated as high risk because of 
questionable spending. 

DOE is hiring staff to provide national oversight to the Recovery Act 
weatherization program. DOE officials told us that each state will be 
assigned a project officer who will review the state's fiscal and 
programmatic reports. Project officers will also be responsible for 
coordinating site visits to the state and local agencies responsible 
for weatherization, as well as visiting a sample of projects being 
weatherized with Recovery Act funds. DOE is in the process of hiring 
this team. 

FEMA's EFSP Recovery Act Funds Have Been Awarded to Local Recipient 
Organizations: 

The Emergency Food and Shelter Program (EFSP), which is administered by 
the Federal Emergency Management Agency (FEMA) within the Department of 
Homeland Security (DHS), was authorized in July 1987 by the Stewart B. 
McKinney Homeless Assistance Act to provide food, shelter, and 
supportive services to the homeless.[Footnote 85] The program is 
governed by a National Board composed of a representative from FEMA: 

and six statutorily designated national nonprofit 
organizations.[Footnote 86] Since its first appropriation in fiscal 
year 1983, EFSP has awarded over $3.4 billion in federal aid to more 
than 12,000 local private nonprofit and government human service 
entities in more than 2,500 communities nationwide. 

The Recovery Act Increased Funds for EFSP Program: 

The Recovery Act included a $100 million appropriation for the EFSP 
program in addition to the $200 million included in DHS's fiscal year 
2009 appropriations. The additional funding was awarded to the National 
Board on April 9, 2009. As stated in FEMA's May 15, 2009, Recovery Act 
Plan for EFSP, EFSP's goal is to deliver critical funding to human 
services organizations serving hungry and homeless people throughout 
our nation. While additional funding is provided, FEMA's Recovery Act 
plan notes that EFSP's objectives remain the same. These objectives are 
to: 

* allocate funds to the neediest areas, 

* deliver the funds expeditiously and efficiently, 

* create and strengthen public and private sector partnerships, 

* empower local representatives to make funding decisions, and: 

* maintain minimal but accountable reporting. 

* The National Board Distributes EFSP Funds to Local Recipient 
Organizations Selected by Local Boards: 

The National Board distributes the EFSP funds to local recipient 
organizations (LRO) selected by Local Boards in jurisdictions the 
National Board has determined are eligible for funds--for example, 
local food banks or shelters within a state. The United Way Worldwide 
is the Secretariat and Fiscal Agent to the National Board and employs a 
staff of 12 to administer the program. One FEMA permanent full-time 
position is dedicated to the EFSP program, but the position is not 
funded through the EFSP appropriation. By law, the total amount 
appropriated for the EFSP program is awarded to the National Board. 

The National Board uses population, unemployment, and poverty data to 
determine which jurisdictions, such as counties or cities within a 
state, are eligible for EFSP funds. Local Boards evaluate applications 
from LROs in the jurisdiction and determine which LROs will receive the 
grant awards.[Footnote 87] In order to be eligible to have LROs receive 
a portion of the $100 million in EFSP Recovery Act funds, jurisdictions 
must have met one of the following criteria from February 2008 through 
January 2009: 

* their number of unemployed was 13,000 or more with a 5 percent rate 
of unemployment, 

* their number of unemployed was between 300 and 12,999 with a 7 
percent rate of unemployment, or: 

* their number of unemployed was 300 or more with a poverty rate of 11 
percent. 

Once the National Board determines that jurisdictions are eligible for 
EFSP funding, and notifies the jurisdictions of their allocations, 
Local Boards are convened in each of the qualifying jurisdictions to 
review applications submitted by LROs and determine which LROs in their 
communities will receive funds.[Footnote 88] While the Local Board 
determines which LROs are to be awarded funds, the National Board 
distributes the funds directly to the LROs, rather than through the 
Local Board or a state or local government agency. The National Board's 
program manual stipulates, however, that the Local Boards are 
responsible for monitoring LRO's expenditure of EFSP funds to ensure 
that LRO's actual expenditures are consistent with planned uses of 
funds and are within the purpose of the Act that established the EFSP 
program. 

EFSP funds, including the Recovery Act funds, can be used for a range 
of services, including food in the form of served meals or other food, 
such as groceries; lodging in a mass shelter or hotel; 1 month's rent 
or mortgage payment; 1 month's utility bill payment; minimal repairs to 
allow a mass feeding or sheltering facility to function during a 
program year; and equipment necessary to feed or shelter people up to a 
$300 limit per item. Program funds cannot be used for rental security 
deposits of any kind, cash payments of any kind, lobbying efforts, 
salaries (except as an administrative allowance that is limited to 2 
percent of the total award), purchases or improvements of an 
individual's private property, telephone costs, repairs to government- 
owned or profit-making facilities, and any payments for services not 
incurred. 

The National Board reserved about $12 million of the $100 million EFSP 
Recovery Act funds for State Set-Aside (SSA) awards. SSA committees 
identify jurisdictions with significant needs or service gaps that may 
not have qualified for EFSP funding under the standard formula. 
[Footnote 89] The jurisdictions may include areas with recent jumps in 
unemployment and isolated pockets of homelessness or poverty. The SSA 
committees develop their own formula, based on the number of unemployed 
in the non-EFSP qualifying jurisdictions in each state, to identify 
pockets of homelessness or jumps in unemployment. 

Recovery Act EFSP Award Funds to LROs in 16 States and the District of 
Columbia: 

As of November 4, 2009, LROs in the 16 states and the District of 
Columbia (District) that GAO is following as part of its Recovery Act 
review were awarded almost $66.2 million in Recovery Act EFSP funds (76 
percent) out of almost $87 million in standard Recovery Act awards 
nationwide, and about $4.8 million (almost 40 percent) of the 
approximately $12 million in Recovery Act SSA awards.[Footnote 90] The 
Recovery Act awards (standard and set-aside combined) for the LROs in 
the 16 states and the District ranged from $14.6 million for 
California's LROs to $720,540 for Iowa's LROs. (See table 10.) The 
average standard EFSP Recovery Act award for the LROs in each of the 16 
states and the District was about $3.6 million. The average SSA 
Recovery Act award was about $300,000 for the LROs in the 16 states, 
ranging from about $724,000 for Pennsylvania's LROs to about $2,300 for 
Arizona's. SSA funds, which are intended to meet significant needs or 
fill gaps in places not covered by the standard EFSP funds, constituted 
differing proportions of the total EFSP awards in the states we 
reviewed. For example, the SSA award for LROs in Pennsylvania 
represented 19 percent of the state's total EFSP award, while it 
represented less than 1 percent of Arizona LROs' total award. In 
contrast, Iowa LROs received a total SSA award of about $406,000--more 
than half (56 percent) of the state LROs' total award of about 
$720,500. 

Table 10: Standard, State Set-Aside, and Total EFSP Recovery Act Awards 
to LROs in 16 Selected States and the District, as of October 27, 2009: 

State: Arizona; 
Standard awards: $1,734,145; 
Set-aside awards: $2,333; 
Total funds awarded: $1,736,478. 

State: California; 
Standard awards: $14,474,217; 
Set-aside awards: $115,620; 
Total funds awarded: $14,589,837. 

State: Colorado; 
Standard awards: $1,309,517; 
Set-aside awards: $199,880; 
Total funds awarded: $1,509,397. 

State: District of Columbia; 
Standard awards: $248,214; 
Set-aside awards: 0; 
Total funds awarded: $248,214. 

State: Florida; 
Standard awards: $5,772,757; 
Set-aside awards: $389,833; 
Total funds awarded: $6,162,590. 

State: Georgia; 
Standard awards: $2,755,365; 
Set-aside awards: $506,047; 
Total funds awarded: v3,261,412. 

State: Illinois; 
Standard awards: $4,378,181; 
Set-aside awards: $357,546; 
Total funds awarded: $4,735,727. 

State: Iowa; 
Standard awards: $314,365; 
Set-aside awards: $406,175; 
Total funds awarded: $720,540. 

State: Massachusetts; 
Standard awards: $1,666,169; 
Set-aside awards: $242,249; 
Total funds awarded: $1,908,418. 

State: Michigan; 
Standard awards: $4,480,296; 
Set-aside awards: $63,179; 
Total funds awarded: $4,543,475. 

State: Mississippi; 
Standard awards: $912,298; 
Set-aside awards: $82,468; 
Total funds awarded: $994,766. 

State: New Jersey; 
Standard awards: $2,373,518; 
Set-aside awards: $336,726; 
Total funds awarded: $2,710,244. 

State: New York; 
Standard awards: $5,290,000; 
Set-aside awards: $307,271; 
Total funds awarded: $5,597,271. 

State: North Carolina; 
Standard awards: $3,067,887; 
Set-aside awards: $156,760; 
Total funds awarded: $3,224,647. 

State: Ohio; 
Standard awards: $3,781,504; 
Set-aside awards: $515,952; 
Total funds awarded: $4,297,456. 

State: Pennsylvania; 
Standard awards: $3,053,499; 
Set-aside awards: $724,112; 
Total funds awarded: $3,777,611. 

State: Texas; 
Standard awards: $5,772,469; 
Set-aside awards: $379,606; 
Total funds awarded: $6,152,075. 

State: Total funds awarded; 
Standard awards: $61,384,401; 
Set-aside awards: $4,785,757; 
Total funds awarded: $66,170,158. 

Source: FEMA. 

[End of table] 

Planned Use of Recovery Act Funds by LROs in 16 States and the 
District: 

As of November 4, 2009, LROs in 16 states and the District of Columbia 
had plans for using more than $64.7 million (98 percent) of their total 
Recovery Act EFSP awards.[Footnote 91] (See table 11.) 

Table 11: Planned Use of EFSP Recovery Act Funds by Service Category 
for LROs in 16 States and the District, as of November 4, 2009:
Dollars in thousands: 

Arizona; 
Served meals: $53; 
Other food: $429; 
Mass shelter: $579; 
Other shelter: $43; 
Supplies/equipment: $6; 
Rehab./building code: $0; 
Rent/mortgage: $536; 
Utilities: $55; 
Admin.: $25; 
Total by state: $1,726. 

California; 
Served meals: $1,552; 
Other food: $5,968; 
Mass shelter: $2,137; 
Other shelter: $921; 
Supplies/equipment: $25; 
Rehab./building code: $7; 
Rent/mortgage: v3,046; 
Utilities: $651; 
Admin.: $273; 
Total by state: $14,580. 

Colorado; 
Served meals: $86; 
Other food: $307; 
Mass shelter: $221; 
Other shelter: $44; 
Supplies/equipment: $14; 
Rehab./building code: 0; 
Rent/mortgage: $760; 
Utilities: $40; 
Admin.: $24; 
Total by state: $1,496. 

District of Columbia; 
Served meals: $47; 
Other food: $46; 
Mass shelter: $36; 
Other shelter: 0; 
Supplies/equipment: 0; 
Rehab./building code: 0; 
Rent/mortgage: $86; 
Utilities: 0; 
Admin.: $3; 
Total by state: $218. 

Florida; 
Served meals: $592; 
Other food: $1,749; 
Mass shelter: $1,142; 
Other shelter: $123; 
Supplies/equipment: $29; 
Rehab./building code: $4; 
Rent/mortgage: $1,863; 
Utilities: $467; 
Admin.: $96; 
Total by state: $6,065. 

Georgia; 
Served meals: $323; 
Other food: $439; 
Mass shelter: $447; 
Other shelter: $92; 
Supplies/equipment: $22; 
Rehab./building code: $6; 
Rent/mortgage: $1,005; 
Utilities: $587; 
Admin.: $49; 
Total by state: $2,971. 

Illinois; 
Served meals: $180; 
Other food: $1,963; 
Mass shelter: $430; 
Other shelter: $73; 
Supplies/equipment: $16; 
Rehab./building code: $32; 
Rent/mortgage: $1,685; 
Utilities: $262; 
Admin.: $35; 
Total by state: $4,675. 

Iowa; 
Served meals: $59; 
Other food: $154; 
Mass shelter: $130; 
Other shelter: $14; 
Supplies/equipment: $2; 
Rehab./building code: $0; 
Rent/mortgage: $203; 
Utilities: $129; 
Admin.: $13; 
Total by state: $705. 

Massachusetts; 
Served meals: $317; 
Other food: $449; 
Mass shelter: $270; 
Other shelter: $14; 
Supplies/equipment: $0; 
Rehab./building code: $0; 
Rent/mortgage: $648; 
Utilities: $173; 
Admin.: $37; 
Total by state: $1,908. 

Michigan; 
Served meals: $230; 
Other food: $1,690; 
Mass shelter: $362; 
Other shelter: $41; 
Supplies/equipment: $24; 
Rehab./building code: $0; 
Rent/mortgage: $1,260; 
Utilities: $846; 
Admin.: $67; 
Total by state: $4,520. 

Mississippi; 
Served meals: $96; 
Other food: $243; 
Mass shelter: $33; 
Other shelter: $10; 
Supplies/equipment: $4; 
Rehab./building code: $0; 
Rent/mortgage: $317; 
Utilities: $210; 
Admin.: $9; 
Total by state: $922. 

New Jersey; 
Served meals: $201; 
Other food: $545; 
Mass shelter: $128; 
Other shelter: $107; 
Supplies/equipment: $19; 
Rehab./building code: $2; 
Rent/mortgage: $1,245; 
Utilities: $206; 
Admin.: $34; 
Total by state: $2,485. 

New York; 
Served meals: $993; 
Other food: $2,171; 
Mass shelter: $226; 
Other shelter: $108; 
Supplies/equipment: $123; 
Rehab./building code: $3; 
Rent/mortgage: $1,538; 
Utilities: $258; 
Admin.: $95; 
Total by state: $5,515. 

North Carolina; 
Served meals: $239; 
Other food: $606; 
Mass shelter: $602; 
Other shelter: $115; 
Supplies/equipment: $14; 
Rehab./building code: $7; 
Rent/mortgage: $944; 
Utilities: $615; 
Admin.: $33; 
Total by state: $3,174. 

Ohio; 
Served meals: $320; 
Other food: $1,282; 
Mass shelter: $728; 
Other shelter: $119; 
Supplies/equipment: $12; 
Rehab./building code: $3; 
Rent/mortgage: $1,087; 
Utilities: $599; 
Admin.: $66; 
Total by state: $4,215. 

Pennsylvania; 
Served meals: $348; 
Other food: $927; 
Mass shelter: $780; 
Other shelter: $128; 
Supplies/equipment: $15; 
Rehab./building code: $6; 
Rent/mortgage: $998; 
Utilities: $519; 
Admin.: $57; 
Total by state: $3,778. 

Texas; 
Served meals: $435; 
Other food: $1,989; 
Mass shelter: $944; 
Other shelter: $68; 
Supplies/equipment: $11; 
Rehab./building code: $0; 
Rent/mortgage: $1,531; 
Utilities: $718; 
Admin.: $86; 
Total by state: $5,781. 

Total; 
Served meals: $6,073; 
Other food: $20,957; 
Mass shelter: $9,191; 
Other shelter: $2,020; 
Supplies/equipment: $336; 
Rehab./building code: $69; 
Rent/mortgage: $18,750; 
Utilities: $6,336; 
Admin.: $1,002; 
Total by state: $64,734. 

Source: GAO analysis of data provided by EFSP National Board 
Secretariat. 

Notes: "Rehab." means rehabilitation. "Admin." means administration. 

The data were submitted by Local Boards to the EFSP National Board 
Secretariat, United Way Worldwide. 

Totals may not add due to rounding. 

[End of table] 

Our analysis of the planned use of EFSP Recovery Act funds reported by 
the Local Boards in the 16 states and the District showed that the 
largest planned use of funds by the LROs was for "other food" (32 
percent)--that is, food programs such as food banks and pantries, food 
vouchers and food-only gift certificates, and rent and mortgage 
assistance (29 percent). However, there is some variation in how LROs 
in the states planned to use the EFSP funds. For example, while LROs in 
California and New York reported that they planned to use about 40 
percent of their total award funds on other food, LROs in Texas, 
Florida, and Michigan reported that they planned to use from 29 percent 
to 37 percent of their award funds on other food. Further, LROs in the 
District, Iowa, and Mississippi reported that they planned to use from 
29 percent to 39 percent of their EFSP funds on mortgage and rent 
assistance, the second largest category for planned use of funds. Mass 
shelter was the third-largest category for planned use of EFSP funds by 
LROs across the 16 states and the District, representing about 14 
percent of total planned use of funds by LROs in these states. 

Recovery Act Funds Provide Assistance to Local Governments and States 
and Help to Address Some Budget Challenges: 

For this report we expanded our focus on the use of Recovery Act funds 
to include local as well as state governments. As shown in figure 25, 
we visited 44 local governments to collect information regarding their 
use of Recovery Act funds. To select local governments for our review, 
we identified localities representing a range of types of governments 
(cities and counties), population sizes, and economic conditions 
(unemployment rates greater than and less than the state's overall 
unemployment rate). We balanced these selection criteria with 
logistical considerations including other scheduled Recovery Act work, 
local contacts established during prior reviews, and the geographic 
proximity of the local government entities. The 44 localities we 
visited ranged in population from 15,042 in Newton, Iowa to 8,363,710 
in New York City. Unemployment rates in our selected localities ranged 
from 5.8 percent in Garfield County, Colorado to 26.3 percent in Flint, 
Michigan.[Footnote 92] 

Figure 25: Selected Local Governments Included in Our December 2009 
Review: 

[Refer to PDF for image: U.S. map indicating locations] 

In Arizona, GAO visited Maricopa County and Yavapai County; 
In California, GAO visited the City of Los Angeles and Sacramento 
County; 
In Colorado, GAO visited Adams County, the city and county of Denver, 
and Garfield County; 
In Florida, GAO visited Ft. Myers City and Lee County; 
In Georgia, GAO visited the city of Atlanta, the city of Macon, and 
Tift County; 
In Illinois, GAO visited the cities of Chicago, Joliet, and 
Springfield; 
In Iowa, GAO visited the cities of Cedar Rapids, Des Moines, and 
Newton; 
In Massachusetts, GAO visited the cities of Boston and Springfield; 
In Michigan, GAO visited Allegan County, the city of flint, and the 
city of Royal Oak; 
In Mississippi, GAO visited the cities of Jackson, Meridian, and 
Vicksburg; 
In New Jersey, GAO visited Cumberland County and the City of Newark; 
In New York, GAO visited the city of Buffalo, New York City, Steuben 
County, and Westchester County; 
In North Carolina, GAO visited the city of Durham and Halifax County; 
In Ohio, GAO visited the city of Athens, the city of Cincinnati, Putnam 
County, and the city of Toledo; 
In Pennsylvania, GAO visited the city of Allentown, Dauphin County, the 
city of Harrisburg, and Lehigh County; 
In Texas, GAO visited the city of Dallas and Denton County. 

Sources: U.S. Census Bureau, U.S. Department of Labor, Bureau of Labor 
Statistics, and Local Area Unemployment Statistics (data); MapInfo 
(map). 

[End of figure] 

Local Government Use of Recovery Act Funds Varied by Program Areas 
While Some Local Governments Reported Difficulty in Applying for 
Recovery Act Grants: 

The use of Recovery Act funds helped to fund existing programs for some 
local governments. A number of local government officials reported that 
they used Recovery Act funds for existing programs or non-recurring 
projects and did not apply for grants that would result in long-term 
financial obligations. For example, although several local government 
officials reported applying for the Community Oriented Policing 
Services (COPS) Hiring Recovery Program grant, officials in a few 
localities expressed concerns about their ability to retain officers 
hired with Recovery Act funds.[Footnote 93] Several localities reported 
applying for and receiving funds for public works or infrastructure 
projects. For example, Meridian, Mississippi is using Recovery Act 
funds from the Energy Efficiency and Conservation Block Grant to 
complete restoration of its city hall using energy-efficient materials. 
A few localities reported that projects to increase energy efficiency 
could provide long-term cost-savings to the local government. 

The process of distributing federal assistance through grants is 
complicated and involves many different parties. Most Recovery Act 
funds to local governments flow through existing federal grant 
programs. Some of these funds are provided directly to the local 
government by federal agencies and others are passed from the federal 
agencies through state governments to local governments. As shown in 
table 12, local officials reported their governments' use of Recovery 
Act funds in program areas including public safety (COPS, Edward Byrne 
Memorial Justice Assistance Grant (JAG)), Energy Efficiency and 
Conservation Block Grants (EECBG), housing (Community Development Block 
Grant (CDBG) and Homeless Prevention and Rapid Re-Housing Program 
(HPRP)), transportation and transit, workforce investment (Workforce 
Investment Act (WIA)), and human services (Community Services Block 
Grants (CSBG) and Supplemental Nutrition Assistance Program (formerly 
the food stamp program), and education (SFSF). Other Recovery Act funds 
received by the selected localities included grants for community 
health centers, waste water treatment, airport improvement, and other 
programs.[Footnote 94] 

Table 12: Selected Examples of Local Governments' Use of Recovery Act 
Funds: 

Recovery Act grant: COPS; 
Selected examples of local use of funds: A COPS grant provided the city 
of Macon, Georgia with funding to hire 14 police officer positions; 
Example of a local government: Macon, GA. 

Recovery Act grant: EECBG; 
Selected examples of local use of funds: The city of Chicago was 
awarded a $27,648,800 EECBG grant to fund several projects, including 
energy efficiency housing retrofits for low income residents that are 
intended to save residents, on average, 15-20 percent of their energy 
costs. The City's Department of Environment will work with local 
lenders to establish a revolving loan fund to support energy efficiency 
retrofits in low-to moderate-income households; 
Example of a local government: Chicago, IL. 

Recovery Act grant: WIA; 
Selected examples of local use of funds: Newark was awarded $5,236,609 
for WIA Adult, WIA Youth, and WIA Dislocated Worker programs. The 
NewarkWORKS agency plans to administer the funds for several projects 
to support workforce preparation, talent development, life skills 
training, and job readiness workshops; 
Example of a local government: Newark, NJ. 

Recovery Act grant: CDBG; 
Selected examples of local use of funds: The City of Harrisburg has 
been allocated $599,343.00 for use under the CDBG program. CDBG funds 
will be used for the acquisition, rehabilitation, management, and 
disposition of not less than four vacant, blighted, single-family 
properties citywide for sale to low-and moderate-income households. The 
allocation includes funding for administrative costs associated with 
the program; 
Example of a local government: Harrisburg, PA. 

Recovery Act grant: Increased Demand for Services (IDS); 
Selected examples of local use of funds: The IDS grant funding is being 
used to support the Community Health Center of Yavapai (CHCY) dental 
and medical services in Cottonwood (Verde Valley) in eastern Yavapai 
County, Arizona. Of the $255,166 in IDS funds awarded, $184,061 is 
being used to expand dental services and $71,105 to retain jobs in the 
medical clinic; 
Example of a local government: Yavapai County, AZ. 

Recovery Act grant: Airport Improvement Program; 
Selected examples of local use of funds: The Denver International 
Airport was awarded 2 competitive Airport Improvement Program grants 
totaling $11,489,921 to rehabilitate pavement and widen the shoulders 
for one of its runways as well as rehabilitate drainage systems on the 
terminal taxiways and aprons. The projects are estimated to save or 
retain 128 jobs; 
Example of a local government: Denver, CO. 

Source: GAO analysis of local governments' reported use of funds. 

[End of table] 

In addition to Recovery Act funds for which local governments were 
prime recipients, several local government officials reported that 
additional Recovery Act funds were received by other entities within 
their local jurisdictions.[Footnote 95] For example, housing 
authorities, transit authorities, nonprofit organizations, and school 
systems were reported as entities within local jurisdictions which 
received Recovery Act funds directly from the federal government. 
Newark, New Jersey officials reported that their local government 
actively helped community partners pursue funding that the city was not 
eligible for, such as a National Endowment for the Arts grant. The city 
of Chicago, Illinois also established a partnership with nonprofit 
organizations to provide training on how to apply for Recovery Act 
grants for which the city was ineligible. 

Some local governments reported experiencing challenges in applying for 
and administering Recovery Act grants, including insufficient staff 
capacity, lack of guidance, budget constraints, and short application 
timetables. In particular, smaller localities, which are often rural, 
reported that they faced challenges due to grant requirements and a 
lack of staff capacity to find and apply for federal Recovery Act 
grants. Allegan County, Michigan officials also told us the 
requirements and goals of many Recovery Act programs do not fit the 
needs of a rural county like Allegan. For example, applicants for a 
grant from the U.S. Department of Transportation's Transit Investments 
for Greenhouse Gas and Energy Reduction program must apply for at least 
$2 million, making it difficult for Allegan County to compete. Other 
local government officials reported that they did not employ a staff 
person to handle grants and therefore did not have the capacity to 
understand which grants they were eligible for and how to apply for 
them. A few local officials also reported concerns regarding some 
grants' matching requirements, either at the state or federal level. 
For example, officials in Springfield, Massachusetts and Harrisburg, 
Pennsylvania reported an inability to apply for some grants because it 
was not feasible for them to generate the funds needed to meet the 
matching requirements.[Footnote 96] 

Local Governments Report Ongoing Budget Challenges after Use of 
Recovery Act Funds: 

Local government officials reported that use of Recovery Act funds 
helps to support local services but recent revenue declines are still 
resulting in mid-cycle budget shortfalls. An October 2009 survey by the 
National Association of Counties said that 56 percent of counties 
responding to the survey reported starting their fiscal years with up 
to $10 million in projected shortfalls.[Footnote 97] In the face of 
decreasing revenue sharing by counties and states, a number of 
localities used Recovery Act funds to plug the resulting gaps in 
program funding. The localities we visited reported varied revenue- 
sharing relationships with state or county governments, but several 
received at least some revenue from the state or county government. A 
few of these localities reported that decreases in revenue sharing 
contributed to their current budget shortfalls. In some cases, the 
receipt of Recovery Act funds helped offset the decline in revenue 
sharing from other levels of government. In other cases, Recovery Act 
funds received at the state level may have reduced the severity of the 
state's revenue sharing reductions. 

Several of the local governments included in our review experienced 
revenue declines and budget gaps.[Footnote 98] For example, Los 
Angeles, California officials stated that they were facing a $530 
million shortfall as a result of declining property taxes, sales taxes, 
transfer/real estate transaction taxes, as well as utility and gas user 
taxes. In Jackson, Mississippi, the county government in which Jackson 
is located reduced the city's 2009 fiscal year portion of the road and 
bridge tax revenue by over $500,000 and city officials expect the 
revenue decrease to continue into fiscal year 2010. City officials in 
Cincinnati, Ohio anticipate there will be a $28 million shortfall in 
their general fund tax revenues for fiscal year 2009 and that these 
revenues will continue to fall in fiscal year 2010. 

Local governments took a variety of budget actions to address 
shortfalls. Cincinnati, Ohio, for example, took several steps to close 
their budget shortfall, including layoffs, furloughs, union wage 
concessions, cutbacks in services, and drawing down on reserves. 
According to officials from Atlanta, Georgia, they offset declines in 
revenues by raising the property tax rate to address a projected $56 
million budget gap. Officials from the city of Dallas, Texas explained 
that property and sales taxes represent two thirds of their $1.3 
billion general revenue fund and the city of Dallas experienced 
declines in property and sales tax revenue for the previous 12 months, 
and anticipates a decline in property tax revenue for fiscal year 2010. 
Dallas officials relied on reductions in staff and city services as 
well as using $21.7 million from the city's reserve fund to balance 
their budget. Officials from both Dallas and Denton County, Texas 
reported that their local governments receive no state aid. In 
contrast, the city of Springfield, Massachusetts relies on state aid 
for 60 percent of its revenue base, and state aid for the city of 
Buffalo, New York comprises about 43 percent of its revenue base. 
Officials from Buffalo expressed concern over impending cuts to state 
aid, while Springfield, Massachusetts officials noted that reductions 
in state aid would have been more severe had the state not received 
Recovery Act funds. 

Local Government Plans for Recovery Act Exit Strategies Vary Based on 
Funding Received: 

Local government officials reported varied approaches to planning for 
the end of Recovery Act funds and several local officials did not 
report the need for a formal exit strategy. Officials representing a 
number of local governments said they did not need an exit strategy 
because of the limited effect of the use of Recovery Act funds. 
Officials in Yavapai County, Arizona stated that Recovery Act funds did 
not result in the adjustment of any budget actions. Although the county 
administration is not planning a formal exit strategy, county agencies 
are developing plans for the end of specific grant periods. Officials 
in Halifax County, North Carolina also reported that Recovery Act funds 
have not yet impacted the city's budget and they have not discussed an 
exit strategy. Some local officials said that because Recovery Act 
funds were generally used for one-time projects which will not result 
in long-term liabilities they did not plan to develop an exit strategy. 
For example, officials in Los Angeles reported that they are working to 
ensure that Recovery Act funds are for one-time uses and making sure 
funds are leveraged to enhance community services rather than to fund 
ongoing projects requiring future financial support. Officials in 
Newton, Iowa stated that the development of a Recovery Act exit 
strategy is currently not applicable because the Recovery Act funded 
one-time improvement projects and not recurring operation expenses. 

On the other hand, a number of local governments reported that they are 
developing plans to sustain current Recovery Act projects after 
Recovery Act funding ends. Officials in Dallas, Texas acknowledged that 
sustaining the 50 police officers beyond the 3-year period of the 
Recovery Act funding would be challenging, but because public safety is 
a top priority and because it would be politically difficult to 
eliminate police officer positions, the city is committed to taking any 
necessary steps to ensure it can retain the additional officers. Other 
local governments reported developing a more general exit strategy 
consisting of reductions in expenditures or possible increases in 
revenue to prepare for the end of Recovery Act funding. Officials in 
Steuben County, New York said that they will have to increase taxes, 
reduce expenditures, and tap into their reserve while Westchester 
County, New York officials said that they may have to increase taxes 
and tap into reserves to prepare for the end of Recovery Act funds. 
Officials in Tift County, Georgia plan to maintain two positions in the 
District Attorney's office supported by Recovery Act funds by charging 
users a fee in the future. Officials in Springfield, Massachusetts 
stated that the city is preparing for a "doomsday budget" once Recovery 
Act funds are no longer available and are planning to hold back 
expenditures as much as possible while exploring additional revenue 
sources. 

State Governments Receive Infusion of Recovery Act Funds While 
Continuing to Face Budget Challenges: 

The Recovery Act continues to help state governments maintain services. 
According to associations representing state officials, budget cuts and 
tax increases would be larger without the use of Recovery Act funds. 
According to the National Governors Association (NGA) and National 
Association of State Budget Officers (NASBO), states will have faced 
$256 billion in budget gaps between fiscal years 2009 and 2011. 
[Footnote 99] These shortfalls were closed through a combination of 
budget cuts, tax increases, use of available reserves, and use of 
Recovery Act funds provided primarily for health care and education. 
According to the Pew Center on the States (Pew), 6 of our 16 selected 
states fall within Pew's top 10 list of recession-stricken states that 
are particularly affected with ongoing fiscal woes.[Footnote 100] 
According to a senior Iowa official, the receipt of Recovery Act funds 
allowed Iowa to mitigate the effects of an across-the-board cut of 10 
percent in fiscal year 2010 general fund expenditures, including 
maintaining state and local education services and reducing the number 
of layoffs in state agencies and local school districts. Without the 
use of Recovery Act funds, Iowa may have needed to cut additional 
programs, services and staff. As we reported in September 2009, 
Colorado had already planned to use more than $600 million in Recovery 
Act funds in fiscal year 2010. These funds include SFSF and the 
increased FMAP for Medicaid, which Colorado used to pay expenses 
related to its increased Medicaid caseload. The state now plans to use 
an additional $190 million in Recovery Act funds to offset proposed 
cuts in budgets for higher education and corrections. North Carolina 
state budget officials told us Recovery Act funds are helping in the 
areas of education and health and human services, and the state intends 
to use more of its State Fiscal Stabilization funds in the second 
quarter. The Governor of Massachusetts also announced a plan to close 
the latest budget gap through the use of $62 million in Recovery Act 
funds, among other strategies. Pennsylvania enacted its fiscal year 
2010 budget since our September report. Michigan and the District of 
Columbia completed their fiscal years and their 2010 budgets since our 
September report. According to Michigan officials, the state enacted 
its 2010 budget on October 30, 2009. Michigan addressed a projected 
$2.7 billion shortfall through spending cuts, including cuts to state 
agencies' budgets, local school districts, provider reimbursement rates 
for Medicaid services, and state revenue sharing to local governments. 

OMB Implements a Project for Earlier Reporting of Internal Control 
Weaknesses: 

Starting in April 2009, we have noted in our bimonthly reports that OMB 
needs to take additional action to focus auditors' efforts on areas 
that can provide the most efficient and most timely results to realize 
the Single Audit Act's full potential as an effective oversight tool 
for Recovery Act programs.[Footnote 101] We reported that as federal 
funding of Recovery Act programs accelerates, the Single Audit process 
may not provide the accountability and focus needed to assist 
recipients in making timely adjustments to internal controls to provide 
assurances that the money is being spent efficiently and effectively to 
meet program objectives.[Footnote 102] To provide additional leverage 
as an oversight tool for Recovery Act programs, we recommended that OMB 
adjust the current audit process to, among other things, provide for 
review of internal controls before significant expenditures occurred. 
The statutory Single Audit reporting deadline is too late to provide 
audit results in time for the audited entity to take action on internal 
control deficiencies before significant expenditures of Recovery Act 
funds. As a result, an audited entity may not receive feedback needed 
to correct identified internal control deficiencies until the latter 
part of the subsequent fiscal year.[Footnote 103] The timing problem is 
exacerbated by the extensions to the 9-month deadline, consistent with 
OMB guidance, that have routinely been granted. 

OMB has developed a Single Audit Internal Control Project in response 
to our recommendations. One of the project's goals is to encourage 
auditors to identify and communicate significant deficiencies and 
material weaknesses in internal control over compliance for selected 
major Recovery Act programs 3 months sooner than the 9-month time frame 
currently required under statute. If effective, the project should 
allow auditee program management to expedite corrective action and 
mitigate the risk of improper Recovery Act expenditures. OMB announced 
the project on September 10, 2009. In order to facilitate early 
communication of internal control significant deficiencies and material 
weaknesses, the project requires the auditor to issue an interim report 
by November 30, 2009, based on its internal control test work. This 
communication is to be based on the OMB Circular A-133 test work on the 
internal control over compliance in effect for the period ended June 
30, 2009, and is to be presented to auditee management prior to 
December 31, 2009. Auditee management is to provide the interim 
communication report and a corrective action plan to the appropriate 
federal agency by January 31, 2010.[Footnote 104] Federal agencies-- 
each of which will assign a project liaison--will then have up to 90 
days to issue a written interim management decision regarding their 
assessment of the areas that have the highest risk to Recovery Act 
funding and any concerns about the proposed plan of corrective action. 
The project was designed to include at least 10 states that received 
Recovery Act funding, with each state selecting at least 2 Recovery Act 
programs for interim internal control testing and reporting from the 
following 11 programs.[Footnote 105] 

* Department of Labor's Unemployment Insurance; 

* Department of Transportation's (DOT) Federal-Aid Highway Surface 
Transportation Program; 

* DOT's Federal Transit-Capital Investment Grants; 

* Environmental Protection Agency's (EPA) Capitalization Grants for 
Clean Water State Revolving Fund; 

* EPA's Capitalization Grants for Drinking Water State Revolving Fund; 

* Department of Energy's (DOE) Weatherization Assistance Program, 

* Department of Education's (Education) State Fiscal Stabilization 
Fund; 

* Education's Title I, Part A of the Elementary and Secondary Education 
Act of 1965, as amended; 

* Health and Human Services' (HHS) Child Care and Development Block 
Grant; 

* HHS's Medicaid; and: 

* various agencies' research and development clusters. 

OMB designed the project to be voluntary. To encourage participation, 
OMB provided incentives to the states for volunteering. States and 
their auditors that participate are granted some relief in their 
workload because the auditor will not be required to perform risk 
assessments of smaller federal programs.[Footnote 106] OMB has also 
modified the requirements under Circular A-133 to reduce the number of 
low-risk programs that must be included in some project participants' 
Single Audits.[Footnote 107] GAO had previously recommended that OMB 
evaluate options for providing relief related to low-risk programs to 
balance new audit responsibilities associated with the Recovery Act. 

One of the project's goals is to identify deficiencies in internal 
controls for selected major Recovery Act programs 3 months sooner than 
the 9-month time frame currently required under statute, so that 
potential issues can be addressed by the auditee's management and the 
federal agencies in a timely manner. Another goal is to provide OMB 
with insight into how a variety of states are implementing certain 
Recovery Act programs. By monitoring and analyzing the project's 
results, OMB officials stated they can determine whether states are 
experiencing issues that OMB may need to address through additional 
guidance. If significant problems are identified, OMB officials have 
stated they may release further guidance for Recovery Act programs. 

At the end of the project period, OMB will determine the success of the 
project by evaluating whether: 

* there has been sufficient participation from the auditees, auditors, 
and federal agencies; 

* the early communication process provides auditee and federal program 
management with useful information regarding internal control 
deficiencies in the Recovery Act programs administered by the states, 
thus resulting in expedited correction of such deficiencies and reduced 
risk to Recovery Act programs; 
and: 

* the process accelerates the audit resolution by the federal agencies 
and therefore provides auditee management with early feedback to assist 
in correction of the high-risk deficiencies in the most expeditious 
manner. 

Sixteen States Volunteered to Participate in OMB's Single Audit 
Internal Control Project: 

On October 7, 2009, OMB announced that it was soliciting auditors and 
auditees from the 50 states, the District of Columbia, Puerto Rico, and 
Guam, to participate in the project. OMB encouraged potential 
participants to respond to the announcement by October 16, 2009. The 
following 16 states volunteered to participate in the project: Alaska, 
California, Colorado, Florida, Georgia, Louisiana, Maine, Missouri, 
Nevada, North Carolina, Ohio, Oklahoma, South Dakota, Tennessee, Texas, 
and Virginia. 

GAO had previously recommended that the Director of OMB take steps to 
achieve sufficient participation and coverage of Recovery Act funded 
programs in the project to leverage Single Audits as an effective 
oversight tool. The 16 project participants can provide important 
information on the potential impact of the early communication process. 

OMB met its goals for the scope of the project, and OMB officials 
stated that, overall, they were satisfied with the population and 
geographic diversity among the states that volunteered. Participants 
include states that use auditors within state government to conduct 
Single Audits as well as some that use external auditors. In addition, 
California and Texas, which are among the top three states with the 
highest levels of Recovery Act obligations from the federal government, 
are participating. 

The project required the states to select at least two programs for 
internal control testing. Thirteen states selected 2 programs, 2 states 
selected more than 2 programs, and Texas selected 8 programs. OMB 
officials said that some of the officials from states not participating 
expressed concerns about lacking sufficient resources to do the work. 

Of the 16 project participants, 9 selected the unemployment insurance 
program, 5 selected the SFSF program, 4 selected the Medicaid program, 
and 5 selected the Highway Infrastructure Investment program for audit. 
As of October 23, 2009, the Recovery Act portions of these 4 programs 
were the top 4 of all Recovery Act programs in terms of obligations to 
states. Further, each of the 11 Recovery Act programs included in the 
project by OMB was selected for inclusion by at least one participating 
state for early internal control testing. 

The project's coverage could be more comprehensive to provide greater 
assurances about the extent that Recovery Act funding was effectively 
used to meet program objectives. As of October 23, 2009, Recovery Act 
federal obligations attributable to states totaled $236.5 billion and 
related outlays totaled $106.3 billion.[Footnote 108] Based on these 
and other data gathered through October 23, we estimate that, in dollar 
terms, the project participants' selected Recovery Act programs are 
responsible for: 

* 16 percent of Recovery Act obligations, 

* 23 percent of Recovery Act outlays, 

* 36 percent of Recovery Act obligations for the 16 volunteer states, 
and: 

* 50 percent of Recovery Act outlays for the 16 volunteer states. 

OMB officials acknowledged that the project was not designed to provide 
coverage over a majority of Recovery Act program funding. 

We commend the 16 states that elected to participate in the project. 
OMB has stated that by participating in the project, the auditors and 
auditees are demonstrating to Congress and the general public their 
deep interest in safeguarding the Recovery Act funds against fraud, 
waste, and abuse. However, the project's dependence on voluntary 
participation limits its scope and coverage. Voluntary participation 
may also bias the project's results by excluding from analysis states 
or auditors with practices that cannot accommodate the project's 
requirement for early reporting of control deficiencies. It is unclear 
whether OMB has the authority to mandate participation in the project. 

The project's goal of identifying potential material weaknesses and 
significant deficiencies for selected major Recovery Act programs 
sooner than currently required has merit, especially since the project 
includes two of the three states with the largest amounts of Recovery 
Act funding nationwide--California and Texas. Although the project's 
coverage could be more comprehensive, it is our view that the analysis 
of the project's results could provide meaningful information to OMB 
for better oversight of Recovery Act programs. OMB stated that it will 
use the results of its analysis of the project as an indicator for 
making potential future modifications for improvement in the Single 
Audit Act. We will continue to monitor the implementation and progress 
of the project and report on its status in our February 2010 report. 

As we reported in July 2009, because a significant portion of Recovery 
Act expenditures will be in the form of federal grants and awards, the 
Single Audit process could be used as a key accountability tool over 
these funds. However, the Single Audit Act, enacted in 1984 and most 
recently amended in 1996, did not contemplate the risks associated with 
the current environment where large amounts of federal awards are being 
expended quickly through new programs, greatly expanded programs, and 
existing programs. Finally, in our July 2009 report, we included a 
matter for congressional consideration pointing out that Congress is 
considering a legislative proposal. We believe that the matter 
continues to be relevant for Congressional consideration and 
reemphasize that: 

* To the extent that appropriate adjustments to the Single Audit 
process are not accomplished under the current Single Audit structure, 
Congress should consider amending the Single Audit Act or enacting new 
legislation that provides for more timely internal control reporting, 
as well as audit coverage for smaller Recovery Act programs with high 
risk. 

* To the extent that additional audit coverage is needed to achieve 
accountability over Recovery Act programs, Congress should consider 
mechanisms to provide additional resources to support those charged 
with carrying out the Single Audit Act and related audits. 

OMB Has Provided Flexibility in Its Administrative Cost Guidance 
Related to Recovery Act Responsibilities: 

During a time when states are grappling with unprecedented levels of 
declining state revenues and fiscal stress, states continue to seek 
relief from additional pressures created by requirements to implement 
and comply with the Recovery Act. This includes a wide range of 
activities to help ensure the prudent, timely, and transparent 
expenditures of Recovery Act funds, including, but not limited to, 
Single Audits. States often take on additional fiscal and 
administrative burdens to accomplish critical activities such as 
awarding grants, contracts, and cooperative agreements and providing 
funds for expenses incurred for general administration. Such additional 
costs can exacerbate states' existing fiscal stress. However, states do 
not generally recover central administrative costs up front, but 
instead are reimbursed for such expenses after the fact. This process 
can have the unintended consequence of preventing state governments 
from obtaining the necessary resources to quickly build administrative 
capacities to meet the important new oversight, reporting, and audit 
requirements of the Recovery Act. In addition, as we previously noted, 
it is our view that Congress should consider mechanisms to provide 
additional resources to support those charged with carrying out the 
Single Audit Act and related audits. 

Our September 23, 2009, Recovery Act report noted that in order to 
achieve the delicate balance between robust oversight and the smooth 
flow of funds to Recovery Act programs, states may need timely 
reimbursement for these activities. We recommended that to the extent 
that the Director of OMB has the authority to consider mechanisms to 
provide additional flexibilities to support state and local officials 
charged with carrying out Recovery Act responsibilities, it is 
important to expedite consideration of alternative administrative cost 
reimbursement proposals. In response to this recommendation, OMB issued 
a memorandum on October 13, 2009, to provide guidance to address 
states' questions regarding specific exceptions to OMB Circular A-87, 
Cost Principles for State, Local and Indian Tribal Governments. In the 
memorandum, OMB provided clarifications for states regarding specific 
exceptions to OMB Circular A-87 that are necessary in order for the 
states to perform timely and adequate Recovery Act oversight, 
reporting, and auditing. We believe the October OMB guidance provides 
the additional clarification needed for states and localities to 
proceed with their plans to recoup administrative costs. 

OMB, States, and Federal Agencies Took Actions Aimed at Reducing Risks 
Inherent in Initial Round of Section 1512 Reporting, but Further Data 
Quality Efforts Are Needed: 

We previously reported[Footnote 109] that the risks inherent in the 
initial round of section 1512 recipient reporting could negatively 
impact the completeness, accuracy, and reliability of the information 
reported and on actions taken by OMB, the states, and federal agencies. 
Many recipients had not previously been subject to such reporting 
requirements, and their systems and processes had not been tested to 
provide reliable and accurate data, such as that required by section 
1512. Risks were also increased because of the large number of 
recipients, making it more difficult for states and federal agencies to 
monitor the quality of the data reported by these recipients within a 
short time. 

While actions have been taken by the states, the District of Columbia, 
and federal agencies to address risks and help ensure the quality of 
the reported data, we found there are significant issues to be 
addressed in reporting data quality and consistent application of OMB 
guidance.[Footnote 110] All of the jurisdictions we reviewed had data 
quality review procedures in place for the recipient reporting data, 
either by a central state office or by state agencies. For example, at 
least three states (Florida, Michigan, and Pennsylvania) and the 
District of Columbia subjected the data to reviews at different levels 
in the state, including reviews by state program offices, state 
agencies, state recovery czars, and state agency inspectors general 
(IG). In the District of Columbia, data was reviewed at three different 
levels--by grant managers, by the agency administering the grant, and 
by the District's recovery czar. In Florida, fiscal and program staff 
in state agencies and state agency IGs reviewed the data. At least six 
states (Florida, Georgia, Iowa, Michigan, Ohio, and Pennsylvania) 
required prime recipients to certify that they had reviewed the data. 
At least seven states (Florida, Georgia, Iowa, Michigan, New Jersey, 
North Carolina, and Texas) and the District of Columbia implemented 
controls, either manual or automated, intended to identify blank 
fields, correct field size, typographical errors, outliers, and other 
anomalies, such as whether the amount of funds spent was greater than 
the amount of funds received. 

In general, federal agencies that awarded Recovery Act funds to states 
developed internal policies and procedures for limited data quality 
reviews, as required by OMB. Federal agency IGs conducted reviews at 
federal agencies to determine whether the agencies had established 
processes to perform limited data quality reviews intended to identify 
material omissions and significant reporting errors and notify the 
recipients of the need to make appropriate and timely changes to their 
reported data. 

Even with the data quality review actions taken by states and federal 
agencies, we found that the data suffers from a number of issues. As we 
reported last month,[Footnote 111] based on our initial set of basic 
analyses of the recipient report data available for download from 
Recovery.gov, we identified recipient report records that showed 
certain data values or patterns in the data that were either erroneous 
or merit further review due to an unexpected or atypical data value or 
relationship between data values. Although recipients in the states we 
reviewed generally made good faith efforts to report accurately, there 
is evidence that the data reporting has been inconsistent, partly due 
to various interpretations of guidance. For example, recipients appear 
to have interpreted guidance on how to calculate and report data on 
jobs created or retained in somewhat different ways and took different 
approaches in how they developed their jobs data. 

We made two recommendations to the Director of OMB. First, to improve 
the consistency of full-time equivalent (FTE) data collected and 
reported, OMB should continue to work with federal agencies to increase 
recipient understanding of the reporting requirements and application 
of the guidance. Specifically, OMB should (1) clarify the definition 
and standardize the period of measurement for FTEs and work with 
federal agencies to align this guidance with OMB's guidance and across 
agencies; (2) given its reporting approach, consider being more 
explicit that "jobs created or retained" are to be reported as hours 
worked and paid for with Recovery Act funds; and (3) continue working 
with federal agencies and encourage them to provide or improve program- 
specific guidance to assist recipients, especially as it applies to the 
FTE calculation for individual programs. Second, OMB should work with 
the Recovery Board and federal agencies to re-examine review and 
quality assurance processes, procedures, and requirements in light of 
experiences and identified issues with this round of recipient 
reporting and consider whether additional modifications need to be made 
and if additional guidance is warranted. 

OMB agreed with our recommendations. In a written response to our 
recommendations, OMB's Controller told us that OMB is committed to 
continually improving the reporting process, so that the Recovery Act 
goals of transparency and usefulness to the American people will be 
met. He also stated that each of our recommendations aligns with what 
OMB is hearing directly from recipients and agencies. OMB is working to 
better define the reporting period of measurement for recipients. As 
the reporting becomes more regular with quarterly updates, the time 
period covered by the data should be more consistent. OMB also plans to 
issue streamlined guidance to provide additional clarity in advance of 
the January reporting period, including refining its jobs-counting 
guidance. Further, OMB has continuing discussions with agencies about 
lessons learned and best practices, including suggestions for data 
quality. OMB pointed out that while there were numerous instances of 
reliable and accurate data reported, there were also erroneous data. 
OMB will continue to work with the Recovery Board to identify errors, 
large and small, and transparently correct them. 

As recipient reporting moves forward, we will continue to review the 
processes that federal agencies and recipients have in place to ensure 
the completeness and accuracy of data, including reviewing a sample of 
recipient reports across various Recovery Act programs to assure the 
quality of reported information. Our subsequent quarterly reports on 
recipient reporting will also discuss actions taken on the 
recommendations and will provide additional recommendations, as 
appropriate. 

GAO's Open Recommendations: 

To strengthen efforts to track the use of funds, demonstrate results, 
and increase outreach to states and localities that administer Recovery 
Act programs, we continue to recommend the following actions: 

Reporting on Program Impact: 

Recipients of Recovery Act funds are expected to report quarterly on a 
number of measures, including the use of funds and the number of jobs 
created and retained. In addition to statutory requirements, the Office 
of Management and Budget (OMB) has directed federal agencies to collect 
performance information and to assess program accomplishments. 

Recipient financial tracking and reporting: Recovery Act prime 
recipients and federal agency reviewers are required to perform data 
quality checks; however, OMB guidance does not explicitly mandate a 
methodology for conducting quality reviews and providing final approval 
of data reported. 

Recommendations: In our July report, we recommended that the Director 
of OMB (1) clarify what constitutes appropriate quality control and 
reconciliation by prime recipients, especially for subrecipient data, 
and (2) specify who should provide formal certification and approval of 
data reported. More recently, in our comments on recipient reporting of 
jobs data,[Footnote 112] we recommended that OMB work with the Recovery 
Accountability and Transparency Board and federal agencies to re- 
examine review and quality assurance processes, procedures, and 
requirements in light of experiences and identified issues with the 
first round of recipient reporting and consider whether additional 
modifications need to be made and if additional guidance is warranted. 

The Controller of OMB in a November 18, 2009, letter outlined a series 
of actions OMB plans to take to address the issues and recommendations 
in our November report on recipient reporting. Those actions include 
conducting survey research with individual recipients to learn directly 
about what they liked about the reporting system, as well as problems 
they encountered. 

According to the OMB Controller, OMB and federal agencies will continue 
to work with the Recovery Board to examine recipient data for 
inconsistencies or errors. We believe that if effectively implemented, 
OMB's planned and ongoing actions will address our recommendations. 

Other impact measures: As we noted in our July report, reporting on 
Recovery Act performance results is broader than the employment-related 
reporting required by the act. We continue to recommend that the 
Director of OMB--perhaps through the Senior Management Councils-- 
clarify what other program performance measures recipients are expected 
to report on to demonstrate the impact of Recovery Act funding. 

Communications and Guidance: 

Funding notification and program guidance: State officials expressed 
concerns regarding communication on the release of Recovery Act funds 
and their inability to determine when to expect federal agency program 
guidance. As we recommended, OMB now requires federal agencies to 
notify recovery coordinators in states, the District of Columbia, 
commonwealths, and territories within 48 hours of an award to a grantee 
or contractor in their jurisdiction. However, OMB does not have a 
master timeline for issuing federal agency guidance. We believe that 
OMB and federal agencies can strike a better balance between developing 
timely and responsive guidance and providing a longer-range timeline to 
support states' and localities' planning efforts. 

Recommendation: We recommended in our April report and continue to 
recommend the addition of a master schedule for anticipated new or 
revised federal Recovery Act program guidance and a more structured, 
centralized approach to making this information available, such as what 
is provided at www.recovery.gov on recipient reporting. 

OMB provided technical comments that have been incorporated into this 
report, as appropriate. 

We are sending copies of this report to the Office of Management and 
Budget; the Centers for Medicare & Medicaid Services; the Departments 
of Education, Energy, Housing and Urban Development, and 
Transportation; and the Federal Emergency Management Agency. In 
addition, we are sending sections of the report to officials in the 16 
states and the District covered in our review. The report is available 
at no charge on the GAO Web site at [hyperlink, http://www.gao.gov]. 

If you or your staffs have any questions about this report, please 
contact me at (202) 512-5500. Contact points for our Offices of 
Congressional Relations and Public Affairs may be found on the last 
page of this report. GAO staff who made major contributions to this 
report are listed in appendix IV. 

Signed by: 

Gene L. Dodaro: 
Acting Comptroller General of the United States: 

List of Addressees: 

The Honorable Nancy Pelosi: 
Speaker of the House of Representatives: 

The Honorable Robert C. Byrd: 
President Pro Tempore of the Senate: 

The Honorable Harry Reid: 
Majority Leader: 
United States Senate: 

The Honorable Mitch McConnell: 
Republican Leader: 
United States Senate: 

The Honorable Steny Hoyer: 
Majority Leader: 
House of Representatives: 

The Honorable John Boehner: 
Minority Leader: 
House of Representatives: 

The Honorable Daniel K. Inouye: 
Chairman: 
The Honorable Thad Cochran: 
Vice Chairman: 
Committee on Appropriations: 
United States Senate: 

The Honorable Dave Obey: 
Chairman: 
The Honorable Jerry Lewis: 
Ranking Member: 
Committee on Appropriations: 
House of Representatives: 

The Honorable Joseph I. Lieberman: 
Chairman: 
The Honorable Susan M. Collins: 
Ranking Member: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The Honorable Edolphus Towns: 
Chairman: 
The Honorable Darrell E. Issa: 
Ranking Member: 
Committee on Oversight and Government Reform: 
House of Representatives: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

This appendix describes our objectives, scope, and methodology (OSM) 
for this fourth of our bimonthly reviews on the Recovery Act. A 
detailed description of the criteria used to select the core group of 
16 states and the District of Columbia (District) and programs we 
reviewed is found in appendix I of our April 2009 Recovery Act 
bimonthly report.[Footnote 113] 

Objectives and Scope: 

The Recovery Act specifies several roles for GAO, including conducting 
bimonthly reviews of selected states' and localities' use of funds made 
available under the act. As a result, our objectives for this report 
were to assess (1) selected states' and localities' uses of and 
planning for Recovery Act funds, (2) the approaches taken by the 
selected states and localities to ensure accountability for Recovery 
Act funds, and (3) states' plans to evaluate the impact of the Recovery 
Act funds they have received to date. 

Our teams visited the 16 selected states, the District, and a 
nonprobability sample of 155 entities (e.g., state and local 
governments, local education agencies, and public housing authorities) 
during September, October, November, and December 2009.[Footnote 114] 
As for our previous Recovery Act reports, our teams met with a variety 
of state and local officials from executive-level and program offices. 
During discussions with state and local officials, teams used a series 
of program review and semistructured interview guides that addressed 
state plans for management, tracking, and reporting of Recovery Act 
funds and activities. We also reviewed state constitutions, statutes, 
legislative proposals, and other state legal materials for this report. 
Where attributed, we relied on state officials and other state sources 
for description and interpretation of state legal materials. Appendix 
III details the states and localities visited by GAO. Criteria used to 
select localities within our selected states follow. 

States' and Localities' Uses of Recovery Act Funds: 

Using criteria described in our earlier bimonthly reports, we selected 
the following streams of Recovery Act funding flowing to states and 
localities for review during this report: increased Medicaid Federal 
Medical Assistance Percentage (FMAP) grant awards; the Federal-Aid 
Highway Surface Transportation Program; the Transit Capital Assistance 
Program, the State Fiscal Stabilization Fund (SFSF); Title I, Part A of 
the Elementary and Secondary Education Act of 1965 (ESEA); Parts B and 
C of the Individuals with Disabilities Education Act (IDEA); the Public 
Housing Capital Fund; the Weatherization Assistance Program; and the 
Emergency Food and Shelter Program. We also reviewed how Recovery Act 
funds are being used by states and localities. In addition, we analyzed 
www.recovery.gov data on federal spending. 

Medicaid Federal Medical Assistance Percentage: 

For the increased FMAP grant awards, we obtained increased FMAP grant 
and draw-down figures for each state in our sample and the District 
from the Centers for Medicare & Medicaid Services (CMS). To examine 
Medicaid enrollment, states' efforts to comply with the provisions of 
the Recovery Act, and related information, we relied on our Web-based 
survey, asking the 16 states and the District to provide new 
information as well as to update information they had previously 
provided to us. When necessary, we interviewed Medicaid officials from 
certain states to clarify survey responses. We also interviewed CMS 
officials regarding the agency's oversight of increased FMAP grant 
awards and its guidance to states on Recovery Act provisions. To assess 
the reliability of increased FMAP draw-down figures, we interviewed CMS 
officials on how these data are collected and reported. To establish 
the reliability of our Web-based survey data, we pretested the survey 
with Medicaid officials in several states and also conducted consistent 
follow-up with all sample states to ensure a high response rate. Based 
on these steps, we determined that the data provided by CMS and 
submitted by states were sufficiently reliable for the purposes of our 
engagement. 

Federal-Aid Highway Surface Transportation Program: 

For highway infrastructure investment, we reviewed status reports and 
guidance to the states and discussed these with the U.S. Department of 
Transportation (DOT) and Federal Highway Administration (FHWA) 
officials. We obtained data from FHWA on obligations, reimbursements, 
and types of projects funded with Recovery Act highway infrastructure 
funds nationally and for the District and each of the 16 states. From 
state DOT officials, we obtained information on the status of projects 
and contracts, including the number of projects planned, out for bid, 
awarded, and completed. We interviewed officials from Arizona, 
California, Georgia, Massachusetts, Mississippi, and New Jersey 
regarding the progress of project and highway development in 
metropolitan areas. We interviewed officials from Arizona, California, 
and Illinois, who developed their own criteria to determine 
economically distressed areas to examine how these states calculated 
and justified their designations. We obtained data from 10 states and 
the District on highway project cost estimates and contract awards and 
analyzed these data to determine the savings from awarding contracts 
for less than the estimated costs. In all, we reviewed 1,880 contracts 
ranging from 12 contracts in the District to 587 in Illinois. 

Transit Capital Assistance Program: 

For Recovery Act public transit investment, we reviewed information 
from California, Colorado, Illinois, Iowa, New York, North Carolina, 
and Pennsylvania on the Federal Transit Administration's (FTA) Transit 
Capital Assistance Program. We also examined the Fixed Guideway 
Infrastructure Investment program in New York and Pennsylvania. We 
reviewed status reports and guidance to the states and discussed these 
with FTA officials. To determine the current status of transit funding, 
we obtained data from FTA on obligations and unobligated balances for 
Recovery Act grants nationally and, for each of our selected urbanized 
and nonurbanized areas, the numbers and types of projects funded. We 
reviewed information from selected urbanized and nonurbanized areas to 
include how projects were chosen, how funds were used, and how progress 
was reported. To determine how transit agencies and states are ensuring 
the accountability of funds and addressing reporting requirements, we 
reviewed the guidance each state uses to meet reporting requirements, 
including reporting on project status, subcontracts, and estimated jobs 
created. We also interviewed selected bus manufacturers on how job 
creation figures were calculated for Recovery Act-funded purchases. We 
also interviewed FTA about meetings with bus manufacturers to 
standardize guidance on job reporting. 

SFSF, ESEA Title I, and IDEA: 

To obtain national and selected state-level information on how Recovery 
Act funds made available by the U.S. Department of Education under 
SFSF, ESEA Title I, and IDEA are being used at the local level, we 
designed and administered a Web-based survey of local education 
agencies (LEA) in the 50 states and the District of Columbia. We 
surveyed school district superintendents across the country to learn if 
they have received or expect to receive Recovery Act funding and how 
these funds are being used. We conducted our survey from August to 
October 2009, with a 73 percent final weighted response rate at the 
national level. We selected a stratified[Footnote 115] random sample of 
2,101 LEAs from the population of 16,028 LEAs included in our sample 
frame of data obtained from the Common Core of Data (CCD) in 2006-2007. 
In order to make estimates for each of the 16 states and the District 
of Columbia, we stratified the sample based on those specific states. 
With the exception of the District of Columbia, all of our sample 
states had a response rate that exceeded 70 percent, with final 
weighted response rates ranging from 71 percent for Iowa to 90 percent 
for Georgia. 

We took steps to minimize nonsampling errors by pretesting the survey 
instrument with officials in 5 LEAs in July and August 2009. Because we 
surveyed a sample of LEAs, survey results are estimates of a population 
of LEAs and thus are subject to sampling errors that are associated 
with samples of this size and type. Our sample is only one of a large 
number of samples that we might have drawn. As each sample could have 
provided different estimates, we express our confidence in the 
precision of our particular sample's results as a 95 percent confidence 
interval (e.g., plus or minus 10 percentage points). We excluded 14 of 
the sampled LEAs for various reasons--because they were no longer 
operating in the 2009-2010 school year, were a duplicate entry, or were 
not an LEA--and therefore were considered out of scope. All estimates 
produced from the sample and presented in this report are 
representative of the in-scope population and have margins of error of 
plus or minus 5 percentage points or less for our overall sample and 12 
percentage points or less for our 16 state samples, excluding the 
District, unless otherwise noted. 

To obtain specific examples of how LEAs are using Recovery Act funds, 
we visited at least two LEAs in Arizona, California, the District, New 
York, and North Carolina and interviewed LEA officials. To learn about 
issues related to Recovery Act funds for education, we interviewed 
officials in the District and state officials in each of the 16 states 
covered by our review. We also interviewed officials at the U.S. 
Department of Education (Education) and reviewed relevant laws, 
guidance, and communications to the states. Further, we obtained 
information from Education about the amount of funds these states have 
drawn down from their accounts with Education. 

Public Housing Capital Fund: 

For Public Housing, we obtained data from HUD's Electronic Line of 
Credit Control System on the amount of Recovery Act funds that have 
been obligated and drawn down by each housing agency in the country. To 
update progress on how housing agencies are using these funds, we 
visited 25 of the 47 agencies we previously selected in nine states. 
[Footnote 116] At the selected agencies, we interviewed housing 
agency officials and conducted site visits of ongoing or planned 
Recovery Act projects. We also selected one Capital Fund Recovery 
Competition grant in all but one of the nine states and collected 
information on the housing agency's plans for those funds. We also 
interviewed HUD officials to understand their procedures for monitoring 
housing agency use of Recovery Act funds and validating data that 
housing agencies reported to FederalReporting.gov. 

Weatherization Assistance Program: 

For the Weatherization Assistance Program, we reviewed relevant 
regulations and federal guidance and interviewed Department of Energy 
officials who administer the program at the federal level. In addition, 
for this report, we collected updated information from seven of our 
selected states and the District on their weatherization programs. 
[Footnote 117] We conducted semistructured interviews of officials in 
the states' agencies that administer the weatherization program and 
with local service providers responsible for weatherization production. 
These interviews covered updates on the use of funds, the 
implementation of the Davis-Bacon Act, accountability measures, and 
impacts of the Recovery Act weatherization program. We also conducted 
site visits to interview 20 local providers of weatherization and to 
witness weatherization production. We continued to collect data about 
each state's total allocation for weatherization under the Recovery 
Act, as well as the allocation already provided to the states and the 
expenditures to date. 

Emergency Food and Shelter Program: 

For the Emergency Food and Shelter Program (EFSP), we reviewed relevant 
federal laws and regulations, and guidance from the Federal Emergency 
Management Agency (FEMA) and the program's National Board, which 
administer the program, and interviewed the FEMA official responsible 
for managing the program. We also analyzed data on the EFSP Recovery 
Act funds awarded to local recipient organizations (LRO) in the 16 
states and the District that GAO reviewed, as well as data on the 
planned uses of EFSP Recovery Act funds reported by the LROs. 

State and Local Budget: 

We continued our review of the use of Recovery Act funds for the 16 
states and the District, with a particular focus on those jurisdictions 
that enacted budgets since our last report. We conducted interviews 
with budget officials and reviewed proposed and enacted budgets and 
revenue estimates to update our understanding of the use of Recovery 
Act funds in the selected states and the District. 

To select local governments for our review, we identified localities 
representing a range of types of governments (cities and counties), 
population sizes, and economic conditions (unemployment rates greater 
than or less than the state's overall unemployment rate). We used the 
latest unemployment rates and population sizes that were available as 
we prepared the draft. We balanced these selection criteria with 
logistical considerations, including other scheduled Recovery Act work, 
local contacts established during prior reviews, and the geographic 
proximity of the local government entities. 

The teams visited a total of 44 local government entities, 27 cities, 
16 counties, and one local government entity organized as a city and 
county, Denver. Due to the small sample size and judgmental nature of 
the selection, GAO's findings are not generalizable to all local 
governments. 

To gain an understanding of local governments' use of Recovery Act 
funds we met with the chief executives, recovery coordinators, 
auditors, and finance officials at the selected local governments. We 
also met with associations representing local governments to understand 
their perspectives on the impact of the Recovery Act on local 
governments and reviewed reports and analysis regarding the fiscal 
conditions of local governments. 

The list of local governments selected in each state is found in 
appendix III. 

Assessing Safeguards and Internal Controls: 

To determine how states are planning for the recipient reporting 
requirements of the Recovery Act, we asked cognizant officials to 
describe the activities undertaken related to recipient reporting, 
including guidance that has been issued to state agencies and 
subrecipients, monitoring plans, and policies and procedures that have 
been developed for recipient reporting. We also reviewed relevant 
recipient reporting guidance issued by the Office of Management and 
Budget (OMB). For audit work related to Single Audits, we reviewed 
OMB's guidance and the scope and objectives for the Single Audit 
Internal Control Project. We also discussed with relevant OMB officials 
their efforts toward implementing the project. We reviewed and analyzed 
federal agency financial and activity reports to compare obligations 
and outlays by states for programs included in the OMB project to 
obligations and outlays attributable to states for all Recovery Act 
programs as of October 23, 2009. We obtained this data from 
www.Recovery.gov. In addition, we discussed with OMB officials OMB's 
progress toward addressing GAO recommendations related to Single Audits 
our in previous Recovery Act reports. 

Data and Data Reliability: 

We collected funding data from www.recovery.gov and federal agencies 
administering Recovery Act programs for the purpose of providing 
background information. We used funding data from www.recovery.gov-- 
which is overseen by the Recovery Accountability and Transparency 
Board--because it is the official source for Recovery Act spending. 
Based on our limited examination of this information thus far, we 
consider these data sufficiently reliable with attribution to official 
sources for the purposes of providing background information on 
Recovery Act funding for this report.[Footnote 118] Our sample of 
states, localities, and entities has been purposefully selected and the 
results of our reviews are not generalizable to any population of 
states, localities, or entities. 

We conducted this performance audit from September 18, 2009, to 
December 4, 2009, in accordance with generally accepted government 
auditing standards. Those standards require that we plan and perform 
the audit to obtain sufficient, appropriate evidence to provide a 
reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a reasonable 
basis for our findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Program Descriptions: 

Following are descriptions of selected grant programs discussed in this 
report. 

Figure 26: Selected Grant Programs and Their Administering Federal 
Agency or Office: 

[Refer to PDF for image: table] 

Federal agency: Department of Agriculture; 
Agency office: Food and Nutrition Service; 
Grant program or programs administered: 
* Supplemental Nutrition Assistance Program. 

Federal agency: Department of Agriculture; 
Agency office: Forest Service; 
Grant program or programs administered: 
* Wildland Fire Management Program. 

Federal agency: Department of Commerce; 
Agency office:National Telecommunications and Information 
Administration; 
Grant program or programs administered: 
* Broadband Technology Opportunities Program/State Broadband Data and 
Development Program. 

Federal agency: Department of Education; 
Agency office: Office of Elementary and Secondary Education; 
Grant program or programs administered: 
* Elementary and Secondary Education Act Title I-A grants; 
* State Fiscal Stabilization Fund. 

Federal agency: Department of Education; 
Agency office: Office of Special Education and Rehabilitative Services; 
Grant program or programs administered: 
* Individuals with Disabilities Education Act Part B and C grants. 

Federal agency: Department of Energy; 
Agency office: Office of Energy Efficiency and Renewable Energy; 
Grant program or programs administered: 
* Clean Cities program; 
* Energy Efficiency and Conservation Block Grants; 
* Weatherization Assistance Program. 

Federal agency: Department of Health and Human Services; 
Agency office: Administration for Children and Families; 
Grant program or programs administered: 
* Child Care and Development Block Grants; 
* Community Services Block Grants; 
* Head Start/Early Start; 
* Recovery Act Impact on Child Support Incentives; 
* Title IV-E Adoption Assistance and Foster Care Programs. 

Federal agency: Department of Health and Human Services; 
Agency office: The Centers for Medicare & Medicaid Services; 
Grant program or programs administered: 
* Medicaid Federal Medical Assistance Percentage. 

Federal agency: Department of Health and Human Services; 
Agency office: Health Resources and Services Administration; 
Grant program or programs administered: 
* Capital Improvement Program; 
* Increased Demand for Services. 

Federal agency: Department of Homeland Security; 
Agency office: Federal Emergency Management Agency; 
Grant program or programs administered: 
* Emergency Food and Shelter Program; 
* Recovery Act Assistance to Firefighters Fire Station Construction 
Grants. 

Federal agency: Department of Housing and Urban Development; 
Agency office: Office of Community Planning and Development; 
Grant program or programs administered: 
* Community Development Block Grants; 
* Homelessness Prevention and Rapid Re-Housing Program; 
* Neighborhood Stabilization Program 2. 

Federal agency: Department of Housing and Urban Development; 
Agency office: Office of Public and Indian Housing; 
Grant program or programs administered: 
* Public Housing Capital Fund. 

Federal agency: Department of Justice; 
Agency office: Office of Community Oriented Policing Services; 
Grant program or programs administered: 
* Community Oriented Policing Services Hiring Recovery Program. 

Federal agency: Department of Justice; 
Agency office: Office of Justice Programs; 
Grant program or programs administered: 
* Assistance to Rural Law Enforcement to Combat Crime and Drugs 
Program; 
* Edward Byrne Memorial Justice Assistance Grant Program; 
* Internet Crimes Against Children Initiatives. 

Federal agency: Department of Justice; 
Agency office: Office on Violence Against Women; 
Grant program or programs administered: 
* Services*Training*Officers*Prosecutors Violence Against Women Formula 
Grants. 

Federal agency: Department of Labor; 
Agency office: Employment and Training Administration; 
Grant program or programs administered: 
* Senior Community Service Employment Program; 
* Workforce Investment Act Title I-B Grants. 

Federal agency: Department of Transportation; 
Agency office: Federal Aviation Administration; 
Grant program or programs administered: 
* Airport Improvement Program. 

Federal agency: Department of Transportation; 
Agency office: Federal Highway Administration; 
Grant program or programs administered: 
* Federal-Aid Highway Surface Transportation Program. 

Federal agency: Department of Transportation; 
Agency office: Federal Transit Administration; 
Grant program or programs administered: 
* Fixed Guideway Infrastructure Investment Program; 
* Transit Capital Assistance Program; 
* Transit Investments for Greenhouse Gas and Energy Reduction Grant 
Program. 

Federal agency: Department of Transportation; 
Agency office: Office of the Secretary; 
Grant program or programs administered: 
* Transportation Investment Generating Economic Recovery Discretionary 
Grants. 

Federal agency: Environmental Protection Agency; 
Agency office: Office of Air and Radiation; 
Grant program or programs administered: 
* Diesel Emission Reduction Act Grants. 

Federal agency: Environmental Protection Agency; 
Agency office: Office of Solid Waste and Emergency Response; 
Grant program or programs administered: 
* Brownfields Program. 

Federal agency: Environmental Protection Agency; 
Agency office: Office of Water; 
Grant program or programs administered: 
* Clean Water State Revolving Fund; 
* Drinking Water State Revolving Fund. 

Federal agency: National Endowment for the Arts; 
Grant program or programs administered: 
* National Endowment for the Arts Recovery Act grants. 

Source: GAO analysis. 

[End of figure] 

Medicaid Federal Medical Assistance Percentage: 

Medicaid is a joint federal-state program that finances health care for 
certain categories of low-income individuals, including children, 
families, persons with disabilities, and persons who are elderly. The 
federal government matches state spending for Medicaid services 
according to a formula based on each state's per capita income in 
relation to the national average per capita income. The Centers for 
Medicare & Medicaid Services, within the Department of Health and Human 
Services, approves state Medicaid plans, and the amount of federal 
assistance states receive for Medicaid service expenditures is known as 
the Federal Medical Assistance Percentage (FMAP). The Recovery Act's 
temporary increase in FMAP funding will provide the states with 
approximately $87 billion in assistance. 

Highway Infrastructure Investment Program: 

The Recovery Act provides funding to states for restoration, repair, 
and construction of highways and other activities allowed under the 
Federal Highway Administration's Federal-Aid Highway Surface 
Transportation Program and for other eligible surface transportation 
projects. The Recovery Act requires that 30 percent of these funds be 
suballocated, primarily based on population, for metropolitan, 
regional, and local use. Highway funds are apportioned to states 
through federal-aid highway program mechanisms, and states must follow 
existing program requirements. While the maximum federal fund share of 
highway infrastructure investment projects under the existing federal- 
aid highway program is generally 80 percent, under the Recovery Act, it 
is 100 percent. 

Funds appropriated for highway infrastructure spending must be used in 
accordance with Recovery Act requirements. States are required to 
ensure that all apportioned Recovery Act funds--including suballocated 
funds--are obligated[Footnote 119] within 1 year. The Secretary of 
Transportation is to withdraw and redistribute to eligible states any 
amount that is not obligated within these time frames.[Footnote 120] 
Additionally, the governor of each state must certify that the state 
will maintain its level of spending for the types of transportation 
projects funded by the Recovery Act it planned to spend the day the 
Recovery Act was enacted. As part of this certification, the governor 
of each state is required to identify the amount of funds the state 
plans to expend from state sources from February 17, 2009, through 
September 30, 2010.[Footnote 121] 

Public Transit Program: 

The Recovery Act appropriated $8.4 billion to fund public transit 
throughout the country through existing Federal Transit Administration 
(FTA) grant programs, including the Transit Capital Assistance Program, 
and the Fixed Guideway Infrastructure Investment program. Under the 
Transit Capital Assistance Program's formula grant program, Recovery 
Act funds were apportioned to large and medium urbanized areas--which 
in some cases include a metropolitan area that spans multiple states-- 
throughout the country according to existing program formulas. Recovery 
Act funds were also apportioned to states for small urbanized areas and 
nonurbanized areas under the Transit Capital Assistance Program's 
formula grant programs using the program's existing formula. Transit 
Capital Assistance Program funds may be used for such activities as 
vehicle replacements, facilities renovation or construction, preventive 
maintenance, and paratransit services. Recovery Act funds from the 
Fixed Guideway Infrastructure Investment program[Footnote 122] were 
apportioned by formula directly to qualifying urbanized areas, and 
funds may be used for any capital projects to maintain, modernize, or 
improve fixed guideway systems.[Footnote 123] As they work through the 
state and regional transportation planning process, designated 
recipients of the apportioned funds--typically public transit agencies 
and metropolitan planning organizations (MPO)--develop a list of 
transit projects that project sponsors (typically transit agencies) 
submit to FTA for approval.[Footnote 124] 

Funds appropriated for the Transit Capital Assistance Program and the 
Fixed Guideway Infrastructure Investment Program must be used in 
accordance with Recovery Act requirements. States are required to 
ensure that all apportioned Recovery Act funds are obligated[Footnote 
125] within 1 year. The Secretary of Transportation is to withdraw and 
redistribute to each state or urbanized area any amount that is not 
obligated within these time frames.[Footnote 126] Additionally, 
governors must certify that the state will maintain the level of state 
spending for the types of transportation projects funded by the 
Recovery Act it planned to spend the day the Recovery Act was enacted. 
As part of this certification, the governor of each state is required 
to identify the amount of funds the state plans to expend from state 
sources from February 17, 2009, through September 30, 2010.[Footnote 
127] 

Education: 

State Fiscal Stabilization Fund: 

The State Fiscal Stabilization Fund (SFSF), administered by the Office 
of Elementary and Secondary Education of the Department of Education, 
included approximately $48.6 billion to award to states by formula and 
up to $5 billion to award to states as competitive grants. The Recovery 
Act created the SFSF in part to help state and local governments 
stabilize their budgets by minimizing budgetary cuts in education and 
other essential government services, such as public safety. 
Stabilization funds for education distributed under the Recovery Act 
must first be used to alleviate shortfalls in state support for 
education to Local Education Agencies (LEA) and public institutions of 
higher education (IHE). States must use 81.8 percent of their SFSF 
formula grant funds to support education (these funds are referred to 
as education stabilization funds) and must use the remaining 18.2 
percent for public safety and other government services, which may 
include education (these funds are referred to as government services 
funds). For the initial award of SFSF formula grant funds, Education 
made available at least 67 percent of the total amount allocated to 
each state,[Footnote 128] but states had to submit an application to 
Education to receive the funds. The application required each state to 
provide several assurances, including that the state will meet 
maintenance-of-effort requirements (or will be able to comply with the 
relevant waiver provisions) and that it will implement strategies to 
advance four core areas of education reform: (1) increase teacher 
effectiveness and address inequities in the distribution of highly 
qualified teachers; (2) establish a pre-K-through-college data system 
to track student progress and foster improvement, (3) make progress 
toward rigorous college-and career-ready standards and high-quality 
assessments that are valid and reliable for all students, including 
students with limited English proficiency and students with 
disabilities; and (4) provide targeted, intensive support and effective 
interventions to turn around schools identified for corrective action 
or restructuring.[Footnote 129] In addition, states were required to 
make assurances concerning accountability, transparency, reporting, and 
compliance with certain federal laws and regulations. After maintaining 
state support for education at fiscal year 2006 levels, states must use 
education stabilization funds to restore state funding to the greater 
of fiscal year 2008 or 2009 levels for state support to LEAs and public 
IHEs. When distributing these funds to LEAs, states must use their 
primary education funding formula, but they can determine how to 
allocate funds to public IHEs. In general, LEAs have broad discretion 
in how they can use education stabilization funds, but states have some 
ability to direct IHEs in how to use these funds. 

ESEA Title I, Part A: 

The Recovery Act provides $10 billion to help LEAs educate 
disadvantaged youth by making additional funds available beyond those 
regularly allocated through Title I, Part A of the Elementary and 
Secondary Education Act of 1965,[Footnote 130] as amended. Title I 
funding is administered by the Office of Elementary and Secondary 
Education within the Department of Education. The Recovery Act requires 
these additional funds to be distributed through states to LEAs using 
existing federal funding formulas, which target funds based on such 
factors as high concentrations of students from families living in 
poverty. In using the funds, LEAs are required to comply with 
applicable statutory and regulatory requirements and must obligate 85 
percent of the funds by September 30, 2010.[Footnote 131] Education is 
advising LEAs to use the funds in ways that will build the agencies' 
long-term capacity to serve disadvantaged youth, such as through 
providing professional development to teachers. 

IDEA, Parts B and C: 

The Recovery Act provided supplemental funding for Parts B and C of the 
Individuals with Disabilities Education Act (IDEA), as amended, the 
major federal statute that supports early intervention and special 
education and related services for children, and youth with 
disabilities. Part B provides funds to ensure that preschool and school-
aged children with disabilities have access to a free and appropriate 
public education and is divided into two separate grant programs --Part 
B grants to states (for school-age children) and Part B preschool 
grants. The IDEA Part B grants are administered by the Office of 
Special Education and Rehabilitative Services. Part C funds programs 
that provide early intervention and related services for infants and 
toddlers with disabilities--or at risk of developing a disability--and 
their families. 

Public Housing Capital Fund: 

The Public Housing Capital Fund provides formula-based grant funds 
directly to public housing agencies to improve the physical condition 
of their properties; to develop, finance, and modernize public housing 
developments; and to improve management. Under the Recovery Act, the 
Office of Public and Indian Housing within the U.S. Department of 
Housing and Urban Development (HUD) allocated nearly $3 billion through 
the Public Housing Capital Fund to public housing agencies using the 
same formula for amounts made available in fiscal year 2008 and 
obligated these funds to housing agencies in March 2009. 

HUD was also required to award nearly $1 billion to public housing 
agencies based on competition for priority investments, including 
investments that leverage private sector funding or financing for 
renovations and energy conservation retrofitting. In September 2009, 
HUD awarded competitive grants for the creation of energy-efficient 
communities, gap financing for projects stalled due to financing 
issues, public housing transformation, and improvements addressing the 
needs of the elderly or persons with disabilities. 

Weatherization Assistance Program: 

The Recovery Act appropriated $5 billion for the Weatherization 
Assistance Program, which the Department of Energy (DOE) is 
distributing to each of the states, the District, and seven territories 
and Indian tribes, to be spent over a 3-year period. The program, 
administered by the Office of Energy Efficiency and Renewable Energy 
within DOE, enables low-income families to reduce their utility bills 
by making long-term energy-efficiency improvements to their homes by, 
for example, installing insulation, sealing leaks, and modernizing 
heating equipment, air circulation fans, and air conditioning 
equipment. Over the past 32 years, the Weatherization Assistance 
Program has assisted more than 6.2 million low-income families. By 
reducing the energy bills of low-income families, the program allows 
these households to spend their money on other needs, according to DOE. 
The Recovery Act appropriation represents a significant increase for a 
program that has received about $225 million per year in recent years. 
DOE has approved the weatherization plans of the 16 states and the 
District that are in our review and has provided at least half of the 
funds to those areas. 

Emergency Food and Shelter Program: 

The Emergency Food and Shelter Program (EFSP), which is administered by 
the Federal Emergency Management Agency (FEMA) within the Department of 
Homeland Security (DHS), was authorized in July 1987 by the Stewart B. 
McKinney Homeless Assistance Act to provide food, shelter and 
supportive services to the homeless.[Footnote 132] The program is 
governed by a National Board composed of a representative from FEMA and 
six statutorily-designated national nonprofit organizations.[Footnote 
133] Since its first appropriation in fiscal year 1983, EFSP has 
awarded over $3.4 billion in federal aid to more than 12,000 local 
private, non-profit, and government human service entities in more than 
2,500 communities nationwide. 

State and Local Budget: 

The following grant programs were mentioned in the state and local 
budget section of this report. 

Airport Improvement Program: 

Within the Department of Transportation, the Federal Aviation 
Administration's Airport Improvement Program provides formula and 
discretionary grants for the planning and development of public-use 
airports. The Recovery Act provides $1.1 billion for discretionary 
Grant-in-Aid for Airports under this program with priority given to 
projects that can be completed within 2 years. The Recovery Act 
requires that the funds must supplement, not supplant, planned 
expenditures from airport-generated revenues or from other state and 
local sources for airport development activities. The Recovery Act 
provides $1.1 billion for this program. 

Assistance to Rural Law Enforcement to Combat Crime and Drugs Program: 

The Recovery Act Assistance to Rural Law Enforcement to Combat Crime 
and Drugs Program is administered by the Bureau of Justice Assistance 
(BJA), a component of the Office of Justice Programs, U.S. Department 
of Justice. The purpose of this program is to help rural states and 
rural areas prevent and combat crime, especially drug-related crime, 
and provides for national support efforts, including training and 
technical assistance programs strategically targeted to address rural 
needs. The Recovery Act provides $125 million for this program, and BJA 
has made 212 awards. 

Broadband Technology Opportunities Program/State Broadband Data and 
Development Program: 

The Department of Commerce's National Telecommunications and 
Information Administration (NTIA) administers the Recovery Act's 
Broadband Technology Opportunities Program. This program was 
appropriated $4.7 billion, including $350 million for the purposes of 
developing and maintaining a broadband inventory map. To accomplish 
this, NTIA has developed the State Broadband Data and Development Grant 
Program, a competitive, merit-based matching grant program to fund 
projects that collect comprehensive and accurate state-level broadband 
mapping data, develop state-level broadband maps, aid in the 
development and maintenance of a national broadband map, and fund 
statewide initiatives directed at broadband planning. 

Brownfields Program: 

The Recovery Act provides $100 million to the Brownfields Program, 
administered by the Office of Solid Waste and Emergency Response within 
the Environmental Protection Agency, for cleanup, revitalization, and 
sustainable reuse of contaminated properties. The funds will be awarded 
to eligible entities through job training, assessment, revolving loan 
fund, and cleanup grants. 

Capital Improvement Program: 

The Department of Health and Human Services' Health Resources and 
Services Administration has allocated $862.5 million in Recovery Act 
funds for Capital Improvement Program grants to health centers to 
support the construction, repair, and renovation of more than 1,500 
health center sites nationwide, including purchasing health information 
technology and expanding the use of electronic health records. 

Child Care and Development Block Grants: 

Administered by the Administration for Children and Families within the 
Department of Health and Human Services, Child Care and Development 
Block Grants, one of the funding streams comprising the Child Care and 
Development Fund, are provided to states, according to a formula, to 
assist low-income families in obtaining child care, so that parents can 
work or participate in education or training activities. The Recovery 
Act provides $1.9 billion in supplemental funding for these grants. 

Clean Water State Revolving Fund: 

The Recovery Act provides $4 billion for the Clean Water State 
Revolving Fund, administered by the Office of Water within the 
Environmental Protection Agency, to fund municipal wastewater 
infrastructure projects. The Recovery Act requires states to use at 
least 50 percent of the amount of their capitalization grant to provide 
additional subsidization of loans to eligible recipients. In addition, 
to the extent there are sufficient project applications, at least 20 
percent of the appropriated funds must be designated for green 
infrastructure, water efficiency improvements, or other environmentally 
innovative projects. 

Clean Cities program: 

The Department of Energy's Clean Cities program, administered by the 
Office of Energy Efficiency and Renewable Energy, is a government- 
industry partnership that works to reduce America's petroleum 
consumption in the transportation sector. The Department of Energy is 
providing nearly $300 million in Recovery Act funds for projects under 
the Clean Cities program, which provide a range of energy-efficient and 
advanced vehicle technologies, such as hybrids, electric vehicles, plug-
in electric hybrids, hydraulic hybrids and compressed natural gas 
vehicles, helping reduce petroleum consumption across the United 
States. The program also supports refueling infrastructure for various 
alternative fuel vehicles, as well as public education and training 
initiatives, to further the program's goal of reducing the national 
demand for petroleum. 

Community Development Block Grants: 

The Community Development Block Grant (CDBG) program, administered by 
the Office of Community Planning and Development within the Department 
of Housing and Urban Development, enables state and local governments 
to undertake a wide range of activities intended to create suitable 
living environments, provide affordable housing, and create economic 
opportunities, primarily for persons of low and moderate income. Most 
local governments use this investment to rehabilitate affordable 
housing and improve key public facilities. The Recovery Act includes $1 
billion for the CDBG program. 

Community Services Block Grants: 

Community Services Block Grants (CSBG), administered by the 
Administration for Children and Families within the Department of 
Health and Human Services (HHS), provide federal funds to states, 
territories, and tribes for distribution to local agencies to support a 
wide range of community-based activities to reduce poverty. The 
Recovery Act appropriated $1 billion for CSBG to become available 
immediately. 

Community Oriented Policing Services (COPS) Hiring Recovery Program: 

The COPS Hiring Recovery Program (CHRP), administered by the Office of 
Community Oriented Policing Services within the U.S. Department of 
Justice, provides competitive grant funds directly to law enforcement 
agencies for the purpose of hiring or rehiring career law enforcement 
officers and increasing their community policing capacity and crime- 
prevention efforts. CHRP grants provide 100 percent funding for 3 years 
for approved entry-level salaries and benefits for newly hired, full- 
time sworn officer positions or for rehired officers who have been laid 
off, or are scheduled to be laid off on a future date, as a result of 
local budget cuts. 

Diesel Emission Reduction Act Grants: 

The program objective of the Diesel Emission Reduction Act Grants, 
administered by the Office of Air and Radiation in conjunction with the 
Office of Grants and Debarment, within the U.S. Environmental 
Protection Agency (EPA), is to reduce diesel emissions. EPA will award 
grants to address the emissions of in-use diesel engines by promoting a 
variety of cost-effective emission reduction strategies, including 
switching to cleaner fuels, retrofitting, repowering or replacing 
eligible vehicles and equipment, and idle reduction strategies. The 
Recovery Act appropriated $300 million for the Diesel Emission 
Reduction Act grants. In addition, the funds appropriated through the 
Recovery Act for the program are not subject to the State Grant and 
Loan Program Matching Incentive provisions of the Energy Policy Act of 
2005. 

Drinking Water State Revolving Fund: 

The Drinking Water State Revolving Fund program was established under 
the Safe Drinking Water Act (SDWA) Amendments of 1996, which authorizes 
the Environmental Protection Agency (EPA) to award capitalization 
grants to states, which in turn are authorized to provide low-cost 
loans and other types of assistance to public water systems to finance 
the costs of infrastructure projects needed to achieve or maintain 
compliance with SDWA requirements. The Recovery Act provides $2 billion 
in funding for this program, which is administered by the Office of 
Water within EPA. 

Edward Byrne Memorial Justice Assistance Grant Program: 

The Edward Byrne Memorial Justice Assistance Grant (JAG) Program within 
the Department of Justice's Bureau of Justice Assistance provides 
federal grants to state and local governments for law enforcement and 
other criminal justice activities, such as crime prevention and 
domestic violence programs, corrections, treatment, justice information 
sharing initiatives, and victims' services. JAG funds are allocated 
based on a statutory formula determined by population and violent crime 
statistics, in combination with a minimum allocation to ensure that 
each state and territory receives some funding. 

Energy Efficiency and Conservation Block Grants: 

The Energy Efficiency and Conservation Block Grants (EECBG), 
administered by the Office of Energy Efficiency and Renewable Energy 
within the Department of Energy, provides funds through competitive and 
formula grants to units of local and state government and Indian tribes 
to develop and implement projects to improve energy efficiency and 
reduce energy use and fossil fuel emissions in their communities. The 
Recovery Act includes $3.2 billion for the EECBG. Of that total, $400 
million is to be awarded on a competitive basis to grant applicants. 

Title IV-E Adoption Assistance and Foster Care Programs: 

Administered by the Administration for Children and Families within the 
Department of Health and Human Services, the Foster Care Program helps 
states to provide safe and stable out-of-home care for children until 
the children are safely returned home, placed permanently with adoptive 
families or placed in other planned arrangements for permanency. The 
Adoption Assistance Program provides funds to states to facilitate the 
timely placement of children, whose special needs or circumstances 
would otherwise make placement difficult, with adoptive families. 
Federal Title IV-E funds are paid to reimburse states for their 
maintenance payments using the states' respective Federal Medical 
Assistance Percentage (FMAP) rates.[Footnote 134] Under the Recovery 
Act, an estimated additional $806 million will be provided to states to 
increase the federal match for state maintenance payments for foster 
care, adoption assistance, and guardianship assistance. 

Head Start/Early Head Start: 

The Head Start program, administered by the Office of Head Start of the 
Administration for Children and Families within the Department of 
Health and Human Services, provides comprehensive early childhood 
development services to low-income children, including educational, 
health, nutritional, social, and other services, intended to promote 
the school readiness of low-income children. Federal Head Start funds 
are provided directly to local grantees, rather than through states. 
The Recovery Act provided an additional $2.1 billion in funding for 
Head Start, including $1.1 billion directed for the expansion of Early 
Head Start programs. The Early Head Start program provides family- 
centered services to low-income families with very young children 
designed to promote the development of the children, and to enable 
their parents to fulfill their roles as parents and to move toward self-
sufficiency. 

Homelessness Prevention and Rapid Re-Housing Program: 

The Homelessness Prevention and Rapid Re-Housing Program, administered 
by the Office of Community Planning and Development within the 
Department of Housing and Urban Development, awards formula grants to 
states and localities to prevent homelessness and procure shelter for 
those who have become homeless. Funding for this program is being 
distributed based on the formula used for the Emergency Shelter Grants 
program. According to the Recovery Act, program funds should be used 
for short-term or medium-term rental assistance; 
housing relocation and stabilization services, including housing 
search, mediation or outreach to property owners, credit repair, 
security or utility deposits, utility payments, and rental assistance 
for management; 
or appropriate activities for homeless prevention and rapid rehousing 
of persons who have become homeless. The Recovery Act includes $1.5 
billion for this program. 

Increased Demand for Services: 

The Department of Health and Human Services' Health Resources and 
Services Administration (HRSA) has allocated Recovery Act funds for 
Increased Demand for Services (IDS) grants to health centers to 
increase health center staffing, extend hours of operations, and expand 
existing services. The Recovery Act provided $500 million for health 
center operations. HRSA has allocated $343 million for IDS grants to 
health centers.[Footnote 135] 

Internet Crimes Against Children Initiatives: 

Internet Crimes Against Children Initiatives (ICAC), administered by 
the Department of Justice, Office of Justice Programs' (OJP) Office of 
Juvenile Justice and Delinquency Prevention (OJJDP), seeks to maintain 
and expand state and regional ICAC task forces to address technology- 
facilitated child exploitation. This program provides funding to states 
and localities for salaries and employment costs of law enforcement 
officers, prosecutors, forensic analysts, and other related 
professionals. The Recovery Act appropriated $50 million for ICAC. 

National Endowment for the Arts Recovery Act grants: 

The Recovery Act provides $50 million to be distributed in direct 
grants by the National Endowment for the Arts to fund arts projects and 
activities that preserve jobs in the nonprofit arts sector threatened 
by declines in philanthropic and other support during the current 
economic downturn. 

Neighborhood Stabilization Program 2: 

The Neighborhood Stabilization Program (NSP), administered by the 
Office of Community Planning and Development within the Department of 
Housing and Urban Development, provides assistance for the acquisition 
and rehabilitation of abandoned or foreclosed homes and residential 
properties, among other activities, so that such properties may be 
returned to productive use. Congress appropriated $2 billion in NSP2 
funds in the Recovery Act for competitive awards to states, local 
governments, and nonprofit organizations. NSP is considered to be a 
component of the Community Development Block Grant (CDBG) program and 
basic CDBG requirements govern NSP. 

Recovery Act Assistance to Firefighters Fire Station Construction 
Grants: 

The Recovery Act Assistance to Firefighters Fire Station Construction 
Grants, also known as fire grants or the FIRE Act grant program, is 
administered by the Department of Homeland Security, Federal Emergency 
Management Agency (FEMA), Assistance to Firefighters Program Office. 
The program provides federal grants directly to fire departments on a 
competitive basis to build or modify existing non-federal fire stations 
in order for departments to enhance their response capability and 
protect the communities they serve from fire and fire-related hazards. 
The Recovery Act includes $210 million for this program and provides 
that no grant shall exceed $15 million. 

Recovery Act Impact on Child Support Incentives: 

Under title IV-D of the Social Security Act, the Administration for 
Children and Families (ACF), within the Department of Health and Human 
Services, administers matching grants to states to carry out their 
child support enforcement programs, which enhance the well-being of 
children by identifying parents, establishing support obligations, and 
monitoring and enforcing those obligations. Furthermore, ACF makes 
additional incentive payments to states based on their child support 
enforcement programs meeting certain performance goals. These 
activities are appropriated annually and the Recovery Act does not 
appropriate funds for either of them. However, the Recovery Act 
temporarily provides for incentive payments expended by states for 
child support enforcement to count as state funds eligible for the 
matching grants. This change is effective October 1, 2008, through 
September 30, 2010. 

Transportation Investment Generating Economic Recovery Discretionary 
Grants: 

Administered by the Department of Transportation's Office of the 
Secretary, the Recovery Act provides $1.5 billion in competitive 
grants, generally between $20 million and $300 million, to state and 
local governments, and transit agencies. These grants are for capital 
investments in surface transportation infrastructure projects that will 
have a significant impact on the nation, a metropolitan area, or a 
region. Projects eligible for funding provided under this program 
include, but are not limited to, highway or bridge projects, public 
transportation projects, passenger and freight rail transportation 
projects, and port infrastructure investments. 

Transit Investments for Greenhouse Gas and Energy Reduction Grant 
Program: 

The Transit Investments for Greenhouse Gas and Energy Reduction 
(TIGGER) Grant program, administered by the Federal Transit 
Administration within the Department of Transportation, is a 
discretionary program to support transit capital projects that result 
in greenhouse gas reductions or reduced energy use. The Recovery Act 
provides $100 million for the TIGGER program, and each submitted 
proposal must request a minimum of $2 million. 

Senior Community Service Employment Program: 

The Senior Community Service Employment Program (SCSEP), administered 
by the Employment and Training Administration within the Department of 
Labor, promotes useful part-time opportunities in community service 
activities for unemployed low-income persons who are 55 years or older 
and who have poor employment prospects. The Recovery Act provides $120 
million for SCSEP. 

Services*Training*Officers*Prosecutors (STOP) Violence Against Women 
Formula Grants Program: 

Under the STOP Program, the Office on Violence Against Women within the 
Department of Justice, has awarded over $139 million in Recovery Act 
funds to promote a coordinated, multidisciplinary approach to enhance 
services and advocacy to victims, improve the criminal justice system's 
response, and promote effective law enforcement, prosecution, and 
judicial strategies to address domestic violence, dating violence, 
sexual assault, and stalking. 

Supplemental Nutrition Assistance Program (formerly the Food Stamp 
Program): 

The Supplemental Nutrition Assistance Program (SNAP), administered by 
the Food and Nutrition Service within the Department of Agriculture, 
serves more than 35 million people nationwide each month. SNAP's goal 
is to help low-income people and families buy the food they need for 
good health. The Recovery Act provides for a monthly increase in 
benefits for the program's recipients. The increases in benefits under 
the Recovery Act are estimated to total $20 billion over the next 5 
years. 

Wildland Fire Management Program: 

The Department of Agriculture's Forest Service administers the Wildland 
Fire Management Program funding for projects on federal, state, and 
private land. The goals of these projects include ecosystem 
restoration, research, and rehabilitation; 
forest health and invasive species protection; 
and hazardous fuels reduction. The Recovery Act provided $500 million 
for the Wildland Fire Management program. 

Workforce Investment Act Title I-B Grants: 

The Workforce Investment Act of 1998 (WIA) programs, administered 
primarily by the Employment and Training Administration within the 
Department of Labor, provide job training and related services to 
unemployed and underemployed individuals. The Recovery Act provides an 
additional $2.95 billion in funding for state formula grants for Youth, 
Adult, and Dislocated Worker Employment and Training Activities under 
Title I-B of WIA. These grants are allocated to states, which in turn 
allocate funds to local entities. The adult program provides training 
and related services to individuals ages 18 and older, the youth 
program provides training and related services to low-income youth ages 
14 to 21, and dislocated worker funds provide training and related 
services to individuals who have lost their jobs and are unlikely to 
return to those jobs or similar jobs in the same industry. 

[End of section] 

Appendix III: Local Entities Visited by GAO in Selected States and the 
District of Columbia: 

Table 13: Highway Entities Visited by GAO: 

Arizona: 
City/county: Phoenix; 
Entity: Arizona Department of Transportation. 

City/county: Phoenix; 
Entity: Maricopa Association of Governments. 

City/county: Prescott; 
Entity: Northern Arizona Council of Governments. 

California: 

City/county: Burlingame; 
Entity: City of Burlingame. 

City/county: Sacramento; 
Entity: California Department of Transportation (Caltrans). 

District of Columbia: 

City/county: Washington; 
Entity: District Department of Transportation. 

Florida: 
City/county: Alachua; 
Entity: Alachua County. 

City/county: Clay; 
Entity: Clay County. 

City/county: Duval; 
Entity: Duval County. 

City/county: Union; 
Entity: Union County. 

Illinois: 

City/county: Springfield; 
Entity: Illinois Department of Transportation. 

City/county: Springfield; 
Entity: Federal Highway Administration - Illinois Division Office. 

Mississippi: 

City/county: Attala County; 
Entity: State Aid Road Construction. 

City/county: Bolivar County; 
Entity: Mississippi Department of Transportation. 

New Jersey: 

City/county: Trenton; 
Entity: New Jersey DOT. 

New York: 

City/county: New York City; 
Entity: New York City Department of Transportation. 

Texas: 

City/county: Plano; 
Entity: City of Plano. 

Source: GAO. 

Note: Total number of highway entities visited by GAO is 17. 

[End of table] 

Table 14: Transit Entities Visited by GAO: 

California: 

City/county: Oakland; 
Entity: Metropolitan Transportation Commission. 

City/county: San Diego; 
Entity: San Diego Association of Governments. 

City/county: San Francisco; 
Entity: San Francisco Municipal Transportation Agency. 

Colorado: 

City/county: Denver; 
Entity: Regional Transportation District. 

City/county: Fort Collins; 
Entity: Transfort. 

Georgia: 
City/county: Atlanta; 
Entity: Metropolitan Atlanta Rapid Transit Authority (MARTA). 

City/county: Lawrenceville; 
Entity: Gwinnett County Transit. 

Iowa: 
City/county: Ames; 
Entity: Ames Transit Agency. 

City/county: Atlantic; 
Entity: Southwest Iowa Transit Agency. 

City/county: Des Moines; 
Entity: Des Moines Area Regional Transit Authority. 

City/county: Fort Dodge; 
Entity: Mid-Iowa Development Association. 

Illinois: 
City/county: Arlington Heights; 
Entity: Pace, the Suburban Bus Division of the Regional Transportation 
Authority. 

City/county: Chicago; 
Entity: Chicago Transit Authority. 

New Jersey: 
City/county: Newark; 
Entity: New Jersey Transit. 

New York: 
City/county: Buffalo; 
Entity: Niagara Frontier Transportation Authority. 

City/county: Glens Falls; 
Entity: Greater Glens Falls Transit. 

City/county: New York City; 
Entity: Metropolitan Transportation Authority. 

North Carolina: 

City/county: Boone; 
Entity: AppalCART. 

City/county: Charlotte; 
Entity: Charlotte Area Transit System. 

City/county: Raleigh; 
Entity: North Carolina Department of Transportation Public 
Transportation Division. 

Pennsylvania: 
City/county: Allentown; 
Entity: Lehigh and Northampton Transportation Authority (LANTA). 

City/county: Allentown; 
Entity: Lehigh Valley Planning Commission (LVPC). 

City/county: Harrisburg; 
Entity: Pennsylvania Department of Transportation Bureau of Public 
Transportation. 

City/county: Philadelphia; 
Entity: Southeastern Pennsylvania Transportation Authority (SEPTA). 

City/county: Pittsburgh; 
Entity: Port Authority of Allegheny County. 

Source: GAO. 

Note: Total number of transit entities visited by GAO is 25. 

[End of table] 

Table 15: Educational Entities Visited by GAO: 

Arizona: 
City: Arlington; 
Name: Arlington Elementary District. 

City: Buckeye; 
Name: Buckeye Elementary District. 

City: Congress; 
Name: Congress Elementary District. 

City: Cornville; 
Name: Desert Star Community School, Inc. 

City: Prescott; 
Name: Yavapai Community College District. 

City: Tempe; 
Name: Maricopa County Community College District. 

City: Tonapah; 
Name: Saddle Mountain Unified School District. 

California: 

City: Caruthers; 
Name: Alvina Elementary Charter School. 

City: Los Angeles; 
Name: Los Angeles Unified School District. 

District of Columbia: 

City: Washington; 
Name: District of Columbia Public Schools. 

City: Washington; 
Name: Friendship Public Charter School. 

City: Washington; 
Name: William E. Doar, Jr. Public Charter School. 

Illinois: 
City: Glenview; 
Name: Glenview School District 34. 

City: Springfield; 
Name: Illinois State Board of Education. 

City: Springfield; 
Name: Springfield School District 186. 

New York: 
City: Jasper; 
Name: Jasper-Troupsburg Central School District. 

City: New York; 
Name: New York City Department of Education. 

North Carolina: 
City: Charlotte; 
Name: Charlotte-Mecklenburg Schools. 

City: Weldon; 
Name: Weldon City Schools. 

Source: GAO. 

Note: Total number of educational entities visited by GAO is 19. 

[End of table] 

Table 16: Housing Entities Visited by GAO: 

Arizona: 

City/county: Glendale; 
Entity: City of Glendale Community Housing Division. 

City/county: Phoenix; 
Entity: City of Phoenix Housing Department. 

City/county: Phoenix; 
Entity: Housing Authority of Maricopa County. 

City/county: Pinal; 
Entity: Pinal County Housing Department. 

City/county: Tucson; 
Entity: City of Tucson Department of Housing and Community Development. 

Colorado: 

City/county: Denver; 
Entity: Housing Authority of the City and County of Denver. 

City/county: Holyoke; 
Entity: Holyoke Housing Authority. 

City/county: Kersey; 
Entity: Housing Authority of the Town of Kersey. 

Georgia: 

City/county: Athens; 
Entity: Athens Housing Authority. 

City/county: Atlanta; 
Entity: Atlanta Housing Authority. 

City/county: Macon; 
Entity: Macon Housing Authority. 

Iowa: 

City/county: Des Moines; 
Entity: Des Moines Municipal Housing Agency. 

City/county: Evansdale; 
Entity: Evansdale Municipal Housing Authority. 

City/county: Mason City; 
Entity: North Iowa Regional Housing Authority. 

City/county: Ottumwa; 
Entity: Ottumwa Housing Authority. 

Illinois: 

City/county: Chicago; 
Entity: Chicago Housing Authority. 

City/county: Ottawa; 
Entity: Housing Authority for LaSalle County. 

Massachusetts: 

City/county: Boston; 
Entity: Boston Housing Authority. 

City/county: Revere; 
Entity: Revere Housing Authority. 

Mississippi: 

City/county: Gulfport; 
Entity: Mississippi Regional Housing Authority No. VIII. 

City/county: Picayune; 
Entity: The Housing Authority of the City of Picayune. 

New Jersey: 

City/county: Newark; 
Entity: Newark Housing Authority. 

City/county: Plainfield; 
Entity: Housing Authority of Plainfield. 

City/county: Rahway; 
Entity: The Housing Authority of the City of Rahway. 

City/county: Trenton; 
Entity: Trenton Housing Authority. 

Texas: 

City/county: San Antonio; 
Entity: San Antonio Housing Authority (SAHA). 

Source: GAO. 

Note: Total number of housing entities visited by GAO is 26. 

[End of table] 

Table 17: State and Local Weatherization Entities Visited by GAO: 

California: 

City/county: Garden Grove; 
Entity: Community Action Partnership of Orange County. 

City/county: Los Angeles; 
Entity: Pacific Asian Consortium in Employment (PACE). 

City/county: Riverside; 
Entity: Community Action Partnership of Riverside County. 

City/county: Roseville; 
Entity: Project Go, Inc. 

District of Columbia: 

City/county: Washington; 
Entity: ARCH Training Center. 

City/county: Washington; 
Entity: District Department of the Environment. 

City/county: Washington; 
Entity: United Planning Organization. 

Iowa: 

City/county: Des Moines; 
Entity: Polk County Public Works Department. 

City/county: Marshalltown; 
Entity: Mid-Iowa Community Action, Inc. 

Massachusetts; 
City/county: Chelsea; 
Entity: Community Action Programs Inter-City, Inc. 

City/county: Gloucester; 
Entity: Action, Inc. 

Michigan: 

City/county: Jackson; 
Entity: Community Action Agency of Jackson, Lenawee, Hillsdale. 

City/county: Lansing; 
Entity: Michigan Department of Human Services. 

City/county: Pontiac; 
Entity: Oakland Livingston Human Services Agency. 

New York: 

City/county: Centereach; 
Entity: Community Development Corporation of Long Island. 

City/county: Long Island City; 
Entity: Community Environmental Center. 

City/county: Syracuse; 
Entity: People's Equal Action and Community Effort. 

Ohio: 

City/county: Athens; 
Entity: Corporation for Ohio Appalachian Development (COAD). 

City/county: Columbus; 
Entity: Mid-Ohio Regional Planning Commission (MORPC). 

City/county: Dayton; 
Entity: Community Action Partnership of the Greater Dayton Area (CAP-
Dayton). 

City/county: Nelsonville; 
Entity: Tri-County (Hocking-Athens-Perry) Community Action. 

Pennsylvania: 

City/county: Gettysburg; 
Entity: South Central Community Action Programs. 

City/county: Harrisburg; 
Entity: Department of Community and Economic Development. 

City/county: Harrisburg; 
Entity: Pennsylvania Housing Finance Agency. 

Source: GAO. 

Note: Total number of weatherization entities visited by GAO is 24. 

[End of table] 

Table 18: Local Governments Visited by GAO (Government Type, Population 
and Unemployment): 

State: Arizona; 
Local government: Maricopa County; 
Type of local government: County; 
Population: 3,954,598; 
Unemployment rate: 8.5%. 

State: Arizona; 
Local government: Yavapai County; 
Type of local government: County; 
Population: 215,503; 
Unemployment rate: 9.5%. 

Local government: City of Los Angeles; 
Type of local government: City; 
Population: 3,833,995; 
Unemployment rate: 14.0%. 

State: California; 
Local government: Sacramento County; 
Type of local government: County; 
Population: 1,394,154; 
Unemployment rate: 12.2%. 

State: Colorado; 
Local government: Adams County; 
Type of local government: County; 
Population: 430,836; 
Unemployment rate: 8.1%. 

State: Colorado; 
Local government: Denver; 
Type of local government: City and County; 
Population: 598,707; 
Unemployment rate: 7.7%. 

State: Colorado; 
Local government: Garfield; 
Type of local government: County; 
Population: 55,426; 
Unemployment rate: 5.8%. 

State: Florida; 
Local government: Ft. Myers City; 
Type of local government: City; 
Population: 65,394; 
Unemployment rate: 12.1%. 

State: Florida; 
Local government: Lee County; 
Type of local government: County; 
Population: 593,136; 
Unemployment rate: 13.9%. 

State: Georgia; 
Local government: Atlanta; 
Type of local government: City; 
Population: 537,958; 
Unemployment rate: 11.4%. 

State: Georgia; 
Local government: Macon; 
Type of local government: City; 
Population: 92,775; 
Unemployment rate: 11.7%. 

State: Georgia; 
Local government: Tift County; 
Type of local government: County; 
Population: 42,434; 
Unemployment rate: 10.6%. 

State: Illinois; 
Local government: Chicago; 
Type of local government: City; 
Population: 2,853,114; 
Unemployment rate: 11.3%. 

State: Illinois; 
Local government: Joliet; 
Type of local government: City; 
Population: 146,125; 
Unemployment rate: 12.2%. 

State: Illinois; 
Local government: Springfield; 
Type of local government: City; 
Population: 117,352; 
Unemployment rate: 8.2%. 

State: Iowa; 
Local government: Cedar Rapids; 
Type of local government: City; 
Population: 128,056; 
Unemployment rate: 6.6%. 

State: Iowa; 
Local government: Des Moines; 
Type of local government: City; 
Population: 197,052; 
Unemployment rate: 7.3%. 

State: Iowa; 
Local government: Newton; 
Type of local government: City; 
Population: 15,042; 
Unemployment rate: 8.1%. 

State: Massachusetts; 
Local government: Boston; 
Type of local government: City; 
Population: 609,023; 
Unemployment rate: 9.2%. 

State: Massachusetts; 
Local government: Springfield; 
Type of local government: City; 
Population: 150,640; 
Unemployment rate: 12.8%. 

State: Michigan; 
Local government: Allegan; 
Type of local government: County; 
Population: 112,975; 
Unemployment rate: 13.2%. 

State: Michigan; 
Local government: Flint; 
Type of local government: City; 
Population: 112,900; 
Unemployment rate: 26.3%. 

State: Michigan; 
Local government: Royal Oak; 
Type of local government: City; 
Population: 57,110; 
Unemployment rate: 9.9%. 

State: Mississippi; 
Local government: Jackson; 
Type of local government: City; 
Population: 173,861; 
Unemployment rate: 8.6%. 

State: Mississippi; 
Local government: Meridian; 
Type of local government: City; 
Population: 38,232; 
Unemployment rate: 12.2%. 

State: Mississippi; 
Local government: Vicksburg; 
Type of local government: City; 
Population: 24,974; 
Unemployment rate: 14.5%. 

State: New Jersey; 
Local government: Cumberland County; 
Type of local government: County; 
Population: 156,830; 
Unemployment rate: 12.6%. 

State: New Jersey; 
Local government: City of Newark; 
Type of local government: City; 
Population: 278,980; 
Unemployment rate: 15.0%. 

State: New York; 
Local government: Buffalo; 
Type of local government: City; 
Population: 270,919; 
Unemployment rate: 10.8%. 

State: New York; 
Local government: New York City; 
Type of local government: City; 
Population: 8,363,710; 
Unemployment rate: 10.2%. 

State: New York; 
Local government: Steuben; 
Type of local government: County; 
Population: 96,573; 
Unemployment rate: 9.5%. 

State: New York; 
Local government: Westchester; 
Type of local government: County; 
Population: 953,943; 
Unemployment rate: 7.4%. 

State: North Carolina; 
Local government: Durham; 
Type of local government: City; 
Population: 223,284; 
Unemployment rate: 7.3%. 

State: North Carolina; 
Local government: Halifax County; 
Type of local government: County; 
Population: 54,983; 
Unemployment rate: 13.1%. 

State: Ohio; 
Local government: Athens; 
Type of local government: City; 
Population: 22,088; 
Unemployment rate: 8.6%. 

State: Ohio; 
Local government: Cincinnati; 
Type of local government: City; 
Population: 333,336; 
Unemployment rate: 9.3%. 

State: Ohio; 
Local government: Putnam County; 
Type of local government: County; 
Population: 34,543; 
Unemployment rate: 9.0%. 

State: Ohio; 
Local government: Toledo; 
Type of local government: City; 
Population: 293,201; 
Unemployment rate: 12.1%. 

State: Pennsylvania; 
Local government: Allentown; 
Type of local government: City; 
Population: 107,250; 
Unemployment rate: 12.4%. 

State: Pennsylvania; 
Local government: Dauphin County; 
Type of local government: County; 
Population: 256,562; 
Unemployment rate: 8.1%. 

State: Pennsylvania; 
Local government: Harrisburg; 
Type of local government: City; 
Population: 47,148; 
Unemployment rate: 11.5%. 

State: Pennsylvania; 
Local government: Lehigh County; 
Type of local government: County; 
Population: 339,989; 
Unemployment rate: 9.3%. 

State: Texas; 
Local government: Dallas; 
Type of local government: City; 
Population: 1,279,910; 
Unemployment rate: 8.7%. 

State: Texas; 
Local government: Denton County; 
Type of local government: County; 
Population: 636,557; 
Unemployment rate: 7.7%. 

Source: GAO analysis of U.S. Census Bureau and U.S. Department of 
Labor, Bureau of Labor Statistics (BLS), Local Area Unemployment 
Statistics (LAUS). 

Notes: Population data are from July 1, 2008. Unemployment rates are 
preliminary estimates for September 2009 and have not been seasonally 
adjusted. Rates are a percentage of the labor force. Estimates are 
subject to revision. 

Total number of local governments visited by GAO is 44. 

[End of table] 

[End of section] 

Appendix IV: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

J. Christopher Mihm, Managing Director for Strategic Issues, (202) 512- 
6806 or mihmj@gao.gov: 

For issues related to SFSF, and other education programs: Cynthia 
Fagnoni, Managing Director of Education, Workforce, and Income 
Security, (202) 512-7215 or fagnonic@gao.gov: 

For issues related to Medicaid programs: Dr. Marjorie Kanof, Managing 
Director of Health Care, (202) 512-7114 or kanofm@gao.gov: 

For issues related to highways, transit, and other transportation 
programs: Katherine A. Siggerud, Managing Director of Physical 
Infrastructure, (202) 512-2834 or siggerudk@gao.gov: 

For issues related to energy and weatherization: Patricia Dalton, 
Managing Director of Natural Resources and Environment, (202) 512-3841 
or daltonp@gao.gov: 

For issues related to public housing: Richard J. Hillman, Managing 
Director of Financial Markets and Community Investment, (202) 512-8678 
or hillmanr@gao.gov: 

For issues related to internal controls and Single Audits: Jeanette 
Franzel, Managing Director of Financial Management and Assurance, (202) 
512-9471 or franzelj@gao.gov: 

For issues related to contracting and procurement: Paul Francis, 
Managing Director of Acquisition Sourcing Management, (202) 512-2811 or 
francisp@gao.gov: 

For issues related to emergency food and shelter: Cathleen A. Berrick, 
Managing Director of Homeland Security and Justice, (202) 512-3404 or 
berrickc@gao.gov: 

Staff Acknowledgments: 

The following staff contributed to this report: Stanley Czerwinski, 
Denise Fantone, Susan Irving, and Yvonne Jones, (Directors); 
Thomas James, James McTigue, and Michelle Sager, (Assistant Directors); 
Sandra Beattie (Analyst-in-Charge); and Robert Alarapon, David 
Alexander, Marie Penny Ahearn, Judith Ambrose, Peter Anderson, Lydia 
Araya, Thomas Beall, James Bennett, Noah Bleicher, Jessica Botsford, 
Anthony Bova, Muriel Brown, Lauren Calhoun, Richard Cambosos, Ralph 
Campbell Jr., Virginia Chanley, Tina Cheng, Marcus Corbin, Robert 
Cramer, Jeffrey DeMarco, Michael Derr, Helen Desaulniers, Ruth "Eli" 
DeVan, David Dornisch, Kevin Dooley, Holly Dye, Abe Dymond, James 
Fuquay, Alice Feldesman, Alexander Galuten, Ellen Grady, Anita 
Hamilton, Geoffrey Hamilton, Tracy Harris, Bert Japikse, Karen Keegan, 
John Krump, Jon Kruskar, Hannah Laufe, Jean K. Lee, Sarah McGrath, Jean 
McSween, Donna Miller, Kevin Milne, Shelia McCoy, Mimi Nguyen, Josh 
Ormond, Ken Patton, Sarah Prendergast, Brenda Rabinowitz, Carl Ramirez, 
James Rebbe, Beverly Ross, Aubrey Ruge, Sylvia Schatz, Sidney Schwartz, 
John Smale Jr., Kathryn Smith, George Stalcup, Andrew J. Stephens, 
Alyssa Weir, Crystal Wesco, and Kimberly Young. 

Program Contributors: 

The names of GAO staff contributing to information contained in the 
sections on the selected program are as follows: 

Education--SFSF, IDEA, Title I; 
Cornelia M. Ashby, James L. Ashley, Ed Bodine, Karen A. Brown, Amy 
Buck, Alex Galuten, Bryon Gordon, Sonya Harmeyer, Susan Lawless, Ying 
Long, Sheila McCoy, Jean McSween, Mimi Nguyen, Karen V. O'Conor, Kathy 
Peyman, James M. Rebbe, Michelle Verbrugge, and Charles Willson. 

Emergency Food and Shelter; 
Laurel Beedon, John Hansen, and William Jenkins. 

Medicaid; 
Susan Anthony, Emily Beller, Ted Burik, Julianne Flowers, Martha Kelly, 
and Carolyn Yocom. 

Public Housing; 
Don Brown, Don Kiggins, May Lee, John Lord, John McGrail, Marc Molino, 
Paul Schmidt, Jennifer Schwartz, and Mathew Scire. 

Safeguarding/Single Audit; 
Phyllis Anderson, Marcia Buchanan, Eric Holbrook, Heather Keister, Kim 
McGatlin, Diane Morris, and Susan Ragland. 

State and Local Budget Stabilization; 
Sandra Beattie, Anthony Bova, Stanley J. Czerwinski, Jeffrey DeMarco, 
Sarah Prendergast, and Michelle Sager. 

Transportation/highway and transit programs; 
Bob Ciszewski, A. Nicole Clowers, Steve Cohen, Catherine Colwell, Dean 
Gudicello, Heather Halliwell, Greg Hanna, Delwen Jones, Les Locke, Tim 
Schindler, Raymond Sendejas, Tina Won Sherman, Carrie Wilks, and Susan 
Zimmerman. 

Weatherization; 
Jessica Bryant-Bertail, Ric Cheston, Mark Gaffigan, Kim Gianopoulos, 
Stuart Ryba, and Jason Trentacoste. 

Contributors to Recovery Act Reporting on the Selected States and the 
District: 

The names of GAO staff contributing to the selected states and the 
District appendixes are as follows: 

Arizona; 
Rebecca Bolnick, Tom Brew, Lisa Brownson, Aisha Cabrer, Steven Calvo, 
Eileen Larence, Steven Rabinowitz, Radha Seshagiri, Jeff Schmerling, 
James Solomon, and Ann Walker. 

California; 
Paul Aussendorf, Linda Calbom, Joonho Choi, Guillermo Gonzalez, Chad 
Gorman, Richard Griswold, Don Hunts, Delwen Jones, Susan Lawless, 
Brooke Leary, Heather MacLeod, Emmy Rhine, Eddie Uyekawa, Lacy Vong, 
and Randy Williamson. 

Colorado; 
Paul Begnaud, Steve Gaty, Kathy Hale, Susan Iott, Jennifer Leone, Brian 
Lepore, Robin Nazzaro, Tony Padilla, Lesley Rinner, Kay Harnish-Ladd, 
Kathleen Richardson, and Mary Welch. 

District of Columbia; 
Laurel Beedon, Sunny Chang, Marisol Cruz, Nagla'a El-Hodiri, Mattias 
Fenton, John Hansen, Adam Hoffman, William O. Jenkins, Jr., LaToya 
King, and Linda Miller. 

Florida; 
Susan Aschoff, Patrick di Battista, Lisa Galvan-Trevino, Sabur Ibrahim, 
Kevin Kumanga, Frank Minore, Zina Merritt, Brenda Ross, Andy Sherrill, 
Barbara Steel-Lowney, Margaret Weber, and James Whitcomb. 

Georgia; 
Alicia Puente Cackley, Waylon Catrett, Chase Cook, Nadine Garrick, Marc 
Molino, Daniel Newman, John H. Pendleton, Barbara Roesmann, Paige 
Smith, David Shoemaker, and Robyn Trotter. 

Illinois; 
Leslie Aronovitz, Cynthia Bascetta, Dean Campbell, Robert Ciszewski, 
Gail Marnik, Cory Marzullo, Paul Schmidt, Roberta Rickey, and Rosemary 
Torres Lerma. 

Iowa; 
Tom Cook, James Cooksey, Dan Egan, Christine Frye, Marietta Mayfield, 
Ronald Maxon, Mark Ryan, Lisa Shames, and Ben Shouse. 

Massachusetts; 
Stanley J. Czerwinski, Laurie Ekstrand, Nancy J. Donovan, Kathleen M. 
Drennan, Lorin Obler, Keith C. O'Brien, Carol Patey, Salvatore F. 
Sorbello Jr., and Robert Yetvin. 

Michigan; 
Manuel Buentello, Ranya Elias, Patrick Frey, Kevin Finnerty, Henry 
Malone, Revae Moran, Giao N. Nguyen, Robert Owens, Susan Ragland, and 
Amy Sweet. 

Mississippi; 
James Elgas, Barbara Haynes, John K. Needham, Norman J. Rabkin, Anna 
Russell, Gary Shepard, Erin Stockdale, and Ryan Stott. 

New Jersey; 
Gene Aloise, Kisha Clark, Diana Glod, Alexander Lawrence Jr., Tarunkant 
Mithani, Vincent Morello, Tahra Nichols, Nitin Rao, Cheri Truett, and 
David Wise. 

New York; 
Colin Fallon, Christopher Farrell, Susan Fleming, Emily Larson, Dave 
Maurer, Tiffany Mostert, Joshua Ormond, Summer Pachman, Frank 
Puttallaz, Barbara Shields, Glenn Slocum, Ronald Stouffer, and Yee 
Wong. 

North Carolina; 
Cornelia Ashby, Sandra Baxter, Bonnie Derby, Terrell Dorn, Steve Fox, 
Bryon Gordon, Fred Harrison, Charlene Johnson, Leslie Locke, Anthony 
Patterson, and Paula Rascona. 

Ohio; 
William Bricking, Matthew Drerup, Cynthia M. Fagnoni, Laura Jezewski, 
Bill J. Keller, Sanford Reigle, David C. Trimble, Myra Watts Butler, 
Lindsay Welter, and Doris Yanger. 

Pennsylvania; 
Mark Gaffigan, Brian Hartman, John Healey, Phillip Herr, Shirin 
Hormozi, Richard Jorgenson, Richard Mayfield, James Noel, Jodi M. 
Prosser, Andrea E. Richardson, and MaryLynn Sergent. 

Texas; 
Carol Anderson-Guthrie, Fred Berry, Ron Berteotti, Steve Boyles, K. 
Eric Essig, Erinn Flanagan, Ken Howard, Michael O'Neill, Bob Robinson, 
Daniel Silva, and Lorelei St. James. 

[End of section] 

Footnotes: 

[1] Pub.L. 111-5, 123 Stat. 115 (Feb. 17, 2009). 

[2] GAO, Recovery Act: Recipient Reported Jobs Data Provide Insights 
into Use of Recovery Act Funding, but Data Quality and Reporting Issues 
Need Attention, [hyperlink, http://www.gao.gov/products/GAO-10-223] 
(Washington, D.C.: Nov. 19, 2009). 

[3] GAO, Recovery Act: As Initial Implementation Unfolds in States and 
Localities, Continued Attention to Accountability Issues Is Essential, 
[hyperlink, http://www.gao.gov/products/GAO-09-580] (Washington, D.C.: 
Apr. 23, 2009); Recovery Act: States' and Localities' Current and 
Planned Uses of Funds While Facing Fiscal Stresses, GAO-09-829 
(Washington, D.C.: July 8, 2009); and Recovery Act: Funds Continue to 
Provide Fiscal Relief to States and Localities, While Accountability 
and Reporting Challenges Need to Be Fully Addressed, [hyperlink, 
http://www.gao.gov/products/GAO-09-1016] (Washington, D.C.: Sept. 23, 
2009). 

[4] GAO, Recovery Act: Recipient Reported Jobs Data Provided Some 
Insight into Use of Recovery Act Funding, but Data Quality and 
Reporting Issues Need Attention, [hyperlink, 
http://www.gao.gov/products/GAO-10-223] (Washington, D.C.: Nov. 19, 
2009). 

[5] Recovery Act, div. B, title V, § 5001. 

[6] In order to qualify for the increased FMAP, states generally may 
not apply eligibility standards, methodologies, or procedures that are 
more restrictive than those in effect under their state Medicaid plans 
or waivers on July 1, 2008. See Recovery Act, div. B, title V, 
§5001(f)(1)(A). 

[7] Under the Recovery Act, states are not eligible to receive the 
increased FMAP for certain claims for days during any period in which 
that state has failed to meet the prompt payment requirement under the 
Medicaid statute as applied to those claims. See Recovery Act, div. B, 
title V, §5001(f)(2). Prompt payment requires states to pay 90 percent 
of clean claims from health care practitioners and certain other 
providers within 30 days of receipt and 99 percent of these claims 
within 90 days of receipt. See 42 U.S.C. §1396a(a)(37)(A). 

[8] A state is not eligible for certain elements of increased FMAP if 
any amounts attributable directly or indirectly to them are deposited 
or credited into a state reserve or rainy-day fund. Recovery Act, div. 
B, title V, §5001(f)(3). 

[9] In some states, political subdivisions--such as cities and 
counties--may be required to help finance the state's share of Medicaid 
spending. Under the Recovery Act, a state that has such financing 
arrangements is not eligible for certain elements of the increased FMAP 
if it requires subdivisions to pay during a quarter of the recession 
adjustment period a greater percentage of the nonfederal share than the 
percentage that would have otherwise been required under the state plan 
on September 30, 2008. See Recovery Act, div. B., title V, § 
5001(g)(2). The recession adjustment period is the period beginning 
October 1, 2008, and ending December 31, 2010. 

[10] See GAO, Recovery Act: Funds Continue to Provide Fiscal Relief to 
States and Localities, While Accountability and Reporting Challenges 
Need to Be Fully Addressed, [hyperlink, 
http://www.gao.gov/products/GAO-09-1016] (Washington D.C.: Sept. 23, 
2009). 

[11] Two states that reported preliminary enrollment data for the 
fourth quarter of 2009 indicated that once finalized, their reported 
enrollment would likely increase. Therefore, our analysis of Medicaid 
enrollment for this time period potentially understates the change in 
overall enrollment. 

[12] The percentage increase is based on state reported enrollment data 
for April 2009 to September 2009. Because the District did not provide 
Medicaid enrollment data for September 2009, we estimated enrollment 
for the District for this month. 

[13] As part of the normal Medicaid grant award process, CMS reconciles 
states' quarterly estimated and actual Medicaid expenditures and 
finalizes the quarterly grants once the reconciliation is complete. 

[14] Pennsylvania Medicaid officials told us that the state intends to 
draw from its 2010 increased FMAP grant award; however, the state 
typically draws available funds retroactively to coincide with the 
submission of its quarterly expenditure report. For example, the state 
drew from its 2009 fourth quarter grant award on November 17, 2009. 

[15] See [hyperlink, http://www.gao.gov/products/GAO-09-1016]. 

[16] See [hyperlink, http://www.gao.gov/products/GAO-09-1016]. 

[17] CMS officials told us that they do not have specific plans for 
issuing additional formal guidance; however, CMS officials continue to 
work with states to identify issues and, as appropriate, may issue 
further guidance regarding compliance with Recovery Act requirements 
such as political subdivisions and rainy-day funds. In addition, the 
agency recently asked states to complete a report that includes 
detailed questions about their receipt and use of increased FMAP. CMS 
officials indicated they hope to collect this information quarterly and 
plan to use the state data to inform CMS oversight of issues related to 
the Recovery Act. 

[18] Under federal law, states are required to make disproportionate 
share hospital payments to hospitals that treat large numbers of low- 
income patients with special needs. See 42 U.S.C. §§ 1396(a)(13)(A), 
1396r-4. 

[19] For the Federal Highway Program, the U.S. Department of 
Transportation (DOT) has interpreted the term obligation of funds to 
mean the federal government's commitment to pay for the federal share 
of the project. This commitment occurs at the time the federal 
government signs a project agreement. States request reimbursement from 
FHWA as the state makes payments to contractors working on approved 
projects. 

[20] For the Transit Capital Assistance Program and the Fixed Guideway 
Infrastructure Investment program, the U.S. DOT has interpreted the 
term obligation of funds to mean the federal government's commitment to 
pay for the federal share of the project. This commitment occurs at the 
time the federal government signs a grant agreement. 

[21] Once the contract is awarded and contractors mobilize and begin 
work, states make payments to these contractors for completed work; 
states may request reimbursement from FHWA. FHWA, through the U.S. 
Department of the Treasury, is required to pay the state promptly after 
the state pays out of its own funds for project-related purposes. 

[22] Data is as of October 31, 2009. A total of $19.9 billion had been 
obligated nationwide as of that date. 

[23] The Highway Bridge Program classifies bridge conditions as 
deficient or not. A structurally deficient bridge is defined as a 
bridge with at least one or more components in poor condition. 

[24] See GAO, Highway Bridge Program: Clearer Program Goals and 
Performance Measures Needed for a More Focused and Sustainable Program, 
[hyperlink, http://www.gao.gov/products/GAO-08-1043] (Washington, D.C.: 
Sept. 10, 2008). 

[25] The Recovery Act provides that states that have had their 
statewide funds obligated before March 2, 2010, will be eligible to 
receive redistributed funds even if their suballocated funds have not 
been obligated. Recovery Act, div. A, title XII, 123 Stat. 115, 206. 

[26] Recovery Act, div. A, §1603. 

[27] 42 U.S.C. § 3161. 

[28] As we reported in September 2009, the criteria align closely with 
special need criteria used by the Department of Commerce's Economic 
Development Administration in its own grant programs, including factors 
such as actual or threatened business closures (including job loss 
thresholds), military base closures, and natural disasters or 
emergencies. 

[29] Recovery Act, div. A, § 1201(a). 

[30] The data provided included projects that had been awarded 
contracts and projects where contracts had not yet been awarded. Our 
analysis included projects that had official engineer's estimates and 
the contract award amount. Therefore, only projects that had values for 
the estimate and award amounts were included in our analysis. Although 
we examined the data for obvious discrepancies, the data we collected 
are self-reported by individual states. Therefore, the data may not be 
complete and we consider the reliability of these data undetermined. 
Because of this, we are only reporting ranges and approximate 
percentages. Our analysis included data from states that had the data 
available as of November 19, 2009. In all, we reviewed 1880 contracts 
ranging from 12 contracts in the District to 587 contracts in Illinois. 
In addition, some states provided data for only state awarded 
contracts, while other states provided both state and locally awarded 
contract data. 

[31] Specifically, within 90 days after determining that the estimated 
federal share of project costs has decreased by $250,000 or more, 
states shall revise the federal funds obligated for a project. 23 
C.F.R. § 630.106(a)(4). The funds deobligated through this process may 
be used for other FHWA-approved projects once the funds have been 
obligated by FHWA. 

[32] See [hyperlink, http://www.gao.gov/products/GAO-09-1016]. 

[33] As we reported, the criteria align closely with special need 
criteria used by the Department of Commerce's Economic Development 
Administration in its own grant programs, including factors such as 
actual or threatened business closures (including job loss thresholds), 
military base closures, and natural disasters or emergencies. 

[34] For example, Arizona identified these areas based in part on home 
foreclosure rates--data not specified in the Public Works Act. 

[35] The other public transit program receiving Recovery Act funds is 
the Capital Investment Grant program, which was appropriated $750 
million. The Transit Capital Assistance Program and the Fixed Guideway 
Infrastructure Investment program are formula grant programs, which 
allocate funds to states or their subdivisions by law. Grant recipients 
may then be reimbursed for expenditures for specific projects based on 
program eligibility guidelines. The Capital Investment Grant program is 
a discretionary grant program, which provides funds to recipients for 
projects based on eligibility and selection criteria. 

[36] Urbanized areas are areas encompassing a population of not less 
than 50,000 people that have been defined and designated in the most 
recent decennial census as an "urbanized area" by the Secretary of 
Commerce. Nonurbanized areas are other areas, i.e., areas that do not 
have population densities of at least 50,000 people. 

[37] The 2009 Supplemental Appropriations Act authorizes the use of up 
to 10 percent of funds apportioned to urbanized and nonurbanized areas 
for operating expenses. Pub. L. No. 111-32, § 1202, 123 Stat. 1859, 
1908 (June 24, 2009). Usually, operating assistance is not an eligible 
expense for transit agencies within urbanized areas with populations of 
200,000 or more. 

[38] Generally, to qualify for funding under the applicable formula 
grant program, an urbanized area must have a fixed guideway system that 
has been in operation for at least 7 years and is more than one mile in 
length. Fixed guideway systems are permanent transit facilities that 
may use and occupy a separate right-of-way for the exclusive use of 
public transportation services. These fixed guideway systems include 
rail (light, heavy, commuter, and streetcar) and may include busways 
(such as bus rapid transit). 

[39] This may include the purchase or rehabilitation of rolling stock, 
track, equipment, or facilities. These funds are specifically provided 
for fixed guideway modernization and cannot be used for investment in 
new fixed-guideway capital projects. 

[40] Designated recipients are entities designated by the chief 
executive officer of a state, responsible local officials, and publicly 
owned operators of public transportation to receive and apportion 
amounts that are attributable to transportation management areas. 
Transportation management areas are areas designated by the Secretary 
of Transportation as having an urbanized area population of more than 
200,000, or upon request from the governor and metropolitan planning 
organizations designated for the area. Metropolitan planning 
organizations are federally mandated regional organizations, 
representing local governments and working in coordination with state 
departments of transportation, that are responsible for comprehensive 
transportation planning and programming in urbanized areas. MPOs 
facilitate decision making on regional transportation issues, including 
major capital investment projects and priorities. To be eligible for 
Recovery Act funding, projects must be included in the region's 
Transportation Improvement Program and the approved State 
Transportation Improvement Program (STIP). 

[41] The sections 1201(c) and 1512 reporting requirements differ 
significantly. Under section 1201(c)(2)(F), FTA is required to collect 
and compile grantee data, including "the number of direct, on-project 
jobs created or sustained …" as well as "to the extent possible, the 
estimated indirect jobs created or sustained in the associated 
supplying industries, including the number of job-years created and the 
total increase in employment..." As implemented by FTA, FTA's grantees 
report on direct on-site jobs only; FTA calculates indirect and induced 
jobs such as manufacturing jobs from the purchase of buses. In 
contrast, section 1512 places the burden on recipients to report "an 
estimate of the number of jobs created and the number of jobs retained 
by the project or activity," language that DOT has interpreted to 
require reporting of manufacturing jobs when a purchase is sufficient 
to impact the manufacturer's labor force requirements. Moreover the 
reporting processes differ under the two provisions. FTA grantees must 
complete their Section 1201 report in TEAM, which is FTA's grant 
management system. 

[42] GAO, Recovery Act: Recipient Reported Jobs Data Provide Some 
Insight into Use of Recovery Act Funding, but Data Quality and 
Reporting Issues Need Attention, [hyperlink, 
http://www.gao.gov/products/GAO-10-223] (Washington, D.C.: Nov. 19, 
2009). 

[43] We conducted our survey from August to October 2009, with a 73 
percent final weighted response rate at the national level. The results 
of our sample have a 95 percent confidence interval. 

[44] Beginning July 1, 2009, Education awarded the remaining government 
services funds to states with approved applications. 

[45] Schools identified for corrective action have missed academic 
targets for 4 consecutive years and schools implementing restructuring 
have missed academic targets for 6 consecutive years. 

[46] For the purposes of this report, "Title I" refers to Title I, Part 
A of the Elementary and Secondary Education Act of 1965 (ESEA), as 
amended. 

[47] LEAs must obligate at least 85 percent of their Recovery Act ESEA 
Title I, Part A funds by September 30, 2010, unless granted a waiver, 
and must obligate all of their funds by September 30, 2011. 

[48] For purposes of this report, unless stated otherwise, when we 
refer to IDEA Recovery Act funds, we are referring to funds provided 
for IDEA, Part B. 

[49] The percentages do not add to 100 percent due to rounding. L. 
Zhou, Revenues and Expenditures for Public Elementary and Secondary 
Education: School Year 2006-07 (Fiscal Year 2007) (NCES 2009 337) 
(Washington D.C.: National Center for Education Statistics, U.S. 
Department of Education), [hyperlink 
http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2009337] (accessed Nov. 
16. 2009). 

[50] For the purposes of our survey, total or overall education funding 
is defined as the combination of federal, state and local funding that 
an LEA received and does not include private funding for education. 

[51] An estimated 9 percent of LEAs responded "don't know" or "not 
applicable" to our survey question about their funding changes. 

[52] Our state-level results do not include Pennsylvania, Michigan and 
Arizona because at the time our survey was available--from August to 
October 2009--their state budgets had not been finalized, and 
therefore, a large percentage of LEAs--33 percent for Pennsylvania, 28 
percent for Michigan, and 21 percent for Arizona--responded "don't 
know" to this funding question on the survey. 

[53] Education, The Condition of Education 2009. 

[54] The national estimate of 6.2 million education staff is based on 
2006-2007 school year data and is taken from Education's 2008 Digest of 
Education Statistics. The 4 percent of the workforce estimate is GAO's 
calculation using Education's 6.2 million estimate and employment 
projections by the U.S. Bureau of Labor Statistics. 

[55] An estimated 18 percent and 20 percent of LEAs reported that they 
expected job losses even with IDEA and Title I Recovery Act funds, 
respectively. Our analysis focused on the percentage of LEAs reporting 
job losses even with SFSF funds because, according to Education, 
averting job cuts and retaining staff are explicit goals of the State 
Fiscal Stabilization Fund. 

[56] "Largest LEAs" refers to the 10-largest LEAs in each state, based 
on enrollment. 

[57] In April 2009, Education released guidance that asked LEA 
officials to consider whether their proposed use of Recovery Act funds 
would (1) improve results for students, including students in poverty, 
students with disabilities, and English language learners; (2) increase 
educators' long-term capacity to improve results for students; (3) 
advance state, district, or school improvement plans and the reform 
goals encompassed in the Recovery Act; (4) avoid recurring costs that 
states, school systems, and schools are unprepared to assume when this 
funding ends; and (5) include approaches to measure and track 
implementation and results. 

[58] Differences between these uses of funds were determined not to be 
statistically significant. 

[59] Hereafter in this section, "local" will refer to "local, or state 
and local" funds. 

[60] LEAs must budget at least the same total or per capita amount of 
local funds for the education of children with disabilities as the LEA 
spent in the most recent prior year for which information is available. 

[61] Mississippi and the District of Columbia had not made 
determinations for this year. Mississippi officials said they were 
planning to use last year's determinations to establish eligibility for 
the flexibility this year, based on guidance from Education. 

[62] Education currently requires states to use indicators related to 
compliance with the law, but state educational agencies are not 
required to use indicators related to LEA performance in other areas, 
such as graduation rates or performance on assessments. 

[63] Changing the performance plan can be done for many reasons, and in 
prior years, some states were changing their plans and targets each 
year. Officials in Pennsylvania said that data on given indicators can 
change significantly year-to-year, often because sample sizes of 
students in special education may be small, and therefore it is 
difficult to judge LEAs' performance on that basis. 

[64] The "largest LEAs" refers to the 10-largest LEAs in each state, 
based on enrollment. 

[65] As of November 4, 2009, drawdowns by the states covered by our 
review of all SFSF funds, including both education stabilization and 
government services funds, were about $10.5 billion or 44 percent of 
awarded funds. 

[66] Education Department General Administrative Regulations (EDGAR), 
at 34 C.F.R. Part 80, address the financial administration of 
Department of Education grants to state and local governments, 
including cash management requirements for grantees and subgrantees. 
Cash management requirements applicable specifically to states are 
contained in Department of the Treasury regulations, 31 C.F.R. Part 
205. 

[67] On January 18, 2007, the Office of Management and Budget issued a 
document entitled the "Final Bulletin for Agency Good Guidance 
Practices." This bulletin established policies and procedures for the 
development, issuance, and use of significant guidance documents by 
executive branch departments and agencies and is intended to increase 
the quality and transparency of agency guidance practices and the 
significant guidance documents produced through them. 

[68] It is important to note that these survey results show LEAs' 
assessments made sometime between late August and early October when 
the survey was conducted (as shown in figure 17); therefore, these 
results do not capture assessments of Education's subsequently released 
guidance. 

[69] These responses were given in answer to survey questions worded as 
follows: "In your opinion, has the guidance your LEA received from the 
Department of Education regarding the allowable uses of [IDEA/ESEA 
Title I/SFSF] Recovery Act funds been adequate or inadequate in the 
following way: Content of guidance was understandable and useful." 

[70] "Largest LEAs" refers to the 10-largest LEAs in each state, based 
on enrollment. 

[71] The sixth is a territory, Puerto Rico, and is not covered by GAO's 
review. 

[72] 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. See, 31 U.S.C. ch. 75. 

[73] HUD allocated Capital Fund formula dollars from the Recovery Act 
to 3,134 public housing agencies, but as of November 14, 2009, 13 
housing agencies chose not to accept Recovery Act funding or no longer 
had eligible public housing projects that could utilize the funds. 

[74] We analyzed the rates at which housing agencies had obligated and 
drawn down funds, grouping housing agencies by the size of the Recovery 
Act formula grant they had received and calculating the average 
percentage of funds obligated and drawn down for each group. We 
selected these amounts as thresholds for comparing groups of housing 
agencies because they were more and less than the median grant amount 
($192,198). Under 24 CFR Part 85, the "simplified acquisition 
threshold" is $100,000. We compared various thresholds greater than the 
median and determined that $500,000--which is the minimum amount of 
federal funds expended for nonfederal entities to be subject to Single 
Audits--was an appropriate threshold, in part because the number of 
housing agencies with grants of more than $500,000 is similar to the 
number of housing agencies with grants of less than $100,000. 

[75] HUD developed PHAS to evaluate the overall condition of housing 
agencies and to measure performance in major operational areas of the 
public housing program. These include financial condition, management 
operations, and physical condition of the housing agencies' public 
housing programs. Housing agencies that are deficient in one or more of 
these areas are designated as troubled performers by HUD and are 
statutorily subject to increased monitoring. 

[76] The Recovery Act provided HUD with the authority to decide whether 
to provide troubled housing agencies with Recovery Act funds. Although 
HUD determined that troubled housing agencies have a need for Recovery 
Act funding, it acknowledged that troubled housing agencies would 
require increased monitoring and oversight in order to meet Recovery 
Act requirements. 

[77] The total number of nontroubled housing agencies to be monitored 
by HUD excludes 13 housing agencies that chose not to accept Recovery 
Act funding, no longer had eligible public housing projects that could 
utilize the funds, or had not yet entered into an agreement with HUD 
for the funds. 

[78] GAO, Recovery Act: Recipient Reported Jobs Data Provide Some 
Insight into Use of Recovery Act Funding, but Data Quality and 
Reporting Issues Need Attention, [hyperlink, 
http://www.gao.gov/products/GAO-10-223] (Washington, D.C.: Nov. 19, 
2009). 

[79] DOE officials plan to allow a state access to the remaining 
Recovery Act funds once it has completed weatherizing 30 percent of the 
homes identified in its state weatherization plan. 

[80] September 30, 2009, is the most recent quarter for which the 
states are required to report data under the Recovery Act. DOE has 
requested that OMB authorize monthly reporting. DOE officials noted 
that the states and territories also have access to annually 
appropriated funds for weatherization activities. 

[81] This report does not include information from Arizona, Colorado, 
Florida, Georgia, Illinois, Mississippi, New Jersey, North Carolina, 
and Texas because the weatherization program is only in the early 
stages of implementation. 

[82] As a basis for selecting an eligible dwelling unit for 
weatherization, DOE requires that the long-term benefits in terms of 
reduced energy usage at least match the weatherization costs. 

[83] Pub. L. No. 89-665, 80 Stat. 915 (codified as amended at 16 U.S.C. 
§ 470 et seq.). 

[84] The General Services Administration maintains the Excluded Parties 
List System, which identifies parties excluded from receiving federal 
contracts, certain subcontracts, and certain other assistance and 
benefits. In GAO-09-174, Excluded Parties List System: Suspended and 
Debarred Businesses and Individuals Improperly Receive Federal Funds, 
we recommended that the General Services Administration take actions to 
strengthen controls over the system. 

[85] Pub. L. No. 100-77, 101 Stat. 482. 

[86] According to the act, the members of the EFSP National Board are 
the Federal Emergency Management Agency (Chair), American Red Cross, 
Catholic Charities USA, National Council of Churches of Christ in the 
USA, The Salvation Army, The Council of Jewish Federations Inc. (now 
known as The Jewish Federations of North America), and the United Way 
of America (now know as United Way Worldwide). 

[87] Local Board membership mirrors the National Board, except that a 
local government official serves on each local board, rather than a 
FEMA representative, and that it must include a homeless or recently 
homeless person. 

[88] Under terms of the award from the National Board, LROs chosen to 
receive any EFSP funds must (1) be private voluntary nonprofits or 
units of government, (2) be eligible to receive federal funds, (3) have 
an accounting system, (4) practice nondiscrimination, (5) have 
demonstrated the capability to deliver emergency food or shelter 
programs, and (6) if they are a private voluntary organization, have a 
voluntary board. 

[89] SSA Committees mirror the Local Boards and include the Governor or 
a representative, as well as other state-level private nonprofits. 

[90] No LROs in the District received an SSA Recovery Act award. 

[91] The LRO's "planned use of funds" dollar amount is based the 
applications LROs submitted to the Local Boards. 

[92] See appendix III, for a complete list of population and 
unemployment rates for the selected local governments. 

[93] COPS Hiring Recovery Program grants provide 100 percent funding 
for 3 years for approved entry-level salaries and benefits for newly- 
hired, full-time sworn officer positions or for rehired officers who 
have been laid off, or are scheduled to be laid off on a future date, 
as a result of local budget cuts. The grant recipient must agree to 
fund the position for at least one year beyond the 3 years of the 
grant. 

[94] For descriptions of these programs, see appendix II. 

[95] A prime recipient is a non-federal entity that receives Recovery 
Act funding in the form of a contract, grant, or loan, directly from 
the federal government. 

[96] Grants may require recipients to match federal funds with state 
and local spending or in-kind contributions. The structure and nature 
of the matching requirement affects what types of recipients will apply 
and how recipients will use the grant funds. 

[97] See National Association of Counties, How are Counties Doing? An 
Economic Status Survey (Washington, D.C.: November 2009). 

[98] Local governments' ability to generate revenues varies based on a 
number of criteria, including the taxing authority the local government 
is granted by the state; the proportion of total revenues a local 
government generates from any particular revenue source; and the amount 
of state aid a local government receives relative to its total 
revenues. Different states grant their local governments the authority 
to levy different types of taxes, including property taxes, sales 
taxes, or personal income taxes. According to a National League of 
Cities report, no state authorizes the use of all three. See National 
League of Cities, Research Report on America's Cities: Cities & State 
Fiscal Structure (Washington, D.C.: May 2008). 

[99] NGA and NASBO, The Fiscal Survey of States (Washington, D.C.: 
December 2009). 

[100] The six states are Arizona, California, Florida, Illinois, 
Michigan, and New Jersey. See Pew Center on the States, Beyond 
California: States in Fiscal Peril (November 2009). 

[101] GAO recommended that to leverage Single Audit as an effective 
oversight tool for Recovery Act programs, OMB should provide more 
direct focus on Recovery Act programs through the Single Audit to help 
ensure that smaller programs with higher risk have audit coverage in 
the area of internal controls and compliance; develop requirements for 
reporting on internal controls during 2009 before significant Recovery 
Act expenditures occur, and for ongoing reporting; evaluate options for 
providing relief related to audit requirements for low-risk programs to 
balance new audit responsibilities associated with the Recovery Act; 
and take steps to achieve sufficient participation and coverage in the 
Single Audit project discussed in this section, providing for early 
written communication of internal control deficiencies and more timely 
accountability over Recovery Act funds. 

[102] 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. 

[103] The Single Audit Act requires that a nonfederal entity subject to 
the act transmit its reporting package to a federal clearinghouse 
designated by OMB no later than 9 months after the end of the period 
audited. 

[104] The corrective action plan will also include the name and contact 
information for a high-level auditee management official who will 
assume overall responsibility for ensuring appropriate corrective 
action. 

[105] OMB's program selections for the project were based on an 
analysis of program obligations and discussions with officials from 
federal awarding agencies and the Recovery Accountability and 
Transparency Board. For selected programs, auditors must perform 
internal control testwork required by OMB Circular Number A-133 on 
internal control for the following types of compliance requirements, as 
applicable: Activities Allowed or Unallowed, Allowable Costs, Cash 
Management, Eligibility, Reporting, and Special Tests and Provisions. 

[106] Auditors conduct these risk assessments as part of the planning 
process to identify which federal programs would be subject to detailed 
internal control and compliance testing. 

[107] Project participants are exempt from the requirements of OMB 
Circular No. A-133.520(e), which establishes the minimum number of 
programs that must be audited as major programs. The project 
establishes new guidelines for participants that may result in fewer 
programs being audited as major programs. 

[108] While detailed federal government obligation and expenditure data 
at the individual program level have not yet been compiled, it is 
possible to obtain higher-level program obligation and outlay amounts 
and estimate state and program project amounts for comparison to 
Recovery Act totals. Our estimate of $38.1 billion for Recovery Act 
obligations included in programs selected by project states as of 
October 23, 2009 comprises about 16 percent of the total of $236.5 
billion in obligations attributable to states. A similar comparison for 
outlays indicates that approximately $24 billion, or 23 percent, of a 
total of $106.3 billion in outlays attributable to states was included 
in funding within the project's scope as of that date. We estimate 
that, as of October 23, 2009, total Recovery Act obligations to project 
participants totaled $105.2 billion and total Recovery Act outlays for 
participants totaled $47.8 billion. 

[109] GAO, Recovery Act: Funds Continue to Provide Fiscal Relief to 
States and Localities, While Accountability and Reporting Challenges 
Need to Be Fully Addressed, [hyperlink, 
http://www.gao.gov/products/GAO-09-1016] (Washington, D.C.: Sept. 23, 
2009). 

[110] GAO, Recovery Act: Recipient Reported Jobs Data Provide Some 
Insight into Use of Recovery Act Funding, but Data Quality and 
Reporting Issues Need Attention, [hyperlink, 
http://www.gao.gov/products/GAO-10-223] (Washington, D.C.: Nov. 19, 
2009). 

[111] [hyperlink, http://www.gao.gov/products/GAO-10-223]. 

[112] GAO, Recovery Act: Recipient Reported Jobs Data Provide Some 
Insight into Use of Recovery Act Funding, but Data Quality and 
Reporting Issues Need Attention, [hyperlink, 
http://www.gao.gov/products/GAO-10-223] (Washington, D.C.: Nov. 19, 
2009). 

[113] GAO, Recovery Act: As Initial Implementation Unfolds in States 
and Localities, Continued Attention to Accountability Issues Is 
Essential, [hyperlink, http://www.gao.gov/products/GAO-09-580] 
(Washington, D.C.: Apr. 23, 2009). 

[114] States selected for our longitudinal analysis are Arizona, 
California, Colorado, Florida, Georgia, Illinois, Iowa, Massachusetts, 
Michigan, Mississippi, New Jersey, New York, North Carolina, Ohio, 
Pennsylvania, and Texas. 

[115] We stratified the population into strata based on state, size, 
and charter school LEA status. 

[116] The states we visited are Arizona, Colorado, Georgia, Illinois, 
Iowa, Massachusetts, Mississippi, New Jersey, and Texas. 

[117] The seven states we collected information from are: California, 
Iowa, Michigan, New York, Ohio, Pennsylvania, and Massachusetts. 

[118] As part of our bimonthly work, we also collected data on tracking 
and recipient reporting of Recovery Act funds and other data by state 
and local governments and other entities. See GAO, Recovery Act: 
Recipient Reported Jobs Data Provided Some Insight into Use of Recovery 
Act Funding, but Data Quality and Reporting Issues Need Attention, GAO-
10-223 (Washington, D.C.: Nov. 19, 2009) for an assessment of recipient 
reporting data. 

[119] For the Highway Infrastructure Investment program, the U.S. 
Department of Transportation has interpreted the term "obligation of 
funds" to mean the federal government's commitment to pay for the 
federal share of the project. This commitment occurs at the time the 
federal government signs a project agreement. 

[120] Recovery Act, div. A, title XII, 123 Stat. 206. 

[121] Recovery Act, div. A, title XII, § 1201(a). 

[122] Fixed guideway systems use and occupy a separate right-of-way for 
the exclusive use of public transportation services. They include fixed 
rail, exclusive lanes for buses and other high-occupancy vehicles, and 
other systems. 

[123] Generally, to qualify for funding under the applicable formula 
grant program, an urbanized area must have a fixed guideway system that 
has been in operation for at least 7 years and is more than one mile in 
length. 

[124] Metropolitan planning organizations are federally mandated 
regional organizations, representing local governments and working in 
coordination with state departments of transportation, that are 
responsible for comprehensive transportation planning and programming 
in urbanized areas. MPOs facilitate decision making on regional 
transportation issues, including major capital investment projects and 
priorities. To be eligible for Recovery Act funding, projects must be 
included in the region's Transportation Improvement and State 
Transportation Improvement Programs. 

[125] For the Transit Capital Assistance Program and Fixed Guideway 
Infrastructure Investment Program, the U.S. Department of 
Transportation has interpreted the term obligation of funds to mean the 
federal government's commitment to pay for the federal share of the 
project. This commitment occurs at the time the federal government 
signs a grant agreement. 

[126] Recovery Act, div. A, title XII, 123 Stat. 210. 

[127] Recovery Act, div. A, title XII, § 1201(a). 

[128] Schools identified for corrective action have missed academic 
targets for 4 consecutive years and schools implementing restructuring 
have missed academic targets for 6 consecutive years. 

[129] Beginning on July 1, 2009, Education awarded the remaining 
government services funds to states with approved applications. 

[130] For the purposes of this report, "Title I" refers to Title I, 
Part A of the Elementary and Secondary Education Act of 1965 (ESEA), as 
amended. 

[131] LEAs must obligate at least 85 percent of their Recovery Act ESEA 
Title I, Part A funds by September 30, 2010, unless granted a waiver, 
and must obligate all of their funds by September 30, 2011. This will 
be referred to as a carryover limitation. 

[132] Pub. L. No. 100-77, 101 Stat. 482. 

[133] According to the Act, the members of the EFSP National Board are 
the Federal Emergency Management Agency (Chair), American Red Cross, 
Catholic Charities USA, National Council of Churches of Christ in the 
USA, The Salvation Army, The Council of Jewish Federations, Inc., (now 
known as the Jewish Federations of North America), and the United Way 
of America (now know as United Way Worldwide.) 

[134] See Medicaid Federal Medical Assistance Percentage (FMAP) 
description earlier in this appendix. 

[135] The Recovery Act provided $2 billion to the Health Resources and 
Services Administration (HRSA) for grants to health centers. Of this 
total, $1.5 billion is for the construction and renovation of health 
centers and the acquisition of HIT systems, and the remaining $500 
million is for operating grants to health centers. Of the $500 million 
for health center operations, HRSA has allocated $157 million for New 
Access Point grants to support health centers' new service delivery 
sites, and $343 million for Increased Demand for Services grants. 

[136] NSP, a term that references the NSP funds authorized under 
Division B, Title III of the Housing and Economic Recovery Act (HERA) 
of 2008, provides grants to all states and selected local governments 
on a formula basis. Under NSP, HUD allocated $3.92 billion on a formula 
basis to states, territories, and selected local governments. The term 
"NSP2" references the NSP funds authorized under the Recovery Act on a 
competitive basis. 

[End of section] 

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