In particular, a  maintenance of effort provision requires a state or its agency to maintain  certain levels of state spending for a certain program. Efforts to Implement and Evaluate Compliance with Maintenance of Effort and Similar Provisions Are Ongoing and Proving to Be Challenging

Requirements for the programs that are subject to Recovery Act provisions  designed to guard against the substitution of federal funds for state funds  vary by responsible agency. The  federal agencies responsible for these programs have issued guidance to  recipients on how to implement the maintenance of effort or similar  provision requirements. However, some agencies and states face challenges in  implementing these provisions. For example, the Department of  Commerce’s review of applications to ensure that proposed projects  would not be feasible without federal funding has been delayed by  scheduling and staffing challenges. In addition, officials from several state  departments of transportation told us that while they plan to meet their  maintenance of effort requirements, decreasing state revenues and  budgets pose a challenge to doing so. According to a DOT official,  the department has not made a decision as to whether the Recovery Act  requires states to maintain a total level of effort for covered programs or  to maintain their level of effort for each covered program. According to FTA officials, FTA has begun this review, but it is not  complete. Education plans for determining compliance with maintenance of effort  provision: Education has begun to draft a monitoring plan to oversee and  enforce state compliance with maintenance of effort requirements under  SFSF. Because SFSF is a new program established under the Recovery  Act, Education has yet to finalize monitoring plans and processes. HUD officials said they are currently developing a strategy for monitoring  the competitive grants that were awarded in September 2009. BTOP  involves more applications and far more funds than the agency formerly  handled through other programs (see fig. 1). While NTIA originally anticipated that it would begin announcing awards  on or about November 7, 2009, the agency now estimates that it will begin  in December 2009 and will not finish awarding the first round of grants  until February 2010. More than 9 months have elapsed since the  passage of the Recovery Act, but federal and state officials have not  completed key steps in the implementation of the maintenance of effort or  similar provisions, including finalizing state transportation certifications  and ensuring transparency of state education support levels, for the  covered programs under the Recovery Act with maintenance of effort  provisions. The Department of Education has taken important  steps to ensure that states are maintaining their maintenance of effort  levels. Appendix I: Objectives, Scope, and Methodology

To determine the programs in the American Recovery and Reinvestment  Act of 2009 (Recovery Act) with maintenance of effort or similar  requirements, we searched the Recovery Act for maintenance of effort and  similar provisions. These programs received a total of  about $106.8 billion in appropriations. To describe the steps that agencies have taken to implement these  requirements, we reviewed guidance from the six agencies, including  notices published by the Departments of Commerce and Housing and  Urban Development (HUD) on funding availability, guidance issued by  DOT in February, May, and September 2009 on maintenance of effort  requirements to governors and FHWA division offices, and the Department  of Education’s guidance to states on the State Fiscal Stabilization Fund  program’s maintenance of effort requirements.
Why GAO Did This Study

To help prevent the substitution of federal funds for state, local, or private funds, the American Recovery and Reinvestment Act of 2009 (Recovery Act) contains maintenance of effort and similar provisions requiring that recipients maintain certain levels of spending for selected programs. This report provides information on selected programs in the Recovery Act with maintenance of effort or similar provisions, the guidance federal agencies have issued to implement these requirements, and how responsible federal agencies are determining whether recipients meet these requirements. To conduct this work, GAO identified eight programs in the Recovery Act that contain a new maintenance of effort or similar provision; account for at least $4 billion in appropriations by agency; and collectively account for about $100.5 billion of the $106.8 billion in Recovery Act appropriations with these provisions. The eight programs with maintenance of effort or similar provisions span the areas of education, highway, housing, rail, telecommunications, and transit. The specifics of each provision vary by responsible agency, such as whether a state must certify the amount of funding it will maintain, whether waivers are allowed, and the consequences (if any) of not meeting the provisions. The federal agencies responsible for these eight programs have issued guidance to states and other recipients on how to implement the maintenance of effort or similar provision requirements. However, federal and state officials have not completed key steps in implementing these provisions because of administrative and fiscal challenges.

What GAO Found

(1) The Department of Transportation (DOT) has begun to assess the highway and transit levels that states certified to maintain; however, it has not estimated a date for completing this assessment and has not finalized plans for determining states' compliance with their transit certifications. Furthermore, according to a DOT official, the department has not made a decision as to whether the Recovery Act requires states to maintain a total level of effort for covered programs or to maintain their level of effort for each covered program. Officials from several state departments of transportation told GAO that while they plan to meet their maintenance of effort requirements, decreasing state revenues and budgets pose a challenge to doing so. (2) The Department of Education (Education) has begun to draft a monitoring plan to oversee and enforce state compliance with maintenance of effort requirements under the State Fiscal Stabilization Fund. Because the State Fiscal Stabilization Fund is a new program under the Recovery Act, Education has yet to finalize monitoring plans and processes. In addition, Education has not issued guidance to states on how to document that they met their required maintenance of effort level. (3) Department of Housing and Urban Development (HUD) officials said they are monitoring Capital Fund formula grants through ongoing efforts. Officials further stated that they are still developing a strategy for monitoring Capital Fund competitive grants. (4) The Department of Commerce's (Commerce) review of broadband grant applications for funding has been delayed because of scheduling and staffing challenges. In particular, the broadband grant program involves more applications and far more funds than the agency formerly handled, raising concerns whether the department has sufficient staff resources to implement the program in accordance with Recovery Act priorities. While Commerce originally anticipated that this review would be completed by November 7, 2009, the agency now estimates that it will not complete this review process and award the first round of grants until February 2010.