As of July 31, 2010, the 16 states and the District had drawn down $43.9  billion in increased FMAP funds, which is 75 percent of the total $58.9  billion in increased FMAP that we estimated would be allocated to these  states and the District through December 31, 2010. If  current spending patterns continue, we estimate that the 16 states and the  District will draw down $56.2 billion by December 31, 2010—about 95  percent of the initial estimated allocation. As part of this  review, we surveyed a nationally representative sample of local  educational agencies (LEA)—generally, school districts—about their uses  of Recovery Act funds for each of these programs. An  estimated 87 percent of LEAs across the country reported that Recovery  Act funding allowed them to retain or create jobs. States Vary in the Rate at Which They Draw Down Recovery Act Funds for Education Programs

As of August 27, 2010, states covered by our review had drawn down 72  percent ($18.2 billion) of the awarded SFSF education stabilization  funds; 46 percent ($3.0 billion) of Recovery Act funds for ESEA Title I,  Part A; and 45 percent ($3.4 billion) of Recovery Act funds for IDEA Part  B. Obligations for State Transportation Projects Are Nearly Complete, but Spending from Other Federal Transportation Sources Has Slowed

			Use of Transportation Funds

Nationwide, the Federal Highway Administration (FHWA) obligated $25.6  billion in Recovery Act funds for over 12,300 highway projects and  reimbursed $11.1 billion as of August 2, 2010. The Federal Transit  Administration (FTA) obligated $8.76 billion of Recovery Act funds for  about 1,055 grants and reimbursed $3.6 billion as of August 5, 2010. Recovery Act public transportation  funds were used primarily for upgrading transit facilities and improving  bus fleets (see fig. The EECBG program provides about $3.2 billion  in grants to develop, promote, implement, and manage projects to improve  energy efficiency and reduce energy use and fossil fuel emissions in local  communities. Of this amount, approximately $2.8 billion has been  allocated through formula grants to about 2,150 state, local, and tribal  governments (recipients) as of August 23, 2010. DOE Has Obligated Most Funds to Grant Recipients, Who Have Obligated about Half to Subrecipients; Overall Spending Rates Are at 11 Percent

The Recovery Act requires that DOE obligate $2.8 billion in formula  EECBG funds by September 30, 2010. As of July 28,  2010, as shown in table 9, more than 60 percent of EECBG funds have  been obligated for three purposes: energy-efficiency retrofits (35.3  percent), such as replacement of heating and cooling systems in fire  stations and libraries in the District; financial incentive programs, such as  the rebate program in New Jersey that pays for energy-efficiency retrofits  not already covered by existing incentives (15.6 percent); and building and  facilities (11.1 percent), such as a geothermal system at a new corrections  facility. As discussed above, HUD officials expect that some housing agencies may  not meet the September 2010 competitive grant obligation deadline. Officials in Ohio credit the over $7.9 billion  in Recovery Act funds they have received as of August 1, 2010, with  helping to protect jobs and continue services in their state. New and Open Recommendations; Matters for Congressional Consideration

For this report, GAO both updates the status of agencies’ efforts to  implement GAO’s 25 open recommendations and makes 5 new  recommendations to the Departments of Transportation (DOT), Housing  and Urban Development (HUD), Labor, Energy (DOE), Health and Human  Services, and Treasury, and to the Environmental Protection Agency  (EPA), and to the Office of Management and Budget (OMB). 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: Medicaid Federal Medical Assistance  Percentage (FMAP) grant awards; 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 Federal-Aid Highway Surface Transportation and Transit  Capital Assistance programs; the State Energy Program (SEP); the Energy  Efficiency and Conservation Block Grant program (EECBG); the  Weatherization Assistance Program; the Public Housing Capital Fund; the  Tax Credit Assistance Program (TCAP); and Grants to States for Low- Income Housing Projects in Lieu of Low-Income Housing Credits Program  under Section 1602 of the Recovery Act (Section 1602 Program). Recipient Reporting

The recipient reporting section of this report responds to the Recovery  Act’s mandate that we comment on the estimates of jobs created or  retained by direct recipients of Recovery Act funds. This guidance directed federal agencies to not grant any  requests made to extend the Single Audit reporting deadlines for fiscal  years 2009 to 2011. Unemployment Insurance Measures Included in the American Recovery  and Reinvestment Act of 2009, as of July 2009.
Why GAO Did This Study

This report responds to two ongoing GAO mandates under the American Recovery and Reinvestment Act of 2009 (Recovery Act). It is the latest in a series of reports on the uses of and accountability for Recovery Act funds in 16 selected states, certain localities in those jurisdictions, and the District of Columbia (District). These jurisdictions are estimated to receive about two-thirds of the intergovernmental assistance available through the Recovery Act. This report also responds to GAO's mandate to comment on the jobs estimated in recipient reports. GAO collected and analyzed documents and interviewed state and local officials and other Recovery Act award recipients. GAO also analyzed federal agency guidance and interviewed federal officials.

What GAO Found

As of September 3, 2010, about $154.8 billion of the approximately $282 billion of total funds made available by the Recovery Act in 2009 for programs administered by states and localities had been paid out by the federal government. Of that amount, over 65 percent--$101.9 billion--had been paid out since the start of federal fiscal year 2010 on October 1, 2009. As of July 31, 2010, the 16 states and the District had drawn down $43.9 billion in increased FMAP funds. If current spending patterns continue, GAO estimates that these states and the District will draw down $56.2 billion by December 31, 2010--about 95 percent of their initial estimated allocation. Most states reported that, without the increased FMAP funds, they could not have continued to support the substantial Medicaid enrollment growth they have experienced, most of which was attributable to children. Congress recently passed legislation to extend the increased FMAP through June 2011, although at lower rates than provided by the Recovery Act. As of August 27, 2010, the District and states covered in GAO's review had drawn down 72 percent ($18.2 billion) of their awarded State Fiscal Stabilization Fund (SFSF) education stabilization funds; 46 percent ($3.0 billion) for Elementary and Secondary Education Act, Title I, Part A; and 45 percent ($3.4 billion) for Individuals with Disabilities Education Act, Part B. In the spring of 2010, GAO surveyed a nationally representative sample of local educational agencies (LEA) and found that job retention was the primary use of education Recovery Act funds in school year 2009-2010, with an estimated 87 percent of LEAs reporting that Recovery Act funds allowed them to retain or create jobs. Nationwide, the Federal Highway Administration (FHWA) obligated $25.6 billion in Recovery Act funds for over 12,300 highway projects, andreimbursed $11.1 billion as of August 2, 2010. The Federal Transit Administration obligated $8.76 billion of Recovery Act funds for about 1,055 grants, and reimbursed $3.6 billion as of August 5, 2010. Highway funds were used primarily for pavement improvement projects, and public transportation funds were used primarily for upgrading transit facilities and improving bus fleets. The EECBG program provides about $3.2 billion in grants to implement projects that improve energy efficiency; of this amount, approximately $2.8 billion has been allocated directly to recipients. As of August 2010, DOE has obligated about 99 percent of the $2.8 billion in direct formula grants to recipients, who have in turn, obligated about half to subrecipients. The majority of EECBG funds have been obligated for three purposes: energy efficiency retrofits to existing facilities, financial incentive programs, and buildings and facilities. As of August 7, 2010, housing agencies had obligated about 46 percent of the nearly $1 billion in Recovery Act Public Housing Capital Fund competitive grants allocated to them for projects such as installing energy-efficient heating and cooling systems in housing units. HUD officials anticipate that some housing agencies may not meet the September 2010 obligation deadline, resulting in those funds being recaptured. GAO believes HUD should continue to closely monitor agencies' progress in obligating remaining funds. As of July 31, 2010, HUD had outlayed about $733 million (32.6 percent) of TCAP funds and Treasury had outlayed about $1.4 billion (25.5 percent) of Section 1602 Program funds. GAO updates the status of agencies' efforts to implement GAO's 58 previous recommendations and makes 5 new recommendations to improve management and strengthen accountability to the Departments of Transportation (DOT), Housing and Urban Development (HUD), the Treasury, and the Office of Management and Budget (OMB).