While one purpose of the Recovery Act was to preserve and create jobs,  it also required states to report information quarterly to increase  transparency and SFSF required recipients to make assurances relating  to progress on educational reforms. 2. 3. According to data from Education, as of September 9, 2011, about 4  percent of the states’ obligated Recovery Act funds remain available for  expenditure. Given  that nearly half of education funding, on average, is provided by the  states, the impact of state-level reductions to education could significantly  affect LEA budgets. 3). 4). LEAs Reduced Support for Special Education Due to Flexibility Allowed under IDEA

According to our survey, over a quarter of LEAs decreased their spending  on special education because of the local MOE spending flexibility  allowed under IDEA and the large influx of Recovery Act IDEA funds. If LEAs that  use the flexibility to decrease their local spending do not voluntarily  increase their spending in future years—after Recovery Act funds have  expired—the total local, or state and local, spending for the education of  students with disabilities may decrease, compared to spending before the  Recovery Act. For states whose waivers are denied or are partially granted, according to  Education officials, the state must provide the amount of the MOE   shortfall for special education during the state fiscal year in question or  face a reduction in its federal IDEA grant award by the amount equal to  the MOE shortfall. Education Plans to Assess Results of Recovery Act Funds

Education plans to conduct two common types of systematic program  assessment: program evaluation and performance measurement. In the  coming years, Education plans to produce an evaluation that will provide  an in-depth examination of various Recovery Act programs’ performance  in addressing educational reform. In addition to this overall assessment of  the programs’ results, for the SFSF program, Education plans to measure  states’ ability to collect and publicly report data on preestablished  indicators and descriptors of educational reform. Education intends for  this reporting to be a means for improving accountability to the public in  the shorter term. Including these Recovery Act  education programs in one evaluation will allow for a broad view of the  results of programs focused on education reform. Education and States Help Ensure Accountability, but Education Did Not Consistently Communicate SFSF Monitoring Concerns to States

		A Range of Accountability Efforts Are in Place and Identified Areas for Improvement

To help ensure accountability of Recovery Act funds, a wide variety of  entities oversee and audit Recovery Act programs, and Education  officials told us they routinely review monitoring and audit results from  many of these sources. Education and States Continue to Review Data Quality and Use Recipient Reports for Monitoring

Education uses various methods to review the accuracy of recipient  reported data to help ensure data quality. Education and several selected states also told us they  examined recipient reports as part of their monitoring efforts. In addition, Iowa and New York officials said  they used recipient reported data to ensure appropriate uses of funds. While FTE Data Have Limitations, Education Found These Data to Be Useful

According to Recovery.gov, during the quarter beginning April 1, 2011,  and ending June 30, 2011, the Recovery Act funded approximately  286,000 FTEs using funds under the programs in our review (see fig. Recommendation for Executive Action

To ensure all states receive appropriate communication and technical  assistance for SFSF, consistent with what some states received in  response to SFSF monitoring reviews, we recommend that the Secretary  of Education establish mechanisms to improve the consistency of  communicating monitoring feedback to states, such as establishing  internal time frames for conveying information found during monitoring. Education officials  reported that the feedback provided to states through this new approach  was ongoing and that not all states have required the same level of follow  up discussions. GAO staff who made key contributions to this report  are listed in appendix V.

Appendix I: Objectives, Scope, and Methodology

To obtain national level information on how Recovery Act funds made  available by the U.S. Department of Education (Education) under SFSF;  ESEA Title I, Part A; and IDEA, Part B were used at the local level, we  designed and administered a Web-based survey of local educational  agencies (LEA) in the 50 states and the District of Columbia. Department of Labor

		Newly Implemented Recommendations

To enhance the Department of Labor’s (Labor) ability to manage its  Recovery Act and regular Workforce Investment Act (WIA) formula grants  and to build on its efforts to improve the accuracy and consistency of  financial reporting, we recommended that the Secretary of Labor take the  following actions:    To determine the extent and nature of reporting inconsistencies  across the states and better target technical assistance, conduct a  one-time assessment of financial reports that examines whether each  state’s reported data on obligations meet Labor’s requirements.
Why GAO Did This Study

The American Recovery and Reinvestment Act of 2009 (Recovery Act) provided $70.3 billion for three education programs--the State Fiscal Stabilization Fund (SFSF); Title I, Part A of the Elementary and Secondary Education Act (Title I); and Individuals with Disabilities Education Act (IDEA), Part B. One goal of the Recovery Act was to save and create jobs, and SFSF also requires states to report information expected to increase transparency and advance educational reform. This report responds to two ongoing GAO mandates under the Recovery Act. It examines (1) how selected states and local recipients used the funds; (2) what plans the Department of Education (Education) and selected states have to assess the impact of the funds; (3) what approaches are being used to ensure accountability of the funds; and (4) how Education and states ensure the accuracy of recipient reported data. To conduct this review, GAO gathered information from 14 states and the District of Columbia, conducted a nationally representative survey of local educational agencies (LEA), interviewed Education officials, examined recipient reports, and reviewed relevant policy documents.

What GAO Found

As of September 9, 2011, in the 50 states and the District of Columbia, about 4 percent of the obligated Recovery Act funds remain available for expenditure. Teacher retention was the primary use of Recovery Act education funds according to GAO's nationally representative survey of LEAs. The funds also allowed recipients to restore state budget shortfalls and maintain or increase services. However, the expiration of funds and state budget decreases may cause LEAs to decrease services, such as laying off teachers. We also found that nearly a quarter of LEAs reported lowering their local spending on special education, as allowed for under IDEA provisions that provide eligible LEAs the flexibility to reduce local spending on students with disabilities by up to half of the amount of any increase in federal IDEA funding from the prior year. However, even with this flexibility, many LEAs reported having difficulty maintaining required levels of local special education spending. In addition, two states have not been able to meet required state spending levels for IDEA or obtain a federal waiver from these requirements. States whose waivers were denied and cannot make up the shortfall in the fiscal year in question face a reduction in their IDEA funding equal to the shortfall, which may be long-lasting. Education plans to conduct two types of systematic program assessments to gauge the results of Recovery Act-funded programs that focus on educational reform: program evaluation and performance measurement. In the coming years, Education plans to produce an evaluation that will provide an in-depth examination of various Recovery Act programs' performance in addressing educational reform. In addition, for the SFSF program, Education plans to measure states' ability to collect and publicly report data on preestablished indicators and descriptors of educational reform, and it plans to provide a national view of states' progress. Education intends for this reporting to be a means for improving accountability to the public in the shorter term. Further, Education officials plan to use states' progress to determine whether a state is qualified to receive funds under other future reform-oriented grant competitions. Numerous entities help ensure accountability of Recovery Act funds through monitoring, audits, and other means, which have helped identify areas for improvement. Given the short time frame for spending these funds, Education's new SFSF monitoring approach prioritized helping states resolve monitoring issues and allowed Education to target technical assistance to some states. However, some states did not receive monitoring feedback promptly and this feedback was not communicated consistently because Education's monitoring protocol lacked internal time frames for following up with states. Education and state officials reported using a variety of methods to ensure recipient reported data are accurate. They also use recipient reported data to enhance their oversight and monitoring efforts. According to Recovery.gov, the Recovery Act funded approximately 286,000 full-time equivalents (FTE) during the eighth round of reporting, which ended June 30, 2011, for the education programs GAO reviewed. Despite the limitations associated with FTE data, Education found these data to be useful in assessing the impact of grant programs on saving and creating jobs.

What GAO Recommends

GAO recommends that the Secretary of Education establish mechanisms to improve the consistency of communicating SFSF monitoring feedback to states. Education agreed with our recommendation.