From the U.S. Government Accountability Office, www.gao.gov Transcript for: Watchdog Report #5: Recovery Act's Use of Funds and Strengthening Accountability Audio interview with Chris Mihm, Managing Director, Strategic Issues March 3, 2010 [ Music ] [ Narrator: ] Welcome to GAO's Watchdog Report, your source for news and information from the Government Accountability Office. It's March 3, 2010. Just over one year ago, Congress passed, and the President signed, the American Recovery and Reinvestment Act of 2009, also known as the Recovery Act. Among the requirements of the act are provisions directing GAO to track the use and accountability of Recovery Act funding and to comment on jobs data from funding recipient's reports. Chris Mihm, Managing Director of GAO's Strategic Issues team, has lead GAO's analysis in these areas. GAO analyst Jeremy Cluchey sat down with Chris to learn more. [ Jeremy Cluchey: ] GAO has issued five reports on the Recovery Act to date. What has this latest analysis found about the use and accountability of recovery funding? [ Chris Mihm: ] Well, the first thing you keep in mind is that a lot of money has already gone out, but there's plenty more still to go out. By that it's about 89 billion dollars have gone out to states and localities, that’s about 30 percent of the over 280 billion that will eventually go out. Most of this money has been in really two major programs: First, increased Medicaid assistance to states and then second, in education programs. There is also money that's gone out to transportation programs—there's been over 11,000 transportation projects that have been funded—public housing programs, energy and weatherization programs. The key thing that it's doing is providing support to the states and localities. In the case of Medicaid, in helping with increased enrollments that are taking place primarily of children, which are the most vulnerable population during an economic downturn. Increased education expenditures are helping to keep teachers on the rolls. It's also helping to stabilize state and local budgets. [ Jeremy Cluchey: ] GAO also looked at the reporting by recovery funding recipients on the numbers of jobs created or retained as a result of the act. Various data quality issues were identified in the first round of these reports. What did GAO find after reviewing and analyzing the second round? [ Chris Mihm: ] Very similar to what we found when we looked at the first round, you know that there's a number of significant data-quality issues that need to be addressed and you know fortunately OMB is on top of this and is taking action—they followed up very quickly on some recommendations that we had based on the first round of reporting. The second thing to keep in mind on this is that the recipient reports are really a new model for federal reporting and that is to get information out to citizens and the public in as close to a real time basis as possible in very disaggregated forms, you can go to recovery.gov, put your zip code in there and see the funding that's gone into to entities in your zip code and to get it out to citizens in useable formats. The normal way of federal reporting would have been to have the information come in, have it be vetted and scrubbed by federal agencies, wait a year and a half, give it out in paper products or on PDFs or something like that. This new model of federal reporting is one of the great stories that we're seeing going forward. [ Jeremy Cluchey: ] I understand some of the Recovery Act requirements are creating challenges for certain projects. Could you talk a little bit about these challenges? [ Chris Mihm: ] Yeah, one of the big challenges is that we've seen is with weatherization. Weatherization went from about a $500 million program to a $5 billion program under the Recovery Act to help, as the name implies, weatherize homes—both to reduce energy costs but also to keep people comfortable in their homes. The program has been slow to really get off the ground. There's a variety of reasons for that, some of them very good, that is states have to put in place the program infrastructures, however we also found that some of the delays were due to the need to get prevailing wage determinations from the Department of Labor, now that money can begin to flow out a little bit more quickly and more homes can be weatherized. [ Jeremy Cluchey: ] GAO has made a variety of recommendations to improve the administration of Recovery Act funding. Can you tell us about some of these recommendations and the extent to which they're being implemented? [ Chris Mihm: ] Yeah, our recommendations fall into a number of broad areas. First to improve accountability and that is that we've been urging improvements into the single audit act process including something that we believe Congress should consider which would provide additional financial relief to state auditors for purposes of the single audit act. We've also had a series of recommendations that are associated with better communication, both communication down to states as to the flow of the money that's coming out, when they can expect money to come into those states. OMB took action on those recommendations as well, that we were very pleased to see. And also to clarify some of the categories of the way in which recipients should be reporting job saved or jobs retained, you know as a result of the Recovery Act. An awful lot still remains to be done in terms of accountability and transparency, but we're very pleased that OMB is taking a concerted and serious action on the recommendations that we’ve made to date. [ Music ] [ Narrator: ] To learn more visit GAO's web site at gao.gov and be sure to tune in to the next edition of GAO's Watchdog Report for more from the Congressional Watchdog, the Government Accountability Office.