Arizona – April 23, 2009

Use of Funds

An estimated 90 percent of fiscal year 2009 Recovery Act funding provided to states and localities will be for health, transportation and education programs. The three largest programs in these categories are the Medicaid Federal Medical Assistance Percentage (FMAP) awards, the State Fiscal Stabilization Fund, and highways.

Medicaid Federal Medical Assistance Percentage (FMAP) Funds

  • As of April 3, 2009, the Centers for Medicare & Medicaid Services (CMS) have made about $534.6 in Medicaid FMAP grant awards to Arizona.
  • As of April 1, 2009, the state has drawn down about $286.3 million, or almost 54 percent of its initial increased FMAP grant awards.
  • Officials plan to use a significant portion of funds made available as a result of the increased FMAP to offset statewide general fund shortfalls.

Transportation—Highway Infrastructure Investment

  • Arizona was apportioned about $522 million for highway infrastructure investment on March 2, 2009, by the U.S. Department of Transportation.
  • As of April 16, 2009, the U.S. Department of Transportation had obligated $148.1 million for 26 Arizona projects.
  • As of April 20, 2009, the Arizona Department of Transportation (ADOT) had selected 41 highway transportation projects worth almost $350 million and had advertised competitive bids on 27 of these projects totaling about $190 million. The earliest bids will close on April 24, 2009, with projects expected to begin work later this spring.
  • These projects include activities such as preserving pavement, widening lanes and adding shoulders, and repairing bridges and interchanges.
  • Arizona will request reimbursement from the Federal Highway Administration as the state makes payments to contractors.

U.S. Department of Education State Fiscal Stabilization Fund (Initial Release)

  • Arizona was allocated about $681.4 million from the initial release of these funds on April 2, 2009, by the U.S. Department of Education.
  • Before receiving the funds, states are required to submit an application that provides several assurances to the Department of Education. These include assurances that they will meet maintenance of effort requirements (or that they will be able to comply with waiver provisions) and that they will implement strategies to meet certain educational requirements, including increasing teacher effectiveness, addressing inequities in the distribution of highly qualified teachers, and improving the quality of state academic standards and assessments. The state plans to submit its application by April 24, 2009, once officials review the latest estimates for the state's fiscal year 2010 budget situation.
  • The state expects funds to be used to improve student assessments, obtain more teachers, and meet federal standards, among other things, in compliance with federal requirements.

Arizona is also receiving additional Recovery Act funds under other programs, such as programs under Title I, Part A of the Elementary and Secondary Education Act (ESEA), (commonly known as No Child Left Behind); programs under the Individuals with Disabilities Education Act (IDEA); several housing programs such as the Low-Income Housing Tax Credit (LIHTC) Assistance program; and programs under the Workforce Investment Act to help provide employment-related services, among other things. Plans to use these funds are discussed throughout this appendix.

Safeguarding & TransparencyBack to top

The state government created a new Office of Economic Recovery within the Office of the Governor, the purpose of which is to coordinate the use of Recovery Act funds across state agencies and to ensure accountability for and transparency in the use of these funds. In addition, to meet Recovery Act requirements, the state comptroller noted that Arizona intends to add new codes to its central accounting system to track Recovery Act funds separately and work with state agencies that have their own accounting systems to ensure that they can also track funds separately. The state has issued guidance on managing the funds, and has plans to publicly report its Recovery Act spending, although officials have said that the state may not be aware of all funds sent directly by federal agencies to other entities, such as municipalities and independent authorities. The officials also identified other challenges, such as ensuring that recipients can report on their use of funds and that, where applicable, funds are used to supplement and not supplant state funds that support relevant affected programs. State and local officials noted that they expect to use existing internal controls and monitoring techniques to safeguard Recovery Act funds, but are concerned about having enough resources to do so. State departments were in the early stages of addressing some of these challenges, and are awaiting further guidance from the federal government on these issues.

Assessing the Effects of SpendingBack to top

Arizona state agencies and select localities that we met with expect to use or enhance existing performance metrics to assess the results achieved through Recovery Act funding, unless the federal government requires new metrics that will need to be developed. State officials were unclear, however, on how to determine the number of jobs created and saved by certain Recovery Act funds and were awaiting further guidance from the federal government.

For More InformationBack to top

The above excerpts are taken from GAO's April 23, 2009 Bimonthly Review of the Recovery Act:

Recovery Act: As Initial Implementation Unfolds in States and Localities, Continued Attention to Accountability Issues Is Essential
GAO-09-580, April 23, 2009
For more information on Arizona within the report, please see the following pages:
Appendix III: Arizona pages: 65 – 77
GAO Contact
portrait of of Eileen R. Larence

Eileen R. Larence

Director, Homeland Security and Justice

(202) 512-6510