Arizona – September 20, 2010

The content below was excerpted from the Arizona Appendix (PDF, 32 pages) of GAO's most recent bimonthly review of the Recovery Act.[1]

What We Did

We reviewed three specific program areas—the Weatherization Assistance Program (WAP), Energy Efficiency and Conservation Block Grants (EECBG), and public housing—funded under the Recovery Act. Our work focused on the status of the program area's funding, how funds are being used, methods used by program managers to monitor projects to ensure proper use and safeguarding of Recovery Act funds, and various issues that are specific to each program area. (For descriptions and requirements of the programs we covered, see appendix XVIII of GAO-10-1000SP.)

We selected these programs because they provided different views of Recovery Act spending in Arizona. For example, the Recovery Act provided a significant addition in WAP funding. We reviewed how this increase in funding was being managed and identified challenges the Arizona Department of Commerce (ADOC) faces in meeting spending deadlines. Furthermore, it provided an opportunity to determine the state and local procedures in place to ensure monitoring, tracking, and measurement of weatherization program success.

The EECBG program afforded us an opportunity to assess how the state is managing a program that had not received funding prior to the Recovery Act. The program provides federal grants through the Recovery Act to local governments, Indian tribes, states, and territories to reduce energy use and fossil fuel emissions, and for improvements in energy efficiency.

We revisited three public housing agencies—we previously reported on these agencies in 2009 and 2010—that received Recovery Act funds directly from the federal government to see firsthand the progress these agencies were making in expending their funds. We also visited the Department of Housing and Urban

Development (HUD) Phoenix Field Office to discuss its efforts to implement their second year monitoring plan for Recovery Act funds.

Our work in Arizona also included monitoring the state's fiscal situation, as well as the city of Phoenix's use of Recovery Act funds. The city received nearly $400 million of Recovery Act monies and was chosen for that reason. Also, because of the significant amount of funding the Arizona Department of Education received, we followed up on the actions it is taking to monitor the use of Recovery Act funds and found that it is better prepared to monitor the funds. Further, to gain an understanding of the state's experience in meeting Recovery Act reporting requirements,[2] we examined documents prepared by and held discussions with the Governor's Office of Economic Recovery (OER) and ADOC. Finally, we spoke with OER and Office of the Auditor General officials that have oversight responsibilities for Recovery Act funds. In assessing all of these programs, we spoke with local and state officials responsible for the programs, reviewed records, and visited locations where weatherization, energy efficiency, and housing improvement activities were underway.

What We FoundBack to top

Weatherization Assistance Program

ADOC was awarded $57 million to weatherize an estimated 6,400 homes. The weatherization services being performed consist of a wide variety of retrofitting measures, such as improving heating and cooling systems, applying air sealing and weather stripping, and improving insulation. Currently, because the average cost to weatherize homes has been less than expected, ADOC faces challenges in expending all of its weatherization funds by the March 2012 deadline, and, if average costs remain the same, may be able to weatherize about 1,200 more homes than originally planned. ADOC is exceeding some U. S. Department of Energy (DOE) requirements for monitoring the use of Recovery Act funds and estimates that weatherization of homes in Arizona will result in up to $2.8 million in annual energy savings.

Energy Efficiency and Conservation Block Grants

The State Energy Office received $9.5 million in EECBG funds and distributed the funds to 64 cities, with populations less than 35,000, as well as the 5 smallest counties in Arizona. In addition, 32 larger communities received $54.2 million and 21 tribal communities received $8.9 million in direct funding from the DOE for energy efficient programs. Recovery Act EECBG funds are being used in Arizona to finance a variety of projects, such as energy assessments and the installation of energy-saving devices and equipment. Other planned activities include retrofitting energy efficient street lighting and installing renewable energy technologies in or on government buildings.

Public Housing Formula and Competitive Capital Funds

Arizona has 15 public housing agencies that have received about $12 million from the Public Housing Capital fund. To date, the agencies are expending their formula funds by the mandated deadlines. Arizona also received one Capital Fund competitive grant, which the city of Phoenix housing agency plans to combine with other funding to renovate 374 housing units. This project has faced challenges stemming from a more complex bidding process and historical preservation issues. These are potential obstacles to the city's ability to meet the September 23, 2010, obligation deadline.

Arizona's fiscal condition

Recovery Act funds helped Arizona to balance its fiscal year 2011 budget by enabling the state to save the equivalent amount of approximately $815 million from its general fund. The state has enacted a budget for 2011 assuming the passage of two ballot measures in the November general election. The state legislature is awaiting the November election results before deciding on possible contingency budget solutions.

The City of Phoenix's use of Recovery Act funds

largest city in Arizona, Phoenix manages a diverse portfolio of Recovery Act funds to mainly support short-term, one-time projects in infrastructure development, energy conservation, public housing, and other areas. Phoenix has been awarded $382 million, of which 62 percent was awarded directly from federal agencies while the remaining 38 percent was awarded to state agencies that in turn passed the funds to the city. Officials said that Recovery Act funds have helped to fund jobs and are expected to yield beneficial outcomes to the city, including better infrastructure; increased services to communities, such as Early Head Start; and energy savings from energy grants.


The Arizona Auditor General released the fiscal year 2009 Single Audit[3] with audit coverage of Recovery Act expenditures from February 2009 when the Recovery Act was passed through June 2009. Only 2 of the 28 significant internal control findings that were related to federal funding awards were specific to controls over Recovery Act funds—one was a lack of maintaining documentation and the other was not having current central contractor registrations documentation prior to awarding grant money. Corrective action plans for both are in place. The OER has begun implementing its monitoring of subrecipients of Recovery Act funds, as well as providing technical assistance to state agencies on procedures to detect fraud, waste, and abuse.

Full September ReportBack to top

Recovery Act: States' and Localities' Uses of Funds and Actions Needed to Address Implementation Challenges and Bolster Accountability
Recovery Act: States' and Localities' Uses of Funds and Actions Needed to Address Implementation Challenges and Bolster Accountability
  • [1] Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009).
  • [2] Recipients of Recovery Act funds are required to report quarterly on a number of measures, including the use of funds and estimates of the number of jobs created and retained. Recovery Act, div. A, § 1512. We refer to the reports required by section 1512 of the Recovery Act as recipient reports.
  • [3] The Single Audit Act of 1984, as amended (31 U.S.C. §§ 7501-7507), requires that each state, local government, or nonprofit organization that expends at least a certain amount per year in federal awardsi-currently set at $500,000 by the Office of Management and Budget (OMB)-must have a Single Audit conducted for that year subject to applicable requirements, which are generally set out in OMB Circular No. A-133, Audits of States, Local Governments and Non-profit Organizations (revised June 27, 2003, and June 26, 2007).
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