California – May 26, 2010

The content below was excerpted from the California Appendix (PDF, 24 pages) of GAO's most recent bimonthly review of the Recovery Act.[1]

What We Did

GAO's work in California included reviewing five specific programs funded under the Recovery Act— Clean and Drinking Water State Revolving Funds (SRF), COPS Hiring Recovery Program (CHRP), Edward Byrne Memorial Justice Assistance Grants (JAG), Weatherization Assistance Program, and Workforce Investment Act (WIA) Dislocated Worker Program. Our work focused on California's uses of Recovery Act funds for selected programs, the steps California agencies are taking to ensure accountability for Recovery Act funds, and the impacts that these funds have had on creating and retaining jobs. For descriptions and requirements of the programs we covered, see appendix XVIII of GAO-10-605SP.

To determine how California used Recovery Act funds under selected programs, we met with officials from state agencies in charge of administering program funds and recipients and subrecipients of Recovery Act funds in four local jurisdictions—the City of Los Angeles (Los Angeles), the County of Sacramento (Sacramento), the City and County of San Francisco (San Francisco), and the City of San Diego (San Diego). To assess the steps taken by California agencies to ensure accountability for Recovery Act funds, we interviewed officials from the California Recovery Task Force (Task Force), California's Recovery Act Inspector General, the California State Auditor, and selected state agencies to obtain information or updates on their oversight and auditing activities. In addition, we reviewed products, such as guidance memorandums, letters, and reports, issued by these agencies related to the Recovery Act. To assess the impact Recovery Act funds have had on job creation and retention, we reviewed the information California recipients reported on ( In addition, we met with the Task Force to obtain current information on the state's experience in meeting Recovery Act reporting requirements and preparing the state's quarterly report and followed up with the California Department of Education (CDE) and 10 local educational agencies (LEA) on issues related to estimating and reporting jobs.

What We FoundBack to top

California Is Using Recovery Act Funds to Expand Programs and Preserve Services

California used Recovery Act funds to expand and preserve existing services. Several programs we reviewed experienced significant increases in funding as a result of the Recovery Act, which allowed California to expand those programs and services. Specifically, the Recovery Act more than doubled the program budgets for the JAG and Weatherization Assistance Programs and allowed recipients to increase capacity and provide additional services to California residents. This additional funding made available by the Recovery Act has affected the timing of spending for certain programs, as well as other factors such as the implementation of new activities and requirements. For example, since California received a significant increase in JAG funds through the Recovery Act, the California Emergency Management Agency (Cal EMA), the state agency administering these funds, needed time to define new program activities before awarding funds to local jurisdictions. Cal EMA officials told us that they wanted to carefully plan for the use of these funds and as a result the agency did not begin awarding funds until March 2010. Recovery Act funds have also helped preserve services, but budgetary gaps remain at the state and local level. The state used about $8 billion in Recovery Act funds to help balance its state fiscal year 2009-2010 budget, but state officials do not anticipate receiving this type of general budgetary relief from Recovery Act funds in the 2010-2011 state general fund budget, which currently faces a $21 billion shortfall. Local governments we met with used Recovery Act funds to preserve services, despite overall budgetary pressures. For instance, officials from two local governments we visited—Los Angeles and San Francisco—stated that CHRP grants were particularly useful in helping them maintain staffing levels within their law enforcement workforce.

Various State Entities Are Conducting Oversight Activities to Help Ensure Appropriate Use of Recovery Act Funds

Since the Recovery Act was enacted in February 2009, California state audit and oversight entities have taken various actions to oversee the use of Recovery Act funds. In our previous reports on Recovery Act implementation, we discussed the oversight roles and activities of key entities in California for Recovery Act funds, including the Task Force, the Recovery Act Inspector General, and the State Auditor. State oversight entities, for example, have conducted risk assessments of internal control systems, provided guidance to recipients of Recovery Act funds, and issued reports highlighting concerns with the use of Recovery Act funds. For example, as of May 2010, the State Auditor has conducted reviews of 32 Recovery Act programs and published nine products with the results of these reviews. State agencies are also responsible for, and involved in, oversight and audits of Recovery Act programs. For example, State Water Resources Control Board officials, which administers the Clean Water SRF program, told us it is using existing internal controls—which include regular contact with subrecipients, reviews of reimbursement requests, and a requirement for subrecipients to conduct financial statement audits—and has also implemented new procedures, such as enhanced project inspections using a Recovery Act checklist recently developed by EPA.

California Reported over 70,000 Jobs for the Third Recipient Report, but Questions Remain about Education Job Estimates

According to, recipients of Recovery Act funds in California reported funding over 70,000 full-time equivalents (FTE) during the third reporting period; however, problems continue with CDE's reporting and review of jobs data, calling the reliability of California's FTE estimates into question. Of the FTEs reported, over 46,000 were education-related jobs funded by Recovery Act education programs. However, as we reported in March 2010, LEAs awarded contracts using Recovery Act funds and either did not report or underreported vendor jobs associated with these contracts. For example, after we brought this to the attention of one LEA, it reported that its vendor jobs estimate increased from 12 to 79 when it recalculated the jobs associated with all Recovery Act contracts. CDE, as the prime recipient of Recovery Act education funds, has not issued detailed guidance to LEAs on collecting and reporting vendor jobs. According to CDE, it will provide clarifying guidance to LEAs when it communicates with them regarding the next reporting period. In addition, our review of 10 large LEAs found that CDE's data-reliability strategies did not always identify questionable LEA FTE estimates. Until CDE issues more specific guidance to LEAs on vendor jobs and follows up with them to help ensure proper implementation; in addition to revising its approach to assessing the reasonableness of LEA job estimates, the reliability of California's overall jobs reporting will continue be in question.

Full May 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).
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