California – September 23, 2009

The content below was excerpted from the California Appendix (PDF, 56 pages) of GAO's third bimonthly review of the Recovery Act.[1]


Use of Funds

GAO’s work in California focused on specific programs funded under the Recovery Act, as well as general issues involving the effect of Recovery Act funds on the state’s budget and the state’s readiness to report on the use and effect of these funds by program. The programs we reviewed—Highway Infrastructure Investment funds, Transit Capital Assistance Program, Weatherization Assistance Program, and the Workforce Investment Act (WIA) Youth Program—were selected primarily because they recently have begun disbursing funds to states or include existing programs receiving significant amounts of Recovery Act funds. For example, the Transit Capital Assistance funds had a September 1, 2009, deadline for obligating a portion of the funds. Additionally, the WIA Youth program had a summer employment component which was under way during our review. In addition to these programs, we also updated funding information on three Recovery Act education programs with significant funds being disbursed—the U.S. Department of Education (Education) State Fiscal Stabilization Fund (SFSF) and Recovery Act funds under Title I, Part A, of the Elementary and Secondary Education Act of 1965 (ESEA), as amended, and the Individuals with Disabilities Education Act (IDEA), Part B. Consistent with the purposes of the Recovery Act, program funds are being directed to help California state and local governments stabilize their budgets and to stimulate infrastructure development and expand existing programs—thereby providing needed services and potential jobs. With the programs, GAO focused on how funds were being used; how safeguards were being implemented, including those related to procurement of goods and services; and how results were being assessed. Our review in California covered the following areas:

State Budget Stabilization

  • On July 24, the state enacted $24 billion in additional budget measures, including $16 billion in cuts to programs, to balance its fiscal year 2009-10 budget.
  • While its immediate fiscal crisis is resolved, the long-term fiscal outlook is still of concern.

State Reporting under Section 1512

  • The state intends to centrally report for all California agencies and their subrecipients of Recovery Act funds.
  • The state developed and is now testing a reporting tool to collect data from state agencies and then upload that information to the federal government.
  • While the state Recovery Act Task Force is confident that they will meet Recovery Act deadlines, the quality of the data, especially from subrecipients, is uncertain.

Highway Infrastructure Investment

  • The U.S. Department of Transportation’s (DOT) Federal Highway Administration (FHWA) apportioned $2.570 billion in Recovery Act funds to California.
  • As of September 1, 2009, the federal government has obligated $1.978 billion to California, and $22 million had been reimbursed by the federal government.
  • As of September 1, California had awarded contracts for 185 projects worth $1.245 billion and advertised an additional 180 projects for bid. The majority of these projects involve pavement widening and improvement projects, but the state is also using highway infrastructure funds for numerous safety and transportation enhancement projects.

Transit Capital Assistance Program

  • DOT’s Federal Transit Administration (FTA) apportioned $1.002 billion in Recovery Act funds to California and urbanized areas in the state.
  • As of September 1, 2009, FTA has obligated $911 million to California and urbanized areas in the state.
  • As part of our current review, we visited four local transit agencies—the Los Angeles County Metropolitan Transit Authority; the Orange County Transportation Authority; the San Joaquin Regional Rail Commission; and the San Joaquin Regional Transit District.

Selected Education Programs

  • As of August 28, 2009, California has distributed about $3.7 billion in Recovery Act funding to local education agencies (LEA), special education learning plan areas[2] (SELPA), and institutes of higher education through three education programs. This includes SFSF education stabilization funds ($2.5 billion to K-12 and about $268 million to each of the state�s university systems), ESEA Title I funds ($450 million), and IDEA Part B funds ($269 million).
  • The state�s cash management practices for education funds, particularly ESEA Title I Recovery Act funding, continue to be a concern and will require close monitoring.

Weatherization Assistance Program

  • California has received 50 percent—about $93 million—of its Recovery Act weatherization allocation, and it has obligated about $9.4 million of these funds for various planning, procurement, and training purposes. As of August 31, 2009, the state had paid invoices totaling approximately $1.4 million.
  • California plans to weatherize 50,330 homes with Recovery Act funds. However, state officials decided not to spend these funds to weatherize homes until prevailing wage rate determinations under the Davis-Bacon Act were resolved by the Department of Labor, which occurred on September 3, 2009. State officials now hope to issue, by the end of September 2009, contract amendments allowing service providers to begin weatherizing homes with these funds.

Workforce Investment Act Youth Program

  • The U.S. Department of Labor (Labor) allotted about $187 million to California in WIA Youth Recovery Act funds.
  • The state has allocated about $159 million to the 49 local workforce investment areas in the state after reserving 15 percent for statewide activities. As of August 20, 2009, local agencies had drawn down $31 million. California reported to Labor on August 15 that 14,078 youth participants were involved in the summer employment activities of the WIA Youth Program under the Recovery Act.
  • The two local workforce investment areas we visited in California, the City and County of San Francisco and the City of Los Angeles, differed in scope, size, and approach in providing their Recovery Act summer youth employment programs under WIA.

Full September ReportBack to top

Recovery Act: Funds Continue to Provide Fiscal Relief to States and Localities, While Accountability and Reporting Challenges Need to Be Fully Addressed
Recovery Act: Funds Continue to Provide Fiscal Relief to States and Localities, While Accountability and Reporting Challenges Need to Be Fully Addressed (Appendixes)
  • [1] Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009).
  • [2] SELPAs are made up of LEAs and county offices of education within particular geographic areas. Small LEAs join together so they can receive IDEA funding to provide a full range of services to students with special needs.
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