Massachusetts – May 26, 2010

The content below was excerpted from the Massachusetts Appendix (PDF, 29 pages) of GAO's most recent bimonthly review of the Recovery Act.[1]

What We Did

GAO's work in Massachusetts focused on (1) the commonwealth's use of Recovery Act funds for selected programs, (2) the approaches taken by Massachusetts agencies to ensure accountability for Recovery Act funds, and (3) impacts of these funds. We reviewed several specific programs funded under the Recovery Act in Massachusetts related to highway, transit system, clean water, drinking water, and housing projects, and education and worker training programs. We selected the programs we reviewed because all have significant funds being expended at this point and several had recent obligation deadlines, as discussed below. For descriptions and requirements of the programs we covered, see appendix XVIII of GAO-10-605SP.

Our work was performed at state agencies responsible for implementing the programs, and also at some localities. We followed up on ongoing Recovery Act projects at two regional transit agencies-the Massachusetts Bay Transportation Authority and the Greater Attleboro Taunton Regional Transit Authority. For our review of public housing, we contacted four public housing agencies in Cambridge, Clinton, Lowell, and Taunton. Our review of state revolving fund spending included visits to two subrecipients-the Massachusetts Water Resources Authority (MWRA) and the town of Spencer. We also visited two local workforce areas with worker training programs-Boston and Bristol.

Finally, we continued to track the use of Recovery Act funds for state and local fiscal stabilization. We visited two Massachusetts cities-Worcester and Everett-to determine the amount of Recovery Act funds each is receiving and how those funds are being used as they deal with their difficult fiscal situations. Both cities are receiving Recovery Act funds under several programs, including funding for public safety expenses. We also followed up with two other cities-Boston and Springfield-which we had visited in fall of 2009.

What We FoundBack to top

Recovery Act education programs

Under the Recovery Act, Massachusetts has been awarded funding through three major education programs, the largest of which is the State Fiscal Stabilization Fund (SFSF) with an allocation of $994 million. Unlike previous reporting periods, local educational agencies (LEA) did not report any SFSF expenditures or jobs to Recovery.gov for the period ending March 31, 2010, according to state officials. They also said that the state did not receive the second phase of SFSF funding until late March, and as a result, the funds were not available to LEAs until April. During the same reporting period, a community college we contacted said that they used SFSF funds to pay for staff salaries and utility costs, among other things. The rate of draw down of funds varies among the major education programs. As of April 16, 2010, the commonwealth had drawn down more than half of its SFSF funds and less than a third of the other two program funds. Massachusetts has recently expanded its SFSF oversight plan to include a supplemental audit of selected school districts. In addition, the commonwealth has recently applied for another source of Recovery Act funding through the School Improvement Grant (SIG) program, but its submission was delayed in order to integrate federal and state requirements.

Highway infrastructure investment

Massachusetts has met the March 2, 2010, obligation deadline for Recovery Act federal-aid highway funds. A total of $378.2 million has been obligated for 84 projects-several paving improvement projects as well as projects that may promote economic and business development-and $59.7 million has been transferred to the Federal Transit Administration (FTA) for eligible projects. On average, bids for highway projects were 15-20 percent below state cost estimates. Massachusetts lags behind the national average on its reimbursement rate, an indicator that it is not expending funds as quickly as most other states. State officials raised concerns about Massachusetts's ability to meet its highway maintenance of effort requirement as a result of construction season timing and an increase after recertifying its required commitment in March 2010.

Transit Capital Assistance funds

The $290 million in Transit Capital Assistance funds that were apportioned to Massachusetts and urbanized areas in the commonwealth were obligated by the March 5, 2010 deadline. Massachusetts transit agencies are using their Recovery Act funding to finance a variety of fleet enhancements and capital improvement projects designed to enhance customer service and improve safety. In addition, $59.7 million was transferred from the Federal Highway Administration (FHWA) to FTA for use by several of the commonwealth's regional transit agencies for their operating costs as well as many of their planned Recovery Act capital expenditures. The two transit agencies we visited used construction management firms to expedite project implementation, although their use requires transit agencies to consider potential increased risks related to higher costs and more remote oversight.

Public Housing Capital Fund

Public housing agencies in Massachusetts were allocated about $82 million in Public Housing Capital Fund formula grants under the Recovery Act. All public housing agencies in the commonwealth met the March 17, 2010, deadline for obligating 100 percent of these funds, and as of May 1, 2010, housing agencies had expended $28.5 million. Many housing agencies used the funds to accelerate projects that were already on their 5-year capital plans, ranging from window replacement and landscaping to substantial rehabilitation of multiple units of housing. Some are using Recovery Act funds to permanently transfer state-supported housing units to their portfolios of federally-supported housing. The Massachusetts Department of Housing and Community Development (DHCD) estimates that this process could result in the commonwealth receiving an additional $10 million in federal operating subsidies annually in the future.

Clean Water and Drinking Water State Revolving Funds (SRF)

Massachusetts received about $185 million in Recovery Act funds through its Clean Water and Drinking Water SRFs and met the Recovery Act's deadline of February 17, 2010, to have its 115 selected projects under contract.[2] These ranged from rehabilitation of a 70-year old water transmission line to green projects enhancing energy efficiency and producing renewable energy. Massachusetts provided nearly all the Recovery Act funding in the form of "principal forgiveness," meaning that the portion of projects funded with Recovery Act money-about 12 percent of clean water projects and 20 percent of drinking water projects-will not need to be repaid. Further, for green projects, none of the funds will need to be repaid.

Workforce Investment Act of 1998 (WIA) Dislocated Worker Program

Massachusetts was allotted about $21 million in WIA Dislocated Worker funds. The commonwealth distributed 60 percent of these funds to the local workforce areas and retained the balance. As of March 31, 2010, the commonwealth had drawn down at least $7.5 million of its Recovery Act allotment. Guided by the commonwealth, local areas have used most of their Recovery Act funds to place more workers in training. From the date the commonwealth started using Recovery Act WIA funds through January 31, 2010, about 2,300 dislocated workers received training under Recovery Act or regular WIA funds. Local areas have taken steps to address the U.S. Department of Labor's (Labor) Recovery Act priorities, such as training for green jobs.

Massachusetts government's and cities' use of Recovery Act funds

The commonwealth of Massachusetts continues to experience budget pressures resulting from multi-year revenue shortfalls along with caseload growth in some of its programs. Because of the unexpected levels of revenue decline, Massachusetts accelerated the use of Recovery Act funds that freed up funds for other uses, but has taken steps to prepare for when Recovery Act funds are no longer available. Cities we visited also discussed fiscal difficulty and reported using Recovery Act funds to prevent layoffs of teachers, police, and firefighters. They reported preparing for the challenges they face as Recovery Act funds end; some pointed to new sources of funds, including hotel and meals taxes and careful use of Recovery Act funds on projects that would not require sustained funding.

Oversight and accountability efforts

The Massachusetts Office of the State Auditor has several Recovery Act audits underway and is incorporating Recovery Act-related work into all its regular audits, including the state's Single Audit. Similarly, the state Inspector General is focusing efforts on investigating Recovery Act programs. Localities we spoke with utilize the Single Audit process to audit Recovery Act funds, although SFSF funds were the only Recovery Act funds that these local entities reported addressing during the recently completed 2009 audits. Areas addressed so far related to the WIA Youth Program and to SFSF.

Full May ReportBack to top

Recovery Act: States' and Localities' Uses of Funds and Actions Needed to Address Implementation Challenges and Bolster Accountability
GAO-10-604
Recovery Act: States' and Localities' Uses of Funds and Actions Needed to Address Implementation Challenges and Bolster Accountability
(Appendixes)
GAO-10-605SP
  • [1] Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009).
  • [2] In addition to these funds, the state also received $1,343,900 in funding for section 604b Water Quality Management Planning. In this report we use the word "project" to mean an assistance agreement, i.e., a loan or grant agreement made by the state revolving fund program to a subrecipient for the purpose of a Recovery Act project.
GAO Contact
portrait of of Stanley J. Czerwinski

Stanley J. Czerwinski

Director, Strategic Issues

czerwinskis@gao.gov

(202) 512-6520

portrait of of Laurie Ekstrand

Laurie Ekstrand

Massachusetts State Team

ekstrandl@gao.gov

(202) 512-6845