North Carolina – December 10, 2009

The content below was excerpted from the North Carolina Appendix (PDF, 22 pages) of GAO's third bimonthly review of the Recovery Act.[1]


What We Did

Our work in North Carolina included gathering information about five programs funded under the Recovery Act—Highway Infrastructure Investment administered by the U.S. Department of Transportation’s Federal Highway Administration (FHWA), Transit Capital Assistance funds administered by the U.S. Department of Transportation’s Federal Transit Administration (FTA), and three education programs administered by the U.S. Department of Education—Title I, Part A of the Elementary and Secondary Education Act of 1965 (ESEA), as amended; Part B of the Individuals with Disabilities Education Act (IDEA), as amended; and the State Fiscal Stabilization Fund (SFSF). For descriptions and requirements of the programs we covered, see appendix XVIII of GAO-10-232SP. We reviewed FHWA obligations of funds for highway infrastructure investment projects and gathered information about the level of state effort for the types of transportation projects funded by the Recovery Act and state oversight of Transit Capital Assistance activities.  We also reviewed the largest transit project in an urbanized area—the Charlotte Area Transit System in the City of Charlotte—and in a nonurbanized area—AppalCART in the town of Boone.

We surveyed a representative sample of local education agencies (LEA) nationally and in North Carolina about their planned uses of Recovery Act funds.  To obtain more specific information on local uses of Recovery Act funds in North Carolina, we also visited two LEAs—Charlotte-Mecklenburg Schools and Weldon City Schools—that participated in GAO’s national survey of LEAs. We gathered information from state educational agency officials about their plans for monitoring local SFSF implementation activities. We also reviewed the state’s implementation of recipient reporting requirements under the Recovery Act by interviewing state and local officials about their experiences at and by gathering information about how the state and local entities estimated jobs created and retained with Recovery Act funds. We also gathered information about the state’s economic condition and visited two local entities—the City of Durham and Halifax County—to learn about the use and impact of Recovery Act funds in urban and rural areas.

What We Found

Highway Infrastructure Investment

As of October 31, 2009, the FHWA had obligated $600 million of the $736 million apportioned to North Carolina for highway infrastructure and other eligible projects, and $110 million had been reimbursed by FHWA to the North Carolina Department of Transportation (NCDOT). Most of these funds have been used to fund pavement projects. NCDOT officials told us that the contract bids, on average, have been approximately 20 percent under NCDOT’s cost estimates. NCDOT officials cited challenges in expending approximately $1.2 billion of state funds required to meet the level of effort the state certified it would expend to meet its Maintenance of Effort (MOE) requirement.

Transit Capital Assistance Funds

FTA apportioned $103.6 million  in Recovery Act Transit Capital Assistance funds to the state and urbanized areas located in the state, of which $70.5 million was apportioned to urbanized areas and $33.1 million to the state for projects in nonurbanized areas. FTA has obligated $67.1 million of the amount for urbanized areas in North Carolina.  Of the $33.1 million apportioned to the state for nonurbanized areas, FTA signed a single grant agreement for $25 million to the state for projects in nonurbanized areas. However, as of November 13, 2009, NCDOT had not allocated any of the $25 million to individual transit agencies in nonurbanized areas.

Local Uses of Recovery Act Education Funds

 We estimate that 37 percent of North Carolina LEAs experienced a total funding decrease of 5 percent or more—more than double the estimate for LEAs nation-wide. Also, many North Carolina LEAs reported they plan to use over half of their SFSF, ESEA Title I, or IDEA Recovery Act funds for retaining staff, but an estimated 54 percent of LEAs reported that, even with SFSF funds, they will lose jobs, compared to 32 percent of LEAs nationally. Charlotte-Mecklenburg and Weldon City school officials report using portions of their SFSF, ESEA Title I, and IDEA funding to retain jobs. North Carolina amended its application for SFSF funds to conform to the state’s legislatively enacted primary funding formulae, which resulted in a reduction of the required education support level in state funds from nearly $7 billion to $5.3 billion.  The U.S. Department of Education approved North Carolina’s amended SFSF application.

Recipient Reporting

North Carolina’s prime recipients met the federal deadline for recipient reports and reported few known errors. The state’s Office of Economic Recovery and Investment (OERI) reviewed every report submitted by state agencies for errors and omissions and reconciled the data with its weekly funding and disbursement report. OERI facilitated information sharing among the state’s prime recipients to ensure recipient reports were complete, accurate, and submitted on time. According to OERI, most reporting problems were administrative in nature.

North Carolina’s Fiscal Condition

North Carolina’s revenues have not met official state forecasts, and the state has initiated actions to control spending. The state’s first quarter revenues were 1 percent, or $45 million, below the $4.2 billion estimated for the first quarter of this fiscal year. North Carolina implemented an approximate 5 percent set-aside of state agencies’ budgets. The City of Durham and Halifax County have both received Recovery Act funding. Durham received a total of approximately $11 million, most of which was used for transportation, energy efficiency, and workforce development initiatives, among others.  Halifax County officials report that the county has received $517,271 that it has used to reduce the effect of budget cuts in child day care and nutrition programs, nutritional assistance to senior citizens, and public safety.

Full December ReportBack to top

Recovery Act: Status of States' and Localities' Use of Funds and Efforts to Ensure Accountability
Recovery Act: Status of States' and Localities' Use of Funds and Efforts to Ensure Accountability
  • [1] Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009).
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Cornelia M. Ashby

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