North Carolina – July 8, 2009

The content below was excerpted from the North Carolina Appendix (PDF, 45 pages) of GAO's second bimonthly review of the Recovery Act.[1]


Use of Funds

Our work in North Carolina focused on nine federal programs, selected primarily because they have begun disbursing funds to the state and include existing programs receiving significant amounts of Recovery Act funds or significant increases in funding, or are new programs. Program funds are being directed to helping North Carolina stabilize its budget and support local governments, particularly school districts and institutions of higher education (IHE), and several are being used to expand existing programs. Funds from some of these programs are intended for disbursement through states or directly to localities. The funds include the following:

Funds Made Available as a Result of Increased Medicaid Federal Medical Assistance Percentage (FMAP)

As of June 29, 2009, North Carolina had drawn down over $710 million in increased FMAP grant awards, which is 100 percent of its awards to date. North Carolina officials reported that they are using funds made available as a result of the increased FMAP to offset the state budget deficit.

U.S. Department of Education State Fiscal Stabilization Fund (SFSF)

In total, North Carolina was allocated over $1.42 billion in SFSF. When the state’s initial application was approved on May 20, 2009, the state was awarded over $1 billion of these funds. North Carolina has begun using these funds to restore state aid to institutions of higher education (IHE) in fiscal year 2009 and plans to provide funds to school districts in fiscal year 2010, helping to stabilize their budgets and, among other uses, retain staff.

Highway Infrastructure Investment Funds

The U.S. Department of Transportation’s Federal Highway Administration (FHWA) apportioned $736 million to North Carolina in March 2009 for highway infrastructure and other eligible projects. As of June 25, 2009, $423 million has been obligated. Funds have been obligated for 65 projects either begun or advertised for bids and largely involve road paving and widening. Of the 65 contracts, 55 representing $309 million have been awarded, and of these contracts, 33 representing $200 million are underway.

Individuals with Disabilities Education Act (IDEA), Parts B and C

The U.S. Department of Education (Education) allocated the first half of states’ IDEA allocations on April 1, 2009, with North Carolina receiving $170 million. Of the $170 million, $163 million was for IDEA, Part B, and the additional funding was for IDEA, Part C. The state allocated Part B funds to school districts on April 29, 2009, to support education and related services for children and youth with disabilities, and the state plans to use Part C funds to retain staff and provide professional development.

Title I, Part A, of the Elementary and Secondary Education Act (ESEA) of 1965

Education allocated the first half of states’ ESEA Title I, Part A, allocations on April 1, 2009, with North Carolina receiving $129 million. North Carolina has begun making these funds available to school districts to help educate disadvantaged youth through, among other things, retaining teachers, professional development, parent participation, and expanding the school day.

Weatherization Assistance Program

The U.S. Department of Energy (DOE) allocated about $132 million in Recovery Act Weatherization funding to North Carolina for a 3-year period. Based on information available on June 23, 2009, DOE has provided $66 million to North Carolina, and North Carolina has obligated none of these funds. North Carolina is planning to use the Recovery Act funding allocation for ramp-up activities, weatherizing homes, and for training weatherization contractors and compliance officers.

Workforce Investment Act Youth Program

The North Carolina Department of Commerce (NCDOC), which administers North Carolina’s workforce development system, has received about $25 million in Recovery Act funds for the WIA youth program, of which about $480,000 has been expended. Of the $25 million, the state reserved 15 percent for statewide activities, and has allocated the remaining funds to the state’s 24 local workforce boards. North Carolina plans to use WIA youth Recovery Act funds to create about 6,000 summer jobs in 2009 for its youth.

Edward Byrne Memorial Justice Assistance Grants

The Department of Justice’s Bureau of Justice Assistance (BJA) has awarded $34.5 million directly to North Carolina in Recovery Act funding. Based on information available as of June 30, 2009, none of these funds have been obligated by the Governor’s Crime Commission, which administers these grants for the state.[2]

Public Housing Capital Fund

North Carolina has 99 public housing agencies that have received $83.4 million from the Public Housing Capital Fund formula grant awards. As of June 20, 2009, 63 public housing agencies had obligated $12.7 million and 35 had expended $2 million. At the two housing authorities we visited, this money, which flows directly to public housing authorities, is being used for various capital improvements, including public housing rehabilitation, replacing water heaters, and building computer labs for public housing tenants.

Safeguarding & TransparencyBack to top

North Carolina is engaged in planning how it will enhance its accounting system to track Recovery Act funds, although modifications have not yet been made. State officials said that they are committed to meeting Recovery Act reporting deadlines, but cited certain challenges, particularly the high cost and staff time needed to modify their systems. The state is going beyond Recovery Act mandates by requiring agencies to account for funds on a weekly basis. In addition, to manage internal controls, North Carolina has developed a statewide program called Enhancing Accountability in Government through Leadership and Education (EAGLE). Subrecipient monitoring was one of the concerns that several state officials mentioned in regard to accountability for funds. The State Auditor’s office plans to focus its Recovery Act work on subrecipient monitoring and on how the Recovery Act funds are being segregated from other federal funds coming through traditional funding streams.

Assessing the Effects of SpendingBack to top

North Carolina agencies continue to express concern about the lack of clear federal guidance on assessing results of Recovery Act spending. A representative of the Governor has requested that all agencies provide written confirmation by June 24, 2009, of their readiness for quarterly reporting on jobs created and saved to the federal government beginning in October 2009. Agency officials with whom we spoke said that they would meet these requirements, and that in some cases they had begun planning how they would meet the requirements. They were concerned, however, about the lack of specific definitions of jobs created and saved from the federal government.

Full July ReportBack to top

Recovery Act: States' and Localities' Current and Planned Uses of Funds While Facing Fiscal Stresses
Recovery Act: States' and Localities' Current and Planned Uses of Funds While Facing Fiscal Stresses (Appendixes)
  • [1] Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009).
  • [2] We did not review Edward Byrne Memorial Justice Assistance Grants awarded directly to local governments in this report because the Bureau of Justice Assistance’s (BJA) solicitation for local governments closed on June 17; therefore, not all of these funds have been awarded.
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Cornelia M. Ashby

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