New Jersey – April 23, 2009

Use of Funds

An estimated 90 percent of Recovery Act funding provided to states and localities nationwide in fiscal year 2009 (through Sept. 30, 2009) will be for health, transportation and education programs. The three largest programs in these categories are the Medicaid Federal Medical Assistance Percentage (FMAP) awards, the State Fiscal Stabilization Fund, and highways.

Medicaid Federal Medical Assistance Percentage (FMAP) Funds

  • As of April 3, 2009, the Centers for Medicare & Medicaid Services (CMS) had made about $550 million in increased FMAP grant awards to New Jersey. As of April 1, 2009, the state has drawn down $362.2 million, which is almost 66 percent of its awards to date.
  • Officials stated that the funds made available as a result of the increased FMAP allow the state to cover the increase in caseload and maintain current populations and benefits. In addition, these funds will help balance the state's budget and allow the state to eliminate premiums for children in families with incomes less than 200 percent of the federal poverty level in New Jersey's State Children's Health Insurance Program.

Transportation—Highway Infrastructure Investment

  • New Jersey was apportioned about $652 million for highway infrastructure investment on March 2, 2009, by the U.S. Department of Transportation. As of April 16, 2009, the U.S. Department of Transportation had obligated $280.8 million for 12 projects. Under the Recovery Act, highway funds are reimbursable, and New Jersey will receive funds after all or part of each project is completed.
  • As of April 16, 2009, the New Jersey Department of Transportation (NJDOT) had advertised competitive bids on 10 projects totaling about $269.5 million. New Jersey has determined that it can meet Recovery Act requirements for obligating highway infrastructure investment funds.
  • These projects included road improvements, pavement and signal rehabilitation, bridge deck repairs, and major design elements for major projects.

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

  • New Jersey was allocated about $891 million from the initial release of these funds on April 2, 2009, by the U.S. Department of Education.
  • Before receiving the funds, states are required to submit an application that provides several assurances to the Department of Education. These include assurances that they will meet maintenance of effort requirements (or that they will be able to comply with waiver provisions) and that they will implement strategies to meet certain educational requirements, including increasing teacher effectiveness, addressing inequities in the distribution of highly qualified teachers, and improving the quality of state academic standards and assessments. State officials estimated that most of the SFSF funds will have an impact on the state's fiscal year 2010 budget, which will start on July 1, 2009. As of April 16, 2009, New Jersey had not applied for SFSF funds.
  • State officials stated that, pending a New Jersey Supreme Court decision on the state's new education funding formula, the SFSF funds for primary education would follow that formula. The state's use of SFSF funds for higher education is unclear. State officials are currently trying to determine what portion of these funds will be allocated to higher education. New Jersey expects to make that determination in late April.

New Jersey is also receiving additional Recovery Act funds under other programs, such as transit capital assistance and fixed guideway modernization funds, Edward Byrne Memorial Justice Assistance Grants, and housing capital assistance. The status of plans for using these funds are described throughout this appendix.

Safeguarding & TransparencyBack to top

New Jersey plans to use several entities to oversee its Recovery Act funds. The Governor has established a state Recovery Accountability Task Force to coordinate and review how state and local agencies use Recovery Act funds as well as provide guidance and best practices for project selection and internal controls, among other things. The state has several accountability agencies that will undertake different aspects of Recovery Act oversight. New Jersey's agencies are adding capabilities to their accounting systems to track Recovery Act funds. Although New Jersey will publicly report the state's Recovery Act spending, state officials said they might not be aware of all federal funds sent directly to other entities, such as public housing authorities. State officials have some concerns about the use of some Recovery Act funds, such as by independent local entities in the state, and they are developing some strategies to mitigate those risks.

Assessing the Effects of SpendingBack to top

New Jersey state agencies are in the early stages of developing plans to assess the effects of Recovery Act spending. Different state and local agencies will have different ways of collecting or estimating jobs created or retained. New Jersey is planning to develop a methodology to collect this data but is waiting to see what federal guidance requires.

For More InformationBack to top

The above excerpts are taken from GAO's April 23, 2009 Bimonthly Review of the Recovery Act:

Recovery Act: As Initial Implementation Unfolds in States and Localities, Continued Attention to Accountability Issues Is Essential
GAO-09-580, April 23, 2009
For more information on New Jersey within the report, please see the following pages:
Appendix XIII: New Jersey pages: 200 – 214
GAO Contact
portrait of of David J. Wise

David J. Wise

Director, Physical Infrastructure

wised@gao.gov

(202) 512-5731

portrait of of Eugene E. Aloise

Eugene E. Aloise

Director, Natural Resources and Environment

aloisee@gao.gov

(202) 512-6870