New Jersey – September 20, 2010

The content below was excerpted from the New Jersey Appendix (PDF, 30 pages) of GAO's most recent bimonthly review of the Recovery Act.[1]

What We Did

We reviewed two specific programs funded through the Recovery Act: the Energy Efficiency and Conservation Block Grant (EECBG) program and the Public Housing Capital Fund. We selected the EECBG program because it was a program newly funded by the Recovery Act and selected the Public Housing Capital Fund to follow up on the status of projects reviewed in prior reports. (For descriptions and requirements of the programs we covered, see appendix XVIII of GAO-10-1000SP.) For both of these programs, we reviewed documentation on program requirements and interviewed federal, state, and local government officials, as appropriate, about the use of funds, challenges in implementation, and oversight and monitoring strategies. In particular, for the EECBG program, we discussed these issues with officials of three localities that were direct recipients of EECBG formula funds—the County of Morris (Morris County), the City of Jersey City (Jersey City), and Woodbridge Township. We selected these localities based on the level of funding received, expenditures incurred, and type of local government. We also conducted a site visit to the Newark Housing Authority to follow up on the status of its Public Housing Capital Fund competitive and formula grants reviewed in prior reports.

In addition to the two program–specific reviews, we also continued to review state efforts to oversee and monitor the use of Recovery Act funds through interviews with officials from the state's accountability community, including the Office of the State Auditor and the Office of the State Comptroller. We also interviewed state and local budget officials about their use of Recovery Act funds, the impact of these funds on state and local budgets, and strategies for addressing the phasing out of Recovery Act funds. We selected one locality, Jersey City, to gain a deeper understanding about the use and impact of Recovery Act funds. This locality was selected based on its population, unemployment rate, and level and type of Recovery Act funds received. Finally, we reviewed information New Jersey recipients reported on ( and interviewed officials from the Office of the Governor, as well as EECBG and housing recipients about their recipient reporting experiences.

What We FoundBack to top


The U.S. Department of Energy (DOE) allocated $75.5 million in EECBG formula funds to New Jersey. Approximately $14.4 million was awarded to the New Jersey Board of Public Utilities (NJBPU), the state regulatory authority responsible for administering the state's clean energy programs, and $61.1 million was directly awarded to 65 municipalities and 10 counties in the state. NJBPU is allocating 71 percent of its funds, or $10.2 million, to provide energy rebates to the 512 localities that did not qualify for EECBG formula funds. State and local officials with whom we spoke stated that vague and changing DOE guidance, as well as adhering to state and local requirements, has contributed to delays in implementing EECBG projects and expending funds. For example, according to Jersey City officials, two contracts were awarded that later had to be terminated because the contractors did not meet the city's required energy–efficiency standards. Although the state and localities have processes in place to routinely monitor and oversee EECBG funds, localities have not yet begun assessing the impact of the EECBG funds.

Public Housing Capital Fund

New Jersey public housing agencies continue to make progress in implementing their Recovery Act Public Housing Capital Fund projects. Of the 80 public housing agencies in New Jersey, 7 collectively received a total of $27 million in Public Housing Capital Fund competitive grants. Public housing agencies in New Jersey are primarily using these funds for the creation of energy–efficient, green communities. Public housing agencies are required to obligate 100 percent of these funds by September 2010. As of August 7, 2010, $5 million, or 18 percent, of these funds had been obligated. Public housing agencies are also required to expend 60 percent of their Public Housing Capital Fund formula grants by March 17, 2011. As of August 7, 2010, 80 public housing agencies had drawn down about 62 percent of the $104 million in funds received. To ensure that public housing agencies continue to meet obligation and expenditure deadlines, the U.S. Department of Housing and Urban Development (HUD) field office is conducting outreach through regular e–mail and phone communication, conducting remote reviews of all competitive grant recipients, and more closely monitoring formula fund grant recipients with low expenditure rates as deadlines approach.


The New Jersey Office of the State Auditor, Office of the State Comptroller, and the New Jersey Recovery Accountability Task Force continue to monitor the state's Recovery Act funds. For example, the Office of the State Comptroller plans to audit program compliance and internal controls governing the administration and monitoring of both the fiscal and programmatic components of the EECBG grant in four localities. New Jersey's Single Audit report for fiscal year 2009 identified 45 significant internal control deficiencies related to compliance with federal program requirements, of which 38 were material. Some of these deficiencies included Recovery Act funds.


New Jersey has received approximately $5.8 billion in Recovery Act funds as of July 21, 2010, and used these funds, in part, to increase and restore the state's portion of education aid to local educational agencies and to fill budget shortfalls. New Jersey enacted a $29.4 billion budget for fiscal year 2011 after closing a $10.7 billion budget shortfall, primarily through the elimination or reduction of projected growth and reductions to the base budget. For example, the state deferred pension payments, cut funding from property tax rebates, and eliminated the special municipal aid program. Jersey City officials stated that the city has primarily used its $14 million in Recovery Act funds for nonrecurring projects. For example, the city used its Community Services Block Grant funds to provide nutrition services to low–income residents, among other things.

Recipient Reporting

New Jersey recipients reported funding over 22,000 full–time equivalents (FTE) with Recovery Act funds during the fourth quarterly reporting period, which covers the period April 1, 2010, to June 30, 2010. According to the New Jersey Office of the Governor, the recipient reporting process went smoothly for the fourth reporting period. However, EECBG recipients we met with did not use Office of Management and Budget (OMB) guidance to calculate FTEs. For example, an official from one locality stated that FTEs were calculated based on the total number of people that had been paid with EECBG funds, without taking into consideration the number of hours each employee had worked or prorating the FTEs based on the number of hours attributed to the Recovery Act. As a result, the total number of FTEs may have been overstated.

Full September ReportBack to top

Recovery Act: Opportunities to Improve Management and Strengthen Accountability over States' and Localities' Uses of Funds
Recovery Act: Opportunities to Improve Management and Strengthen Accountability over States' and Localities' Uses of Funds
  • [1] Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009).
  • [2] We also obtained follow–up information from the Newark Housing Authority and Rahway Housing Authority on the impact, if any, the Recovery Act funds had on their ability to administer their regular public housing capital funds. These housing agencies had obligated more than 50 percent of their public housing capital funds as of January 30, 2010 and were therefore not a focus of this review.
  • [3] The base SRF program refers to all SRF funds generated through yearly appropriations, state–match, or repaid loans and does not include Recovery Act funds.
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