New York – September 23, 2009

The content below was excerpted from the New York Appendix (PDF, 53 pages) of GAO's third bimonthly review of the Recovery Act.[1]


Use of Funds

New York, the nation’s third most populous state and home of the nation’s largest city and most important financial center, continues to be hit hard by the current recession. It expects to receive about $26.7 billion in Recovery Act funds plus possible additional discretionary program funds through the end of 2011. About $11 billion will be for Medicaid; $5 billion will be for education; and another $2.4 billion for highway and transit projects.

GAO’s work in New York for this third bimonthly review focused on the efforts of the state to stabilize its budget and meet the Recovery Act’s first reporting requirements for recipients of Recovery Act funds. We also focused on three Recovery Act programs—the Transit Capital Assistance Program, the Weatherization Assistance Program, and the Workforce Investment Act Youth Program (WIA)—and updated funding information on the highway construction and public housing programs. We selected these programs for different reasons:

  • The Transit Capital Assistance funds had a September 1, 2009 deadline for obligating a portion of the funds and, further, provided an opportunity to review transit agencies receiving Recovery Act funds, including the Metropolitan Transportation Authority (MTA), which manages the nation’s largest transit system.
  • The Weatherization Assistance Program in New York received an almost 400 percent increase in funding as a result of the Recovery Act. The program began on June 26, 2009, providing us the opportunity to look at how state and local agencies are planning to oversee and implement financial controls, track funding, and report results.
  • The WIA Youth program in New York also experienced significant growth due to Recovery Act funds and many summer employment activities funded by the Recovery Act were in full operation at the time of our review.

Within these programs, we focused on how funds were being used, how internal controls and safeguards were being implemented, and how results were being assessed. Consistent with the purposes of the Recovery Act, funds from the programs we reviewed are being directed to help New York and local governments stabilize their budgets and stimulate infrastructure development and expand existing programs—thereby providing needed services and potential jobs. The following provides highlights of our review of these programs:

Budget Stabilization

  • New York State addressed a significant 2-year budget gap of $20.1 billion when it enacted its fiscal year 2009-2010 Budget Financial Plan on April 28, 2009,[2] with the help of approximately $6.2 billion in Recovery Act funds and other measures.
  • Continued declining revenues and the current economic environment resulted in a forecasted $2.1 billion budget gap for the state at the end of its first quarter for fiscal year 2009-2010.
  • The state’s proposal to address this budget gap is expected to be deliberated in early fall 2009.

Highway Infrastructure Investment Funds

  • The U.S. Department of Transportation’s Federal Highway Administration (FHWA) apportioned $1.12 billion in Recovery Act funds to the New York State Department of Transportation (NYSDOT) in March 2009.
  • As of September 1, 2009, the federal government had obligated about $783 million to New York, and about $23 million had been reimbursed by the federal government.
  • According to NYSDOT, it has used Recovery Act funds to award contracts for about 194 projects, 190 of which have begun construction. Since June, NYSDOT has made progress in the number of contracts awarded and the proportion of projects that are located in economically distressed areas.

Transit Capital Assistance Program

  • The U.S. Department of Transportation’s Federal Transit Administration (FTA) apportioned over $1.3 billion in Recovery Act funds to the state of New York and urbanized areas (UZA) that include localities in New York. As of September 1, 2009, FTA had obligated $1.1 billion.
  • FTA was slow to obligate these funds, because of its lengthy grant review processes, but as of September 1, 2009, FTA concluded that the 50 percent obligation requirement had been met for New York and urbanized areas located in the state.
  • The Metropolitan Transportation Authority (MTA)—the largest transit agency in the country and recipient of the most Recovery Act Transit Capital Assistance Program funds in New York —used preaward authority to begin Recovery Act projects in advance of FTA’s obligation of the funds.[3] MTA will receive its Transit Capital Assistance Program funding through two grants worth over $660.2 million.[4] MTA plans to use these funds to pay for a series of maintenance and capital projects throughout the MTA transit system.

Weatherization Assistance Program

  • On June 26, 2009, the U.S. Department of Energy (DOE) approved New York State’s plan for the use of Recovery Act funds in the Weatherization Assistance Program authorizing expenditure of 50 percent ($197.3 million) of its total allocation for this program ($394.7 million).
  • According to officials, as of August 31, 2009, no funds have been disbursed. The state’s Division of Housing and Community Renewal which reviews the contract applications submitted by the 64 subgrantees that implement the program for the state has approved nine contract applications obligating $27.5 million. The division anticipates that the remaining contract applications will be approved by October 15, 2009. However, officials told us that the need to address Davis-Bacon requirements, which were not imposed on the program before the Recovery Act, had complicated the contract-review process and created uncertainty over labor costs until prevailing wage rates were determined by September 3, 2009.

Workforce Investment Act Youth Program (WIA)

  • The U.S. Department of Labor (Labor) allotted about $71.5 million to New York in WIA Recovery Act funds.
  • The state has allocated $60.8 million to the state’s 33 local workforce areas and, as of August 31, 2009, local areas had expended an estimated $34.6 million.
  • New York summer youth employment programs exceeded their goal by enrolling over 24,000 youth in summer jobs.
  • We visited the government entity managing the WIA Youth program in Oneida County. It employed various strategies to help overcome eligibility challenges and to retain older youth at the end of the summer. For example, Oneida County hired four employees from May to December 2009 that assisted youth in the eligibility process.

Public Housing Capital Fund

  • New York State has 84 public housing agencies that have received Recovery Act formula grant awards through the Public Housing Capital Fund, totaling $502.3 million.
  • As of September 5, 2009, 59 of the state’s 84 public housing agencies have obligated $154.4 million, while 43 have expended $2.9 million.

Recovery Act Reporting

  • New York State has a major planning effort in place to meet the Recovery Act’s first recipient reporting deadline of October 10, 2009.[5] However, some concerns remain about the ability of recipients in the state that received Recovery Act funds to submit complete reports by the October 10, 2009 reporting deadline, which is 10 days after the end of the quarter; ensure that all subrecipients’ data will be included; and report on specific performance measures.
  • New York State has contracted with a consultant to assist the state in meeting its first-round reporting requirements in October.
  • State officials said that state agencies vary in their thoroughness of planning and capability to meet Recovery Act reporting requirements.

Full September ReportBack to top

Recovery Act: Funds Continue to Provide Fiscal Relief to States and Localities, While Accountability and Reporting Challenges Need to Be Fully Addressed
Recovery Act: Funds Continue to Provide Fiscal Relief to States and Localities, While Accountability and Reporting Challenges Need to Be Fully Addressed (Appendixes)
  • [1] Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009).
  • [2] The 2-year budget gap of $20.1 billion was for fiscal years 2008-2009 and 2009-2010.
  • [3] FTA operates on a reimbursement basis, which means the project sponsor must have incurred a cost before they can draw funds.
  • [4] MTA expects to receive over $1 billion in Recovery Act funds, including funds through FTA’s Capital Assistance Grants, the Fixed Guideway Infrastructure Investment Program, and the Capital Investment Grant Program.
  • [5] Section 1512 of the Recovery Act requires that all recipients prepare quarterly reports, which includes information such as who is receiving Recovery Act dollars and the amounts, projects or activities that are being funded, the completion status of project activities, and an estimate of the number of jobs created and the number of jobs retained by projects and activities.

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