Recovery Act: Planned Efforts and Challenges in Evaluating Compliance with Maintenance of Effort and Similar Provisions

To help prevent the substitution of federal funds for state, local, or private funds, the American Recovery and Reinvestment Act of 2009 (Recovery Act) contains maintenance of effort and similar provisions requiring that recipients maintain certain levels of spending for selected programs. This report provides information on selected programs in the Recovery Act with maintenance of effort or similar provisions, the guidance federal agencies have issued to implement these requirements, and how responsible federal agencies are in determining whether recipients meet these requirements. To conduct this work, the U.S. Government Accountability Office (GAO) identified programs in the Recovery Act that contain a new maintenance of effort or similar provision; account for at least $4 billion in appropriations by agency; and collectively account for about $100.5 billion of the $106.8 billion in Recovery Act appropriations with these provisions. GAO identified eight programs in the Recovery Act with new maintenance of effort provisions. These programs span the areas of education, highway, housing, rail, telecommunications, and transit, and account for about $100.5 billion in Recovery Act appropriations. The maintenance of effort or similar provisions are designed to prevent recipients, such as state departments of transportation, public housing agencies, and private companies, from substituting planned spending for a given program with Recovery Act funds—that is, the provisions ensure that the increased federal spending will supplement rather than replace state, local, or private spending. Although the maintenance of effort or similar provisions of these eight programs share a common purpose, the specifics of each provision vary by responsible agency. These variations include whether a state must certify the amount of funding it will maintain, whether waivers are allowed, and the consequences (if any) of not meeting the provisions. For example, the Recovery Act allows the Secretary of Education to waive state maintenance of effort requirements for the State Fiscal Stabilization Fund, under certain circumstances, but other programs GAO reviewed for this study did not have such a waiver provision. The federal agencies responsible for these eight programs have issued guidance to states and other recipients on how to implement the maintenance of effort or similar provision requirements. For example, since February 2009, the Department of Transportation (DOT) has issued several sets of guidance to reduce the variations in how states calculate their maintenance of effort certifications. DOT anticipates issuing further guidance to clarify some requirements, including how it will evaluate whether states maintained their certified levels of effort. The Department of Education also issued guidance allowing states flexibility in defining maintenance of effort levels. However, guidance from Education does not require states to include an explanation for changes made to maintenance of effort calculations in their resubmitted application, reducing transparency in terms of what has changed from previously approved applications. Given that some states plan to decrease their fiscal year 2006 maintenance of effort funding by billions of dollars, an explanation of why this change was made would allow the public and policymakers alike the ability to better understand the action. Federal and state officials have not completed key steps in the implementation of the maintenance of effort or similar provisions because of administrative and fiscal challenges associated with their implementation. DOT has begun to assess the highway and transit levels that states certified to maintain; however, it has not estimated a date for completing this assessment and has not finalized plans for determining states’ compliance with their transit certifications. Furthermore, according to a DOT official, the department has not made a decision as to whether the Recovery Act requires states to maintain a total level of effort for covered programs or to maintain their level of effort for each covered program. According to this DOT official, DOT plans to make a decision on this issue by the end of calendar year 2009.


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Media Info

  • Media Type: Web
  • Features: Appendices; Figures; Tables;
  • Pagination: 41p

Subject/Index Terms

Filing Info

  • Accession Number: 01148556
  • Record Type: Publication
  • Report/Paper Numbers: GAO-10-247
  • Files: TRIS
  • Created Date: Jan 1 2010 1:06PM