The US government is sending stimulus money to states faster than it anticipated, defying some claims that it is not acting quickly enough, but its checks on how the states spend come up. The Government Accountability Office report, obtained by Reuters late on Tuesday, says that states and localities are to receive $49 billion from the American Recovery and Reinvestment Act in fiscal year 2009.
In the four months since the stimulus was passed, the federal government has already paid out 60 percent of that, or $29 billion. Almost all of the outlays have been used to bolster Medicaid, a healthcare program for the poor that states administer with the federal government and which takes up more than a quarter of most states' budgets. The stimulus increased the federal share of the program for 27 months. But Medicaid enrolment in the 16 states and the District of Columbia the GAO surveyed rose from October 2007 to May 2009 by 7 percent, taking up some of the extra cash.
"Most commonly, states reported that they are using or planning to use freed-up funds to cover their increased Medicaid caseload, to maintain current benefits and eligibility levels, and to help finance their respective state budgets," the GAO, which acts as a government watchdog, says.
President Barack Obama pledged to keep all participants in the $787 billion stimulus plan accountable and to make frequent checks on how money is spent. Congress, too, emphasized "transparency," when it passed the historic spending and tax bill in February. That left states to report to federal agencies, a stimulus oversight commission and Congressional committees, and they are confused by the different requirements and frequently do not have enough staff, the GAO says. Also, some audits may not be completed in time for states to catch and fix problems.
For example, some school officials have had little guidance on how to use some of the $44.8 billion earmarked for education and "school district officials told us that preparing for the funds was difficult," the GAO says.
In April, the office asked the Obama administration to clarify how it will track the results of the stimulus, namely the number of jobs created or saved. The Office of Management and Budget last month set guidelines for states to use when counting jobs and will release a tally in October.
While the GAO applauds the guidelines in its report, Republican members of Congress say Obama must do more to accurately show the impact of the stimulus on the job market, especially now that the unemployment rate is 9.5 percent. "We've seen unemployment reach its highest levels since 1983 and an administration unable to justify its questionable claims related to jobs 'saved or created' by the stimulus," said the spokesman for Darrell Issa, the most powerful Republican on the House of Representatives Oversight Committee.
Still, as states' revenues drop and their spending needs rise, the stimulus has helped them close budget gaps for fiscal years 2009 and 2010, the GAO found. Many of the states the GAO surveyed "reported they would have had to make further cuts to services and programs without. Recovery Act funds."