GAO Report Finds Flaws in ARRA Reporting

More than a year ago, Congress passed the American Recovery and Reinvestment Act (ARRA) providing almost $100 billion for federal education programs including Title I, the Individuals with Disabilities Education Act, and a new program called the State Fiscal Stabilization Fund (SFSF). But this new money, which was channeled through states and distributed to school districts and institutions of higher education, came with a major caveat – schools were required to extensively track and report on the use of these funds through a new federal website called Recovery.gov. These reporting requirements were intended to ensure transparency surrounding the use of the new federal funds for the public and policymakers. But how effective were the reporting requirements? A recent Government Accountability Office (GAO) report suggests that the reporting requirements for education programs did not result in the kind of transparency Congress and the Obama Administration likely intended.

The reporting system that the White House Office of Management and Budget (OMB) put in place to track the use of ARRA funds requires primary recipients of funds (state governments in the case of education funds) to report details on their use of funds. This includes information such as the project name and description, a description of the purpose, outputs, and outcomes of the award, and a description of the projects and activities that would be conducted with the award funds. Additionally, sub-recipients of the funds (school districts and institutions of higher education) must report the location and amount of the sub-awards they receive but not any detailed information on how the funds are actually used. This means that state governments have to provide all details on how sub-recipients are using the funds to the extent possible.

According to the GAO, states rarely fulfill these requirements to the level of specificity intended. In many cases, the sheer amount of information that OMB requires to completely fulfill these requirements is more than the reporting system can handle. For example, the reporting system does not allow for enough characters for California to completely describe the activities of all 1,500 of its SFSF grant recipients.

In other cases, however, the U.S. Department of Education, through additional guidance it gave to states to guide their use of the OMB reporting system, provided the states with shortcuts to reduce the reporting burden. In its guidance, the Department of Education told states that they could use prefabricated text in both the award description and activities description sections, resulting in a loss of transparency. For example, a state could automatically enter “Assist States in providing special education and related services to children with disabilities in accordance with Part B of the IDEA” as the award description for their IDEA funds. This means that states do not have to provide any detailed or specific information on how the funds would be actually be used or what their intended outcomes would be.

Through a review of recently reported data at Recovery.gov, GAO found that only 9 percent of states provided fully transparent information in their reporting (as defined by GAO’s transparency criteria). This means that these states provided information beyond the suggested text provided by the Department of Education and fully satisfied the requirements outlined by OMB. An additional 13 percent of states provided a significant amount of information in their reporting, while the remaining 78 percent provided only limited information in their reporting. It appears that the information state governments have been providing through Recovery.gov is limited in its usefulness at best.

What does this all mean for ARRA reporting moving forward?

GAO suggests that the Department of Education require that states provide their own text for the section that describes the relevant activities rather than rely on standard text provided by ED (though they will continue to be able to use the standard text for the award description). Ideally, this will allow the public to determine how ARRA funds are actually being used at the local level. As states begin to receive a new infusion of $10 billion through the recently passed Education Jobs Fund, which is also subject to these reporting requirements, this information is likely to become more important than ever.