The Government Accountability Office issued a report last week stressing the need for accountability on the state and local level for how federal stimulus dollars are used. Ninety percent of $49 billion headed to the states will be spent in three areas: Medicaid, transportation and education. The sixteen states surveyed are handling oversight differently. Some are appointing, ‘recovery czars’, others like Mississippi are delegating oversight of education and transportation to the independent authorities that manage these activities for the state.
One of the primary concerns expressed by states is the difficulty of tracking spending. GAO reports states are “uncertain about their reporting responsibilities when Recovery Act money goes directly to the localities.” Such uncertainty is not limited to which transactions to follow, but also, how to calculate economic impacts including indirect job creation and the impact of funding not intended to create jobs.
A few things to consider. Why is following federal spending on the state and local levels so difficult? States and localities have been receiving federal funds for decades – why haven’t better tracking systems emerged? And secondly, it is likely estimating the economic impact of stimulus dollars will be fraught with difficulty, with much potential for miscalculation and error.
Accountability officers and auditors have their work ahead of them.