Rep. Towns: States need help managing stimulus money

The Office of Management and Budget should give more guidance to states on how to direct and document hundreds of billions of dollars in spending under the economic stimulus law, the chairman of the House Oversight and Government Reform Committee said today.

“The good news is that money is flowing from the federal government to the states at a faster rate than the Congressional Budget Office predicted at the beginning of this year,” said Rep. Edolphus Towns (D-N.Y.) at a committee hearing.

“But there is also bad news,” he added. “The [Government Accountability Office] found significant shortcomings in the targeting and tracking of recovery act spending.”

States need more guidance to define economically distressed areas targeted under the $790 billion economic stimulus law, Towns said. At least $300 billion of the spending will be channeled through state and local governments.

State agencies would also benefit from additional funding for conducting administrative and oversight functions for the spending, he said. He has introduced legislation to increase the percentage of stimulus funds that can be used for oversight activities.

At the hearing, GAO’s Acting Comptroller General Gene Dodaro said states need more guidance on accountability, transparency, impact assessments, communications and single audits.

“States have implemented various internal control programs. However, federal single audit guidance and reporting does not fully address [the American Recovery and Reinvestment Act] risk,” Dodaro said. “The single audit reporting deadline is too late to provide audit results in time for the audited entity to take action on deficiencies noted in recovery act programs. Moreover, current guidance does not achieve the level of accountability needed to effectively respond to recovery act risks. Finally, state auditors need additional flexibility and funding to undertake the added single audit responsibilities under the recovery act.”