GAO finds fault with Treasury over $350 billion in aid

The U.S. Government Accountability Office is taking the U.S. Treasury Department to task over how $350 billion in pandemic relief funds were managed and dispensed to states and localities. 

The two big bones of contention over how State and Local Fiscal Recovery Funds were administered include a lack of assistance from the Treasury and questions over “performance indicators.” The revelations come via a report issued by the GAO last Thursday that offers a series of recommendations and critiques that ring true with issuers.   

“The performance indicators came about pretty far out in the process,” said Emily Brock, director, director, federal liaison center, Government Finance Officers Association. “When you ask, St. Louis Missouri, for example, “Hey, can you measure this? And how far back can you go to measure this?’ The question is, were they measuring it beforehand and is this a reasonable metric? We struggled with that.”  

In the report Minneapolis, Minnesota cited a program that’s tasked with improving conditions in homeless camps that doesn’t line-up with funds that require a number for housing units preserved or developed as a performance indicator. 

Per the report, all municipalities with populations over 250,000 were required to include “metrics associated with a particular performance indicator that Treasury has identified in its reporting guidance.” 

In addition to guidance clarity, the report also takes issue with how the Treasury responded to calls for help. Per the report, “Officials in most selected states and some selected localities told GAO that the assistance Treasury provided by telephone or email through its Contact Center was not timely and did not meet their needs.” 

“I think the technical support was the part that was not that surprising,” said Brock. “For what it’s worth, they lost funding halfway through.” 

The report indicates that most of the funding has been allocated. As of March 31, states reported obligating 60% and spending 45% of SLFRF awards they received. Localities reported obligating 54% and spending 38%, of SLFRF awards they received. Recipients have until Dec.r 31, 2024, to obligate, and until Dec. 31, 2026, to spend their awards. 

To compile the report, the GAO interviewed budget officials responsible for administering SLFRF awards in eighteen selected states and localities. The sampled data set is responsible for 60% percent of SLFRF funds allocated and represent about 60% of the U.S. population.

California accounted for $27 billion, Texas clocked in with $15.8 billion and New York had $15.8 billion allocated. Individual cities and counties were also included in the survey.

To correct the deficiencies, the GAO is recommending that Treasury “comprehensively assess staffing needs for the Contact Center to ensure that it is able to respond timely to SLFRF recipient requests for assistance and with information that meets their needs.” 

In addition, GAO would like to see the Treasury update policies based in lessons learned on tapping SLFRF awards, review recipients’ single audit reports, and issue timely management decisions related to SLFRF findings in accordance with OMB’s single audit guidance.