An Audit Report on American Recovery and Reinvestment Act Funds for Selected Programs at the Texas Education Agency

March 2010

Report Number 10-024

Overall Conclusion

On February 13, 2009, the U.S. Congress passed the American Recovery and Reinvestment Act of 2009 (ARRA) to provide $787 billion in federal funds, tax cuts, and other benefits for stimulating the economy. This included nearly $224 billion for increased federal funding of education and health care programs, as well as entitlement programs.

The Texas Education Agency (TEA) had been awarded 8 grants totaling $4.5 billion in ARRA funds from the U.S. Department of Education as of December 31, 2009 (see Appendix 2 for more information about these grants).

Auditors reviewed two TEA programs that received ARRA-funded grants for compliance with ARRA-related state and federal requirements. These were:

- Title I, Part A, of the Elementary and Secondary Education Act of 1965 (Title I, Part A), which provides funds to help children most at risk of not meeting state academic standards. TEA was awarded $948,737,780 in ARRA funds for this program.

- Individuals with Disabilities Education Act, Part B (IDEA, Part B), which provides funds to provide an appropriate education to children with disabilities. TEA was awarded $945,636,328 in ARRA funds for this program.

As of September 30, 2009, TEA reported that it approved 753 ARRA-funded Title I, Part A grants and 1,119 IDEA, Part B grants to local education agencies.

TEA established and documented an adequate process that ensured that required information, including ARRA-related program expenditures and job creation information self-reported by local education agencies, was collected and included in the quarterly report required by ARRA, Section 1512, for the reporting period ending September 30, 2009. In addition, TEA complied with state requirements to track ARRA funds separately from other federal funds and provide a link on its Web site to the State Auditor's Office for the reporting of suspected fraud, waste, and abuse of ARRA funds.

TEA also provided guidance and technical assistance to more than 1,200 local education agencies about tracking and reporting ARRA funds; however, the methodology provided was not consistent among all the ARRA guidance documents TEA made available. TEA faced a challenging timeline in providing this guidance and technical assistance. The U.S. Department of Education released its guidance on or about September 21, 2009. TEA staff had just a few working days to assimilate this information, disseminate it internally, and provide it to more than 1,200 local education agencies so that the guidance could be implemented for the September 30, 2009, quarterly reports.

In addition, TEA should monitor and follow up with local education agencies to facilitate the regular and timely draw down of ARRA funds. If local education agencies do not request timely reimbursements of ARRA-related expenditures, there is an increased risk that the local education agencies will not spend all ARRA funds by September 30, 2011, as required by state and federal law. For example, one of the two local education agencies audited had requested reimbursement for only a small percentage of its ARRA-related expenditures as of September 30, 2009.

Reporting of ARRA Funds by Local Education Agencies

Auditors audited two local education agencies that received ARRA funds: the Pasadena Independent School District (Pasadena ISD) and the Alvin Independent School District (Alvin ISD). Both local education agencies over-reported the number of jobs created and saved by ARRA funds for the quarter ending September 30, 2009.

Pasadena ISD and Alvin ISD should improve their processes for collecting, calculating, and reporting the number of jobs created and saved to ensure that they report accurate information to TEA. Pasadena ISD reported to TEA that 100.00 jobs were created and saved by ARRA funds in Title I, Part A and IDEA, Part B programs; auditors recalculated this number and determined that 69.76 jobs were created and saved, a difference of 45.35 percent. Alvin ISD reported that 3.57 jobs were created and saved; auditors recalculated this number and determined that 3.36 jobs were created and saved, a difference of 6.25 percent.

Pasadena ISD requested and received reimbursement from TEA for $104,090 in ARRA-funded expenditures for Title I, Part A programs for the quarter ending September 30, 2009. Alvin ISD requested and received reimbursement from TEA for $1,000,000 in ARRA-funded expenditures for Title I, Part A and IDEA, Part B programs for the same time period. Both Pasadena ISD and Alvin ISD had adequate processes in place to ensure that they spent ARRA funds in accordance with state and federal requirements for the grants tested.

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