GAO finds states need help covering cost of managing, auditing massive stimulus spending

GAO: States should get help managing stimulus

WASHINGTON — States responsible for more than a third of President Barack Obama’s $787 billion stimulus program should be able to tap some of the recovery money to cover costs of managing the new spending, a congressional watchdog agency said Thursday.

The Government Accountability Office found states are struggling to cover the costs of handling their share of Obama’s spending program, a frustration state leaders have expressed repeatedly in the months following approval of the economic recovery plan. A top lawmaker echoed the concerns of state and local leaders in their push for more help.

Sen. Joe Lieberman, I-Conn., chairman of the Senate Homeland Security and Governmental Affairs Committee, said Thursday that Obama’s recovery program is forcing state and local governments to do more and to do it faster than ever with the new federal money.

“Therefore, I am committed to giving state and local governments the flexibility they need to use some Recovery Act funds to help pay for administrative and oversight costs,” Lieberman said.

States will handle $280 billion of the spending plan, distributing the money through a series of existing programs. Obama placed strict rules on accounting for the new money, and states have said they don’t have the resources to cover the costs of the additional oversight required.

GAO released a report Thursday recommending that Obama’s Office of Management and Budget “should clarify what Recovery Act funds can be used to support state efforts to ensure accountability and oversight.”

GAO is monitoring how 16 states and the District of Columbia are managing the stimulus money. Its report found those states already have tapped nearly $8 billion in additional Medicaid money and are applying for billions more in transportation and education funds.

But the huge infusion of cash comes with its own problems, including accounting for where the money goes and managing how it flows to required programs, state and local leaders have said.

GAO presented its report to Lieberman’s committee, noting early efforts by state and local governments to manage their share of the stimulus program.