FHWA Should Find Way to Make Unspent ARRA Funds Available to States, USDOT Inspector General Report Says

A report issued earlier this month by the U.S. Transportation Department's Office of the Inspector General says that the Federal Highway Administration should look for ways to make the unspent dollars from the American Recovery and Reinvestment Act of 2009 readily available to states for transportation projects.

ARRA provided $27.5 billion for highway infrastructure project investments (which FHWA oversaw) when passed, and as of April 2013, about 96 percent of that funding was expended. However, OIG then looked at the status of the funds not yet expended through ARRA to see if states could use them before Sept. 30, 2015 (which is when the time period for spending the funds expires). OIG found that states had unexpended ARRA funds totaling about $1.5 billion, and about $155 million in recovered funds (those de-obligated) from other ARRA projects.

OIG found that FHWA has taken adequate actions to monitor unexpended ARRA funds, but that ARRA highway funds may remain unused when the program officially expires in 2015 due in part to FHWA's limitations on obligating recovered funds. According to the report, ARRA recovered funds remain unobligated because, by law, states cannot use them to pay for new ARRA highway projects. Also, FHWA's annual $25 million national limitation on obligating recovered funds has hindered states' ability to maximize their recovered ARRA funds.

To combat this, OIG's report says that further FHWA actions could increase the availability of recovered funds.

"To meet a key ARRA goal of stimulating the U.S. economy through timely investments in transportation projects, FHWA faces the ongoing challenge of helping states fully utilize remaining unexpended ARRA funds," according to the report. "While the law places limits on what states can do with ARRA funds after Sept. 30, 2010, FHWA can take actions to reduce administrative barriers, within the law, and provide states with more opportunities to use recovered ARRA funds. In fiscal year 2012, FHWA took actions to accomplish this and lessen the amount that would remain when ARRA concludes. However, to ensure achievement of ARRA's economic recovery goals, it would be prudent for FHWA to explore appropriate actions to make more unspent ARRA funds available to states."

FHWA mostly concurred with the recommendations in the report, though it said it had already taken some of the steps the report recommended.

OIG's full audit report is available here.

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