City Controller Releases Audits of how Los Angeles has used Federal Stimulus Money
$111 spent for only 55 jobs -- so far



City Controller Releases Audits of how Los Angeles has used Federal Stimulus Money
$111 Million in ARRA Funds Has Only Created 55 Jobs So Far

by Wendy Greuel

LA City Controller's Office

September 16th, 2010

(Los Angeles) – Continuing her efforts to ensure that taxpayer money is spent efficiently and effectively, City Controller Wendy Greuel released two audits today of how the City of Los Angeles has used American Recovery and Reinvestment Act (ARRA) funds. The audits looked at the how the two departments that have received the largest amount of ARRA funding so far – the Department of Transportation (LADOT) and the Department of Public Works (DPW) – have used those funds and how many jobs were created. Los Angeles becomes the largest City in America to conduct an audit of how ARRA funds have been expended.

DPW has received $70.65 million and created or retained 45.46 jobs, though they are expected to create 238 jobs overall (the fraction of a job created or retained correlates to the number of actual hours works). LADOT has been awarded $40.8 million and created or retained 9 jobs, though they are expected to create 26 jobs overall. Overall, the Departments have received $111 million in federal stimulus funds out of the $594 million the City has been awarded so far and created or retained 54.46 jobs.

“I'm disappointed that we've only created or retained 55 jobs after receiving $111 million in ARRA funds. With our local unemployment rate over 12% we need to do a better job cutting the red tape and putting Angelenos back to work,” said City Controller Greuel. “While it doesn't appear that any of the ARRA funds were misspent, the City needs to do a better job expediting the process and creating jobs.We're going to continue to audit how these funds are spent, to ensure that they are expended quickly and correctly. I'm pleased that since our auditors completed their field work, the Departments have begun to implement the changes we identified to help get this money out the door faster.”

Some of the findings of the audits included:

  • DPW's policies need to be strengthened in order to ensure transparent and accurate tracking of ARRA funds and related expenditures.
    • The Department's process for using work orders for ARRA projects makes it difficult to distinguish between ARRA-related expenditures and expenditures using City funds.
    • Billing costs for reimbursement are not always submitted in a timely manner and did not always include all costs. In addition, the Bureau of Sanitation's negotiated agreements for storm water projects stipulate quarterly— not monthly—billing.
  • DPW's existing processes may not be sufficient to expend funds quickly and promote job creation and stimulate the economy.
    • Some of the Department's ARRA-funded projects have taken many months to award contracts and start construction, meaning the local economy is not impacted immediately, which was the initial goal of ARRA.
  • LADOT's could improve their contracting processes to expedite ARRA funds being spent to create and retain jobs.
    • Some of the LADOT's ARRA-funded projects have taken many months to award contracts and start construction.For example, four of the Federal Highway Administration (FHWA) projects were not sent out to bid until at least seven months after they were authorized by the State/FHWA.
    • The Department's typical contracting processes, which follow a standard framework to comply with established Federal, State and City policies, may not be the best approach to ensure that ARRA projects have an immediate impact on local economy.

LA City Controller: