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Audit Report: OAS-RA-L-12-04

April 30, 2012

The Department of Energy's American Recovery and Reinvestment Act – Tennessee State Energy Program 

The State of Tennessee's Department of Economic and Community Development (Tennessee) received $62.5 million of American Recovery and Reinvestment Act of 2009 (Recovery Act) State Energy Program (SEP) grant funds.  This was a significant increase from the $467,000 received prior to the Recovery Act.  We found that Tennessee had developed processes and controls to manage its SEP Recovery Act grant.  However, we determined that, contrary to Federal requirements, Tennessee provided funds to the University of Tennessee (University) in excess of what was immediately needed to pay for actual expenses.  In December 2011, the University and the University of Tennessee Research Foundation (Research Foundation) had about $18.3 million of unexpended grant funds in their possession.  Further, the University and Research Foundation had earned over $650,000 in interest on these funds and had not remitted any of the interest to the Government.  However, on January 25, 2012, the University remitted 3 separate checks totaling $652,104. 03 to the Department for interest earned by the University and Research Foundation on the unspent funds in the Tennessee Solar Farm and Tennessee Solar Institute (Solar Institute) accounts.  Our review also noted that a substantial amount of funds provided for Solar Institute initiatives had not been spent, calling into question whether the funds can be expended before expiration of the grant.  Additionally, In January 2012, Tennessee requested that the Department extend the SEP grant through September 2013.  The Department approved Tennessee's request in February 2012. 

Topic: Financial Assistance