Summary: Pursuant to a congressional request, GAO provided information regarding states' use of Warner Amendment oil overcharge funds, focusing on: (1) the status of all oil overcharge funds; (2) Arizona's, California's, and Illinois's Warner funds use and spending time frames; (3) states' funds expenditure processes; (4) ways in which states' Warner funds experiences may apply to their use of much larger oil overcharge settlements; and (5) federal and state monitoring of Warner funds' use.
GAO found that: (1) during fiscal years 1982 through 1987, Warner funds accounted for $200 million of the $3.3 billion states received from the oil overcharge escrow account; (2) as of September 30, 1987, about $1 billion remained in the oil overcharge escrow account for distribution to states and other parties; (3) the Department of Energy (DOE) estimated that it could still collect about $2.2 billion in oil overcharges; (4) more than 4 years after their distribution, states had not expended between $20 and $40 million of funds, with Arizona, California, and Illinois accounting for about $3.7 million of unexpended funds; (5) states cited a lengthy learning process for effective expenditure, reprogramming needs, and time-consuming planning and review processes as reasons for their delay in spending funds; (6) states predicted that their planned expenditures of other oil overcharge funds could take 3 to 5 years; (7) states subjected Warner funds to the same systems of management controls they normally applied to federal funds; and (8) DOE and Department of Health and Human Services oversight of Warner funds was similar to that for appropriated funds.
