Review of Alabama's Compliance With the Reserve or Rainy Day Fund Requirement for the Increased Federal Medical Assistance Percentage Under the American Recovery and Reinvestment Act

For the recession adjustment period (October 1, 2008, through December 31, 2010), the American Recovery and Reinvestment Act of 2009 (Recovery Act) provided an estimated 87 billion in additional Medicaid funding based on temporary increases in States' Federal medical assistance percentage (FMAP). However, a State was not eligible for the increased FMAP if any amounts attributable (directly or indirectly) to such an increase were deposited or credited into any reserve, or rainy day, fund.

Our review found that Alabama complied with the Recovery Act reserve or rainy day fund requirement for receiving increased FMAP. Specifically, the State did not use additional Medicaid funding to supplement any reserve or rainy day account. Therefore, we have no recommendations.

However, the State drew Federal Recovery Act funds that exceeded the amount of the Recovery Act expenditures reported on its Quarterly Statements of Expenditures for the Medical Assistance Program (CMS-64 reports) for the audit period. The State agency did not provide an explanation for the excessive drawdown of Recovery Act funds.