Remember high school science? Remember Archimedes? As the story goes, about 2,250 years ago, he noticed that the water in his bath rose higher in the tub when he submerged his body. We're pretty sure he wasn't the first to notice this (otherwise those ancient Greeks spent a heck of a lot of time mopping up water from the floor). But Archimedes took the observation a step further, and started talking about "displacement," and its value for measuring an object's volume.

Enter the phenomenon we're calling "ARRA displacement." Here's how it works: With limited administrative capacity in governments, when there's need for more effort on the Recovery Act, it displaces other work. For example, we’ve heard complaints from state and local auditors that they can’t manage the new requirements for auditing and oversight and get their regular work done. Inevitably, some long-standing evaluation plans have wound up on the cutting room floor.

The GAO’s most recent major report about the Recovery Act provides an example of yet another variation on ARRA displacement.

As the report points out, at the end of June, states still had $19.7 billion of their regular highway funds to be allocated -- that’s 63 percent more than normal.  (The average amount left over at the end of June for the previous three years was $12.1 billion.) Federal Reimbursement of regular highway fund spending in the first ten months of fiscal year 2010 was 18 percent less than the average in the last three years.

What happened? States that are intently focused on obligating and spending their stimulus funds have fallen behind on getting those regular highway formula funds out the door.  As the GAO writes: “Some state officials told us they had not been obligating regular federal highway formula funds as quickly because they had been focusing on meeting the Recovery Act obligation deadlines and did not have the resources to do both.

“Because states did not spend regular federal highway formula funds at the same pace as in previous years, while also spending Recovery Act funds, the full economic benefits of Recovery Act funds are likely to be delayed.”

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