This paper is a transcript of a letter written by the author, Cornelia M. Ashby, Director, Education, Workforce, and Income Security Issues, to June St. Clair Atkinson, State Superintendent of the North Carolina Department of Public Instruction. In this letter, the author reports that she and her colleagues have examined the efforts of selected states and local educational agencies (LEA) to ensure appropriate uses of Recovery Act funds. In North Carolina, they reviewed efforts undertaken by the North Carolina Department of Public Instruction (DPI) and selected LEAs to administer and oversee the use of Recovery Act funds under the State Fiscal Stabilization Fund (SFSF) education stabilization funds; Title I of the Elementary and Secondary Education Act of 1965 (ESEA Title I), as amended; and Part B of the Individuals with Disabilities Education Act (IDEA), as amended. As part of this effort, they met with various DPI staff and, from February 23 through 25, 2010, they visited Winston-Salem/Forsyth County Schools (WSFCS) to review and test the adequacy of controls and procedures in place pertaining to Recovery Act funds for these three federal programs. They found the following: (1) WSFCS expended $38,400 of ESEA Title I funds on a program that included some expenses that appeared to constitute entertainment, a potentially unallowable use of these funds; and (2) WSFCS staff could not provide documentation to show that the district obtained multiple bids or price quotes for contracts for goods and services. (Contains 14 footnotes.)