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21–574 PDF 2005

THE NEED FOR GRANT REFORM AND THE FASTER

AND SMARTER FUNDING FOR FIRST RESPONDERS

ACT OF 2005

HEARING

BEFORE THE

SUBCOMMITTEE ON EMERGENCY 

PREPAREDNESS, 

SCIENCE, AND TECHNOLOGY

OF THE

COMMITTEE ON HOMELAND SECURITY 

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

April 12, 2005

Serial No. 109–6

Printed for the use of the Committee on Homeland Security 

Available via the World Wide Web: http://www.access.gpo.gov/congress/house
COMMITTEE ON HOMELAND SECURITY

CHRISTOPHER COX, California, Chairman 

DON YOUNG, Alaska 

LAMAR S. SMITH, Texas 

CURT WELDON, Pennsylvania, Vice Chairman 

CHRISTOPHER SHAYS, Connecticut 

PETER T. KING, New York 

JOHN LINDER, Georgia 

MARK E. SOUDER, Indiana 

TOM DAVIS, Virginia 

DANIEL E. LUNGREN, California 

JIM GIBBONS, Nevada 

ROB SIMMONS, Connecticut 

MIKE ROGERS, Alabama 

STEVAN PEARCE, New Mexico 

KATHERINE HARRIS, Florida 

BOBBY JINDAL, Louisiana 

DAVE G. REICHERT, Washington 

MICHAEL MCCAUL, Texas 

CHARLIE DENT, Pennsylvania 

BENNIE G. THOMPSON, Mississippi 

LORETTA SANCHEZ, California 

EDWARD J. MARKEY, Massachusetts 

NORMAN D. DICKS, Washington 

JANE HARMAN, California 

PETER A. DEFAZIO, Oregon 

NITA M. LOWEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

ZOE LOFGREN, California 

SHEILA JACKSON-LEE, Texas 

BILL PASCRELL, JR., New Jersey 

DONNA M. CHRISTENSEN, U.S. Virgin Islands 

BOB ETHERIDGE, North Carolina 

JAMES R. LANGEVIN, Rhode Island 

KENDRICK B. MEEK, Florida 

SUBCOMMITTE ON EMERGENCY PREPAREDNESS, SCIENCE, AND TECHNOLOGY

PETER T. KING, New York Chairman 

LAMAR S. SMITH, Texas 

CURT WELDON, Pennsylvania 

ROB SIMMONS, Connecticut 

MIKE ROGERS, Alabama 

STEVAN PEARCE, New Mexico 

KATHERINE HARRIS, Florida 

DAVE G. REICHERT, Washington 

MICHAEL MCCAUL, Texas 

CHARLIE DENT, Pennsylvania 

CHRISTOPHER COX, California (Ex Officio) 

BILL PASCRELL, JR., New Jersey 

LORETTA SANCHEZ, California 

NORMAN D. DICKS, Washington 

JANE HARMAN, California 

NITA M. LOWEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

DONNA M. CHRISTENSEN, U.S. Virgin Islands 

BOB ETHERIDGE, North Carolina 

BENNIE G. THOMPSON, Mississippi (Ex Officio) 

(II) 
(III)

C O N T E N T S

Page 

STATEMENTS

The Honorable Peter King, a Representative in Congress from the State 

of New York, and Chairman, Subcommittee on Emergency Preparedness, 

Science and Technology ....................................................................................... 1

The Honorable Christopher Cox, a Representative in Congress from the State 

of California, and Chairman, Committee on Homeland Security .................... 3

The Honorable Bill Pascrell, Jr., a Representative in Congress from the 

State of New Jersey, and Ranking Member, Subcommittee on Emergency 

Preparedness, Science and Technology .............................................................. 2

The Honorable Bennie Thompson, a Representative in Congress from the 

State of Mississippi, and Ranking Member, Committee on Homeland Security ......................................................................................................................... 4

The Honorable Bob Etheridge, a Representative in Congress from the State 

of North Carolina ................................................................................................. 56

The Honorable Michael McCaul, a Representative in Congress from the State 

of Texas ................................................................................................................. 58

The Honorable Stevan Pearce, a Representative in Congress from the State 

of New Mexico ...................................................................................................... 54 

The Honorable Mike Rogers, a Representative in Congress from the State 

of Alabama ............................................................................................................ 53

The Honorable Loretta Sanchez, a Representative in Congress from the State 

of California .......................................................................................................... 50

The Honorable Rob Simmons, a Representative in Congress from the State 

of Connecticut ....................................................................................................... 60

WITNESSES 

PANEL I 

Mr. J. Richard Berman, Assistant Inspector General for Audits, Office of 

Inspector General, U.S. Department of Homeland Security 

Oral Statement ..................................................................................................... 5

Prepared Statement ............................................................................................. 6

William O. Jenkins, Jr., Ph.D., Director, Homeland Security and Justice 

Issues, Government Accountability Office 

Oral Statement ..................................................................................................... 31

Prepared Statement ............................................................................................. 33

Veronique de Rugy, Ph.D., Fellow, American Enterprise Institute 

Oral Statement ..................................................................................................... 16

Prepared Statement ............................................................................................. 17

PANEL II 

The Honorable Bryan E. Beatty, Secretary, North Carolina Department of 

Crime, Control and Public Safety 

Oral Statement ..................................................................................................... 63

Prepared Statement ............................................................................................. 65

Mr. Michael Chapman, Director, Missouri Office of Homeland Security 

Oral Statement ..................................................................................................... 67

Prepared Statement ............................................................................................. 69
Page

IV

Mr. David L. Miller, Administrator, Iowa Homeland Security and Emergency, 

Management Division 

Oral Statement ..................................................................................................... 70

Prepared Statement ............................................................................................. 73
(1)

THE NEED FOR GRANT REFORM AND THE 

FASTER AND SMARTER FUNDING FOR FIRST 

RESPONDERS ACT OF 2005

Tuesday, April 12, 2005

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON EMERGENCY PREPAREDNESS, 

SCIENCE, AND TECHNOLOGY

COMMITTEE ON HOMELAND SECURITY, 

Washington, DC. 

The subcommittee met, pursuant to call, at 2:09 p.m., in Room 

2212, Rayburn House Office Building, Hon. Peter King [chairman 

of the subcommittee] presiding. 

Present: Representatives King, Simmons, Rogers, Pearce, 

McCaul, Cox, Pascrell, Sanchez, Lowey, Norton, Etheridge, and 

Thompson. 

Mr. KING. [Presiding.] Good afternoon. The Committee on Homeland Security Subcommittee on Emergency Preparedness, Science, 

and Technology will come to order. The subcommittee is meeting 

today to hear testimony on the need for grant reform and the Faster and Smarter Funding for First Responders Act of 2005. 

As the Chairman of the subcommittee and also as someone from 

New York, there is no issue more important to me than this as we 

deal with the threat of homeland security. The purpose of this 

hearing is to look at the need to reform the Federal Terrorism Preparedness grant process and particularly we want to focus on several widely reported problems with the current system. These include, one, the reliance on arbitrary formulas rather than risk or 

need, the lack of federal terrorism preparedness standards or goals 

which would guide the expenditure of the terrorism grants, and 

also the failure of current programs to consider the risks of rural 

jurisdictions in allocating such funds, for example, agro-terrorism. 

Another significant issue which has received some coverage in recent days is the slow rate of draw-down by state and local recipients of terrorism preparedness grants and the failure of many 

states and territories to allocate funds within their jurisdictions are 

on the basis of risk and need. 

As I said at the outset, to me there is no more important issue 

as we go forward in this war against international terrorism, that 

homeland security money be spent properly, that it go where it is 

needed. Money is spent everywhere and thus we are spending it 

nowhere. If we are going to make adequate use of the money, effective use of the money, it has to go to the areas that have the greatest need. So that is the thrust of Chairman Cox’s bill. 
2

I commend him, once again, and also the Ranking Member, Mr. 

Thompson, and as the bill moves forward, it is something that we 

are going to pursue very aggressively. This hearing today is the 

first hearing, and there is a full committee hearing I believe coming on Thursday, and it is going to move forward from there. 

So with that, I want to thank all of the witnesses for agreeing 

to be here today, and I now recognize the Ranking Member, the 

gentleman from New Jersey, Mr. Pascrell. 

Mr. PASCRELL. I thank the Chairman. I am going to hold my 

time to a minimum. After 9/11, the urgency to provide support for 

our first responders finally punctured the collective mind of Congress. We began spending over $3 billion annually to help our men 

and women on the frontlines to prevent and prepare for future terrorist attacks. 

Unfortunately, the current mechanisms for distributing grant 

funding to the local level is fundamentally broken. We have a system where grant funding is distributed to a large extent on minimum funding allocations rather than on risk. This is wrong. We 

must prioritize our homeland security grant funding so that we are 

spending federal money where it is needed the most, as the Chairman pointed out. 

I am heartened by the bipartisan unity displayed so far and I 

want to commend Chairman Cox and Ranking Member Thompson 

for their efforts in regard to the Faster and Smarter Funding for 

First Responders Act. The foundation of this legislation rests on 

common sense. It will require the Department to work hand in 

hand with first responders to finally determine what ‘‘being prepared’’ means to different communities. It will mandate that we assess both the threats and the vulnerabilities confronting America’s 

localities to form a picture of the risks they actually face; that recognizes that antiterrorism grant decisions could be based primarily 

on the highest priorities for defending America. This is absolutely 

critical. Dispensing terrorism preparedness money on arbitrary political formulas is the height of cynicism and counterproductive to 

national security. 

Indeed, the legislation takes large steps to correct many of the 

problems with the current system. We continue to ignore the most 

pressing need of most jurisdictions for homeland security, and that 

is staffing. Personnel shortages are placing a strain on local budgets across all levels of government and encompassing all first responder disciplines. While we continue to prohibit state and local 

governments from using homeland security funding to hire personnel, the administration has proposed eliminating much of the 

COPS program and some of the SAFER programs that provide 

such resources. 

So as we hold hearings on this first responder legislation, we 

must carefully examine not only how funding is distributed, but 

also the uses of that funding. I am very interested in hearing from 

our distinguished witnesses, Mr. Chairman. They bring a breadth 

of experience and knowledge that is vital in our efforts to improve 

our security grant system. 

Thank you, Chairman Cox and Subcommittee Chairman King for 

holding this hearing. Thank you, Mr. Chairman. 

Mr. KING. I thank the Ranking Member. 
3

I recognize the gentleman from California, Chairman of the full 

committee, Mr. Cox. 

Mr. COX. Thank you, Mr. Chairman. 

Good afternoon, and let me join in welcoming our witnesses. We 

have two outstanding panels, first to give us the Washington perspective, and second, the perspective from the States. This subcommittee hearing is the latest in a series of hearings by the 

Homeland Security Committee and the select committee that preceded it, on the need for first responder grant reform. It is especially fitting that we are focusing on the needs of our nation’s first 

responders this week, just a few days after thousands of firefighters from across the country attended the Congressional Fire 

Service Institute’s annual national fire and emergency services dinner. 

As first responders learn to adapt to our new counterterrorism 

priorities, we have to give them the support necessary to fulfill 

their crucial role in defending the country. This is the core of our 

national security mission. The Faster and Smarter Funding for 

First Responders Act of 2005, which was introduced today by myself, Ranking Member Thompson and every single Republican and 

Democratic member of our committee, is now numbered H.R. 1544, 

and will do just that. 

Since the tragic events of 9/11, Congress has appropriated over $40 billion to help states, localities and first responders improve 

our nation’s preparedness for future acts of terrorism. The President’s budget for fiscal year 2006 requests additional billions, representing an increase of about 2000 percent over 2001 levels. Yet 

billions of these dollars remain in the pipeline unspent, despite the 

fact that the threat of terrorism remains very real. Any day could 

bring another damaging terrorist attack on U.S. soil. 

It is clear that despite the enormous increase in authorized and 

appropriated funding by Congress, the homeland security 

grantmaking process is broken. According to reports issued by the 

witnesses on our first panel today, the grantmaking process is 

plagued by inefficiencies and administrative problems. The lack of 

risk-based priorities and terrorism preparedness standards to guide 

federal, state and local government spending decisions means that 

national security funds are often used for less important purposes. 

The leading cause for this breakdown is that the law requires the 

Department of Homeland Security to allocate terrorism preparedness funding in a formulaic manner, unrelated to risk. That pattern is often repeated at the state level. In the immediate aftermath of 9/11, Congress passed the USA Patriot Act, which put into 

law these arbitrary political formulas for the distribution of 

antiterrorism grants to the States. The Patriot Act guarantees that 

every state, no matter its actual risk, must receive a fixed percentage of the total grant funding each year, and that percentage is the 

same from state to state, from Rhode Island to New York. It does 

not matter. Everybody gets the same amount. 

Neither does DHS allocate the remaining funds, the other half, 

on the basis of risk or need. Those funds go according to another 

formula, population. We just cannot afford to keep spending these 

huge amounts of money without regard to risks. We do a disservice 

to our citizens and to our first responders if we refuse to acknowl-
4

edge that in a world of limited resources in which time is not on 

our side, we must prioritize our spending where it is needed most. 

This is not in any way to suggest that only large urban areas 

ought to receive federal homeland security dollars. To the contrary, 

while many major metropolitan areas are terror targets, they are 

by no means the only places that have a real risk of terrorism and 

are in need of funding. States with major agricultural industries 

such as Iowa, Missouri and North Carolina represented at our 

hearing today can also legitimately cite risks worth being protected 

against. They have assets that are crucial to our nation. They provide much of the food that we eat. They are thick with defense assets, energy, banking, finance and other critical infrastructure sectors. The current system simply ignores these risks because they 

are not located in major metropolitan areas. 

Since 9/11, many government agencies and outside experts have 

identified a host of problems with our homeland security 

grantmaking process. I look forward to working with Ranking 

Member Thompson, Subcommittee Chairman King and Ranking 

Member Pascrell and all members of the Committee on Homeland 

Security on solving these problems. We owe it to the men and 

women who put their lives at risk every day to keep us safe. We 

owe it to them to make sure that they all go home safely as well. 

Thank you, Mr. Chairman. 

Mr. KING. Thank you, Chairman Cox. 

I now recognize the Ranking Member of the full committee, the 

gentleman from Mississippi, Mr. Thompson. 

Mr. THOMPSON. Thank you very much, Mr. Chairman. 

As has already been stated, I joined Chairman Cox earlier today 

in introducing this Act. It is basically the same bill that was passed 

by the select committee last year. I look forward to its speedy consideration, not just by the committee on Thursday, but ultimately 

by the full body of Congress, but also for our first responders 

whether they are firefighters, law enforcement, or EMS providers. 

Our first line of defense, we want to say thank you for a job well 

done. I hope with this bill we can do it in terms of getting resources 

to you a little better, but also we hope that once we get the resources to the states they in turn get the equipment and the other 

items to those departments, volunteer or paid, in a better time. 

From my standpoint, representing a rural district, I am concerned a little bit about how we dispense the resources. This bill 

adequately addresses identifying risk and some other things that 

we have not had in the past. So whether you have a nuclear facility, a port or other significant assets, we will be able to address 

some of those resource allocations because of that. But from the 

standpoint of my position, Mr. Chairman, I am excited about this 

legislation. There are some things in this legislation we will talk 

about a little later. I think we will get the money out faster to the 

communities where the need is greatest, based on a state comprehensive plan. It also provides monies to Native Americans and 

other people that in the past did not get included in other legislation. 

So we are correcting some errors of the past, notwithstanding 

most of us saw 60 Minutes on Sunday and we still have some work 
5

to be done associated with it. So I look forward to the testimony 

and welcome the witnesses to this hearing. 

Mr. KING. I thank the Ranking Member for his remarks. 

Now, I would like to introduce the first panel we have with us 

today. We have, first, Mr. J. Richard Berman, the Assistant Inspector General for Audits, Office of the Inspector General, Department 

of Homeland Security; Dr. Veronique de Rugy, a Fellow at the 

American Enterprise Institute; and Dr. William Jenkins, Director 

of Homeland Security and Justice Issues in the GAO. 

As I said, I thank the witnesses for being here today and ask 

them if they could possibly keep their remarks to within 5 minutes. 

Your full statement will be made part of the record. 

I recognize Mr. Berman. 

STATEMENT OF J. RICHARD BERMAN ASSISTANT INSPECTOR 

GENERAL FOR AUDITS, OFFICE OF INSPECTOR GENERAL, 

U.S. DEPARTMENT OF HOMELAND SECURITY 

Mr. BERMAN. Mr. Chairman and members of the subcommittee, 

thank you for the opportunity to be here today to discuss our work 

at the Department of Homeland Security’s first responder grant 

programs. My remarks will focus on the March, 2004 report entitled Distributing and Spending First Responder Grant Funds, and 

the actions taken by the department to address the recommendations made in that report. 

Additional IG audits of state and local spending of first responder funds are ongoing. Generally, we found that while the department had significantly reduced the time it took to process 

grant applications, states, local jurisdictions and first responder organizations have been slow to draw-down and spend first responder 

grant funds. For example, of the $882 million awarded in fiscal 

year 2002 and the first part of fiscal year 2003, 79 percent remained in the U.S. Treasury in February, 2004. As of April 2005, 

29 percent of the $882 million still had not been drawn down. 

Draw-downs do not tell the whole story, however. We also found 

that while only a small percentage of the funds have been drawn 

down, much of the remainder had been committed or obligated by 

the states. The department’s Office for Domestic Preparedness, or 

ODP, responded positively to our report and agreed with most of 

our recommendations. In addition, the department has made considerable progress in responding to state and local officials’s calls 

for establishment of a one-stop shop that would consolidate the various preparedness grants into a single comprehensive program. 

Further, the Secretary created the Task Force on State and Local 

Homeland Security Funding, whose report published in June of 

2004 mirrored many of the findings of our audit. I would like to 

highlight four of the major findings and recommendations we 

made, along with the status of the department’s actions to address 

them. First, we identified numerous reasons for the delayed spending. In some instances, states and local jurisdictions have delayed 

spending funds pending the completion of statewide risk assessments and homeland security strategies and the development of detailed spending plans. 

In addition, the need to adhere to state and local administrative 

practices, including legal and procurement requirements, often de-
6

layed the spending of grant funds. In some instances, equipment 

back-orders were encountered, caused by the same equipment 

being purchased by the military. We recommended that ODP identify and publish best practices that result in faster and more efficient grant processing and spending, and they are doing that. 

Second, states needed to provide more meaningful reporting of 

progress. While only a small percentage of the funds had been 

drawn down, the amount of draw-downs alone does not provide a 

clear picture of a state’s actual progress because many states did 

not reflect funds obligated or committed. We recommended that 

ODP require more meaningful reporting by states so it can track 

progress more accurately and assist states when necessary. ODP 

has implemented several improvements in the reporting process, 

including requirements for an initial strategy implementation plan 

and a biannual strategy implementation report. 

Third, state and local officials told us that planning efforts were 

often delayed because first responders and emergency officials did 

not have clear federal guidance on equipment, training, exercises 

and preparedness levels, making it difficult for them to prioritize 

their needs. We recommended that ODP accelerate the development of federal guidelines for such activities. 

In addition to guidance already developed, the department earlier this month issued an interim national preparedness goal. The 

goal is a product of a capabilities-based planning process that led 

to the identification of core capabilities that the nation and its 

states, communities and citizens need to possess. By mid–April 

2005, the department plans to issue detailed instruction on how 

communities use the goal and a description of how the goal will be 

used in the future to manage federal preparedness assistance. 

Fourth, at the time of our audit, ODP had not implemented a formal grant monitoring system and ODP staff had not conducted 

field visits or very frequent field visits to monitor grant recipients. 

We recommended that ODP publish program monitoring guidance 

and ensure that states report their progress in achieving program 

performance goals and objectives. We also recommended that ODP 

monitor state oversight of local jurisdictions’s compliance with 

grant requirements and develop performance standards that can be 

used to measure the overall success of the grant programs, including baselines against which to measure progress. 

ODP updated its grant monitoring guidance in fiscal year 2004 

and established new monitoring goals. According to the guidance, 

at least one office file review and one on-site visit should be completed for each fiscal year. 

That completes my summary of remarks. I would be happy to answer any questions you may have. 

[The statement of Mr. Berman follows:]

PREPARED STATEMENT OF J. RICHARD BERMAN

Mr. Chairman and Members of the Committee: 

Thank you for the opportunity to be here today to discuss our work on the Department of Homeland Security’s (the Department’s) first responder grant programs. My 

remarks will focus on our March 2004 report entitled, ‘‘Distributing and Spending 

‘‘First Responder’’ Grant Funds,’’ and the actions taken by the Department’s Office 

for Domestic Preparedness (ODP), and its Office of State and Local Government Coordination and Preparedness (SLGCP), of which the ODP is now a part, to resolve 

recommendations made in that report. Our audit covered funds awarded under the 
7

fiscal year 2002 State Domestic Preparedness Program (SDPP), the fiscal year 2003 

State Homeland Security Grant Program (SHSGP), and the fiscal year 2003 SHSGP 

Part II. 

Generally we found that states, local jurisdictions, and first responder organizations had been slow to receive and spend ODP first responder grant funds. For example, as of February 2004, of the $882 million in fiscal year 2002 SDPP and fiscal 

year 2003 SHGP funds awarded by the ODP, 79 percent still remained in the U.S. 

Treasury. Because our report is a year old, we have updated a table showing more 

current draw down information and attached it to this statement as Attachment 1. 

As of April 2005, only 19 percent of the $882 million has not been drawn down. 

We identified numerous reasons for the delayed spending. In some instances, 

states and local jurisdictions had delayed spending funds pending the completion of 

state-wide risk assessments and homeland security strategies and the development 

of detailed spending plans. We also identified numerous other reasons for delayed 

spending—some unavoidable but others that could be mitigated. For example, many 

states and jurisdictions complained of unclear federal guidance, inadequate staffing 

resulting from the economic downturn and budget shortages, and, in some instances, equipment backorders caused by the same equipment being purchased by 

our military. 

Expenditures do not tell the whole story, however. We also found that while only 

a small percentage of the funds had been drawn down, much of the remainder had 

been committed or obligated. In addition, these are reimbursement programs, and 

some states and jurisdictions had already purchased equipment but had not yet requested reimbursement under the grants. 

SLGCP responded positively to our report and agreed with most of our recommendations. In addition, the Department has made considerable progress in responding to state and local government officials’ calls for the establishment of a 

‘‘one-stop-shop’’ that would consolidate the various preparedness grants into a single, comprehensive program. The Department also created the Task Force on State 

and Local Homeland Security Funding. The Task Force report, published in June 

2004, mirrored many of the findings of our audit. Further, the GAO published a report in February 2005, HOMELAND SECURITY—Management of First Responder 

Grant Programs Has Improved, but Challenges Remain, that documents the Department’s progress in many of the areas identified in our report. 

Following are the major findings and recommendations we made along with the 

status of the Department’s actions to address them.

Delayed Spending of Grant Funds 

We found that state and local government administrative practices often delayed 

their spending of grant funds. Often, the ability of states and localities to spend 

grant funds expeditiously was complicated by the need to adhere to state and local 

legal and procurement requirements and approval processes. 

We recommended that the ODP identify and publish best practices that result in 

faster and more efficient grant processing and spending. For example, identify state 

procurement practices that result in first responder equipment being supplied in a 

timely and cost effective manner. 

Department efforts are under way to identify and disseminate best practices, including how states and localities manage legal and procurement issues that affect 

grant distribution. The Department’s Homeland Security Advisory Council Task 

Force stated in its June 2004 report that some jurisdictions have been ‘‘very innovative’’ in developing mechanisms to support the procurement and delivery of emergency-response-related equipment. The task force recommended that, among other 

things, the Department should, in coordination with state, county, and other governments, identify, compile, and disseminate best practices to help states address grant 

management issues. The ODP has established a new Homeland Security Preparedness Technical Assistance Program service to enhance the grant management capabilities of state administrative agencies. Also, the Department established a password protected web site, Lessons Learned Information Sharing, which allows states, 

local governments, and first responder organizations to share best practices.

Need for More Meaningful Reporting by States 

Although only a small percentage of the funds had been drawn down, the amount 

States’ reported drawing down did not provide a clear picture of states’ actual 

progress for three reasons. First, some states had obligated and spent substantial 

amounts but had not yet drawn down the funds. Second, states were inconsistent 

in how they reported funds as being obligated. Third, 30 of the 56 states and territories reported on a cash basis and did not report obligations at all. 

We recommended that the ODP require more meaningful reporting by states so 

it can track progress more accurately and assist states when necessary. Specifically, 
8

we recommended they ensure that the definition of obligation is consistent for both 

programmatic and financial reporting purposes and require states using a ‘‘cash 

basis’’ accounting system to report the value of binding agreements to be funded by 

first responder grant funds. The Task Force also recommended standardized terminology and real-time tracking capabilities. 

The ODP has not changed its reporting requirements for obligations. However, 

starting in fiscal year 2004 and continuing in fiscal year 2005, states are required 

to submit Initial Strategy Implementation Plans that show how planned grant expenditures are linked to larger projects, which in turn support specific goals and objectives in the state homeland security strategy. In addition to these plans, the ODP 

requires states to submit biannual strategy implementation reports showing how 

the actual expenditure of grant funds is linked to strategy goals and objectives. 

While these changes should be helpful, we will continue to follow-up with the ODP 

on implementing our recommendation to report obligations.

Need for Clear Federal Guidance 

State and local officials told us that planning efforts were often delayed because 

first responders and emergency officials did not have clear federal guidance on 

equipment, training, exercises, and preparedness levels, making it difficult for them 

to prioritize their needs. 

We recommended that the ODP accelerate the development of federal guidelines 

for first responder capabilities, equipment, training, and exercises. 

In responding to our recommendation, ODP’s Executive Director said that, in addition to developing a standardized Weapons of Mass Destruction awareness training program, ODP was developing national performance standards for assessing domestic preparedness capabilities and identifying gaps in those capabilities. Homeland Security Presidential Directive-8 called for a new national preparedness goal 

and performance measures, standards for preparedness assessments and strategies, 

and a system for assessing the nation’s overall preparedness. The Department 

issued an Interim National Preparedness Goal on April 1, 2005. The goal is a product of a capabilities-based planning process that led to the identification of core capabilities that the Nation and its states, communities, and citizens need to possess. 

By mid–April 2005, the Department plans to issue detailed instructions on how communities can use the Goal and a description of how the Goal will be used in the 

future to manage Federal preparedness assistance. For fiscal year 2006, states and 

urban areas are to update their Homeland Security Preparedness Strategies to reflect how they will address seven National Priorities in order to receive further Federal preparedness assistance. These priorities include: (1) implement the National 

Incident Management System and National Response Plan; (2) expanded regional 

collaboration; (3) implement the Interim National Infrastructure Protection Plan; (4) 

strengthen information sharing and collaboration capabilities; (5) strengthen interoperable communications capabilities; (6) strengthen capabilities for detection, response, and decontamination of chemical, biological, radiological, nuclear, or explosive materials; and (7) strengthen medical surge and mass prophylaxis capabilities. 

For fiscal year 2007, states and urban areas will need to revise their Homeland Security Preparedness Strategies to align with the Final National Preparedness Goal 

in order to receive further Federal preparedness assistance. The Department plans 

to issue the Final National Preparedness Goal and a Target Capabilities List, updated to include the target levels of capabilities, on October 1, 2005.

Need to revise the 45 day Transfer Rule 

Fiscal year 2003 appropriation language required states to transfer grant funds 

within 45 days of the funds being awarded by the ODP. We found no evidence that 

the 45-day transfer rule sped up spending. States met the requirement by declaring 

funds obligated once they decided how they would distribute them to jurisdictions. 

The rule did not get the funds into the hands of the jurisdictions or streamline burdensome administrative processes. 

We recommended that the ODP seek a legislative change to revise or eliminate 

the 45-day transfer rule to allow more time for planning. 

The requirement was lengthened to 60 days by the fiscal year 2005 appropriation 

(House Conference Report 108–774).

Formal Grant Monitoring System Lacking 

At the time of our audit, the ODP had not implemented a formal grant monitoring 

system, and ODP staff had not conducted frequent field visits to monitor grant recipients. 

We recommended that the ODP publish program monitoring guidance and ensure 

that states report their progress in achieving program and performance goals and 

objectives. We also recommended that the ODP monitor state oversight of local ju-
9

risdictions’ compliance with grant requirements, and develop performance standards 

that can be used to measure the overall success of the grant programs, including 

baselines against which to measure progress. 

The ODP updated its grant-monitoring guidance in fiscal year 2004 and established new monitoring goals. According to the guidance, at least one office file review and one on-site visit should be completed for each state each fiscal year. In 

addition, the requirements for Initial Strategy Implementation Plans and biannual 

strategy implementation reports, discussed earlier, should improve monitoring. As 

of September 2004, the ODP had filled 138 staff positions, as compared with 63 

filled positions at the end of fiscal year 2003. That should help alleviate the staffing 

shortages that contributed to ODP’s inability to conduct frequent grantee monitoring.

Approved Equipment Lists Change Each Year 

The approved equipment list changed each year, generally broadening the selection of equipment permitted. State and jurisdiction officials complained that keeping 

track of what could be purchased with each grant was confusing and time consuming. We agreed and saw no reason that a single list could not be applied to all 

years. 

We recommended that the ODP allow states to use the most recent ODP-approved 

equipment list when purchasing equipment with prior-year grant funds. 

However, the ODP did not agree with our recommendation, stating that ‘‘allowing 

grantees to use current or future equipment lists that may differ from those provided by ODP in previous years will ultimately have a negative impact upon accounting practices, vendor selection, equipment maintenance, and training and calibration programs managed by ODP grantees.’’ We will continue to look at this issue 

as we continue our audits of state and local spending of first responder grant funds.

Consolidation of Preparedness Grants Under SLGCP 

The Department has made considerable progress in consolidating grant programs 

into a one-stop-shop for states and local jurisdictions. In developing and implementing a national program to enhance the capacity of state and local agencies to 

respond to incidents of terrorism, the Department has integrated numerous distinct, 

yet related, preparedness grant initiatives and programs into a single program 

under the auspices of SLGCP. Under the $2.6 billion Fiscal Year 2005 Homeland 

Security Grant Program, SLGCP consolidated the application process and administration of six programs: State Homeland Security Program, Urban Areas Security 

Initiative, Law Enforcement Terrorism Prevention Program, Citizen Corps, Emergency Management Performance Grants, and Metropolitan Medical Response System Program Grants. Attachment 2 lists the Department’s major preparedness 

grant programs, including those still outside SLGCP. 

Although SLGCP has program management and monitoring responsibility for 

grants awarded under the Fiscal Year 2005 Homeland Security Grant Program, it 

relies upon the Justice Department’s Office of the Comptroller for grant fund distribution and assistance with financial management support. In the Department’s 

2004 financial statement audit report, the independent auditors noted that SLGCP 

management was not actively involved in the financial reporting of its activities and 

had not obtained a thorough understanding of the control activities over its financial 

reporting process performed by the Justice Department. As a result, SLGCP lacks 

assurance that the processing of its financial activities coincides with its business 

operations, are reported accurately, and controlled properly. 

That concludes my prepared remarks, Mr. Chairman. I will be happy to answer 

any questions you or the members may have.
10

Attachment 1

Department of Homeland Security Office of State and Local Government

Coordination and Preparedness First Responder Grants FYs 200–2004

Grants Awarded

($4.6B) 

Drawn

February 2004

($342M) 

Drawn

April 2005

($1.7B) 

Percent

Drawn

(37%) 

FY 2002 State 

Domestic 

Preparedness Program ........... $315,841,000 $114,637,167 $278,058,077 88 

FY 2003 State 

Homeland 

Security 

Grant Program Part I 566,295,000 70,721,430 350,759,198 62

FY 2003 State 

Homeland 

Security 

Grant Program Part II 1,500,000,000 156,409,171 759,595,402 51

FY 2004 

Homeland 

Security 

Grant Program ........... 2,220,000,000 —— 317,763,857 14

Grand total 4,602,136,000 341,767,768 1,706,176,534 37

Note: The fiscal year 2004 grant includes funds for State Homeland Security, Law 

Enforcement Terrorrsm Prevention, and Citizen Corps Programs.

Source: U.S. Department of Justice, Office of Justice Programs
11

State 

FY 2002 State Domestic Preparedness Program 

Awarded

($316M) 

Drawn

February 2004

($115M) 

Drawn

April 2005

($278M) 

Percent

Drawn

(88%) 

Alabama ................. $5,317,OO $2,866,889 $3,415,121 64

Alaska .................... 2,783,000 71,600 2,661,315 96 

American Samoa ... 828,000 181,808 714,671 86 

Arizona ................... 5,770,000 2,552,407 5,522,838 96 

Arkansas ................ 4,141,000 1 ,409,37 3,945,997 95 

California ............... 24,831,000 2,519,960 22,365,829 90 

Colorado ................. 5,220,000 528,749 4,893,363 94 

Connecticut ............ 4,626,OO 1,245,65 4,227,554 91 

Delaware ................ 2,887,000 0 2,887,000 100 

District of 

Columbia ............ 2,747,000 2,558,690 2,558,690 93 

Florida .................... 12,967,000 8,702,835 12,967,000 100 

Georgia ................... 7,797,000 942,500 2,393,000 31 

Guam ...................... 892,000 753,037 782,786 88 

Hawaii .................... 3,172,000 74,071 1,748,006 55 

Idaho ...................... 3,226,OO 640,401 2,395,696 74 

Illinois .................... 10,604,000 5,777,509 10,226,949 96 

Indiana ................... 6,400,OO 1,151,268 4,833,571 76 

Iowa ........................ 4,308,000 3,444,273 4,307,046 100 

Kansas ................... 4,151,000 3,94O,345 4,081,006 98 

Kentucky ................ 5,O48,OO0 759,630 4,723,981 94 

Louisiana ............... 5,331,OO0 686,341 5,330,997 100 

Maine ..................... 3,213,000 2,657,172 3,213,000 100 

Maryland ............... 5,881,OO0 4,244,702 5,881,000 100 

Massachusetts ....... 6,579,000 5,929,733 6,559,646 100 

Michigan ................ 8,958,000 5,875,820 8,841,855 99 

Minnesota .............. 5,631,000 3,014,307 5,473,066 97 

Mississippi ............. 4,255,000 107,619 3,145,484 74 

Missouri ................. 6,079,000 4,225,100 6,051,500 100 

Montana ................. 2,967,000 1,245,902 2,950,859 99 

Nebraska ................ 3,502,OO0 1,865,113 3,445,584 98 

Nevada ................... 3,693,OO0 2,874,192 3,498,038 95 

New Hampshire .... 3,328,000 424,849 2,238,692 67 

New Jersey ............ 7,948,000 0 3,442,939 43 

New Mexico ........... 3,574,000 106,091 3,125,886 87 

New York ............... 14,953,000 0 14,400,000 96 

North Carolina ...... 7,706,000 3,517,086 7,569,851 98 

North Dakota ........ 2,794,000 1,240,166 2,794,000 100 

Northern Mariana 

Islands ................ 835,000 545,917 631,603 76 

Ohio ........................ 9,897,OO0 5,435,537 9,894,773 100 

Oklahoma .............. 4,656,OO0 0 1,729,388 37 

Oregon .................... 4,637,000 682,6882 3,404,254 73 

Pennsylvania ......... 10,512,000 2,578,4511 8,625,437 82 

Puerto Rico ............ 4,894,000 182,426 989,817 20 

Rhode Island .......... 3,063,OO0 1,170,550 2,371,377 77 

South Carolina ...... 5,028,OO0 2,539,155 5,025,963 100 

South Dakota ......... 2,868,OO 1,362,448 2,868,000 100 

Tennessee .............. 6,140,000 2,026,109 6,137,538 100 

Texas ...................... 16,196,OO0 1,587,327 14,505,713 90 

Utah ....................... 3,849,000 2,001,356 3,664,922 95 

Vermont ................. 2,772,000 1,883,177 2,772,000 100 

Virginia .................. 7,062,000 5,560,966 7,062,000 100 

Virgin Islands ........ 861,000 125,923 299,010 35 

Washington ............ 6,276,000 2,527,968 6,274,466 100 

West Virginia ........ 3,567,000 3,567,000 3,567,000 100 

Wisconsin ............... 5,925,000 2,724,977 5,925,000 100 

Wyoming ................ 2,696,000 0 2,696,000 100

Grand total 315,841,000 114,637,167 278,058,077 88
12

State 

FY 2003 State Homeland Security Grant Program Part I 

Awarded

($566M) 

Drawn

February 2004

($71M) 

Drawn

April 2005

($350M) 

Percent 

Drawn

(62%) 

Alabama ................. $9,457,000 $98,821 $1,392,304 15 

Alaska .................... 4,995,000 25,255 1,716,783 34 

American Samoa ... 1,482,000 0 924,430 62 

Arizona ................... 10,584,000 1,440,515 5,973,784 56 

Arkansas ................ 7,394,000 2,521,666 4,599,720 62 

California ............... 45,023,000 2,966,828 20,219,379 45 

Colorado ................. 9,480,000 0 4,067,980 43 

Connecticut ............ 8,265,000 0 3,189,322 39 

Delaware ................ 5,185,000 0 3,544,671 68 

District of 

Columbia ............ 4,910,000 0 2,767,903 56 

Florida .................... 23,654,000 2,273,323 14,717,142 62 

Georgia ................... 14,188,000 1,858,500 8,355,600 59 

Guam ...................... 1,596,000 75,566 477,945 30 

Hawaii .................... 5,693,000 127,534 1,504,445 26 

Idaho ...................... 5,803,000 572,511 4,281,841 74 

Illinois .................... 18,879,000 4,955,513 14,513,986 77 

Indiana ................... 11,399,000 4,859,562 6,844,335 60 

Iowa ........................ 7,656,500 58,210 3,752,731 49 

Kansas ................... 7,401,000 252,327 5,022,728 68 

Kentucky ................ 9,001,000 1,655,413 5,679,514 63 

Louisiana ............... 9,451,000 95,686 4,403,442 47 

Maine ..................... 5,751,000 1,009,281 2,920,002 51 

Maryland ............... 10,585,000 275,912 7,358,991 70 

Massachusetts ....... 11,711,000 40,803 6,662,261 57 

Michigan ................ 15,918,000 574,941 10,143,155 64 

Minnesota .............. 10,076,000 351,914 6,396,071 63 

Mississippi ............. 7,582,000 724,245 4,372,455 58 

Missouri ................. 10,834,000 1,815,200 8,187,100 76 

Montana ................. 5,303,000 233,966 4,000,972 75 

Nebraska ................ 6,254,500 551,663 5,052,655 81 

Nevada ................... 6,771,000 1,259,919 5,028,183 74 

New Hampshire .... 5,727,000 334,006 2,851,128 50 

New Jersey ............ 14,222,000 0 3,371,396 24 

New Mexico ........... 6,401,000 73,673 3,268,846 51 

New York ............... 26,492,000 13,000,000 23,400,000 88 

North Carolina ...... 13,908,000 516,434 8,319,525 60 

North Dakota ........ 4,983,000 565,640 3,496,377 70 

Northern Mariana 

Islands ................ 1,496,000 0 1,221,848 82 

Ohio ........................ 17,510,000 2,652,971 14,598,963 83 

Oklahoma .............. 8,304,000 0 3,209,367 39 

Oregon .................... 8,336,000 199,478 3,967,113 48 

Pennsylvania ......... 18,570,000 209,395 11,930,437 64 

Puerto Rico ............ 8,727,000 0 372,770 4 

Rhode Island .......... 5,489,000 1,899,312 2,926,272 53 

South Carolina ...... 9,017,000 276,082 7,221,765 80 

South Dakota ......... 5,131,000 1,011,363 3,476,128 68 

Tennessee .............. 10,978,000 22,742 6,207,870 57 

Texas ...................... 29,538,000 1,652,929 25,295,231 86 

Utah ....................... 6,937,000 1,190,913 5,400,517 78 

Vermont ................. 4,963,000 1,466,921 3,046,183 61 

Virginia .................. 12,716,000 4,175,589 10,826,160 85 

Virgin Islands ........ 1,542,000 14,173 1,374,337 89 

Washington ............ 11,294,000 6,355,323 9,244,406 82 

West Virginia ........ 6,340,000 1,319,768 6,318,501 100 

Wisconsin ............... 10,565,000 3,109,642 8,967,750 85 

Wyoming ................ 4,827,000 0 2,374,477 49

Grand total 566,295,000 70,721,430 350,759,198 62
13

State 

FY 2003 State Homeland Security Grant Program Part II 

Awarded

($1,500M) 

Drawn

February 2004

($156M) 

Drawn

April 2005

($759M) 

Percent 

Drawn

(51%) 

Alabama ................. $25,049,000 $1,622,255 $8,322,439 33 

Alaska .................... 13,230,000 42,651 5,992,365 45 

American Samoa ... 3,926,000 214,152 1,287,923 33 

Arizona ................... 28,033,000 1,268,220 14,939,062 53 

Arkansas ................ 19,585,000 3,241,401 10,603,463 54 

California ............... 119,256,000 19,071,957 54,682,765 46 

Colorado ................. 25,111,000 36,388 5,024,511 20 

Connecticut ............ 21,893,000 0 4,004,009 18 

Delaware ................ 13,733,000 0 5,402,463 39 

District of 

Columbia ............ 13,006,000 1,734,000 4,416,788 34 

Florida .................... 62,655,000 5,871,373 20,782,841 33 

Georgia ................... 37,579,000 2,171,100 18,652,100 50 

Guam ...................... 4,226,000 0 516,940 12 

Hawaii .................... 15,079,000 1,144,242 3,046,943 20 

Idaho ...................... 15,375,000 890,469 7,984,990 52 

Illinois .................... 50,005,000 0 13,695,463 27 

Indiana ................... 30,194,000 9,763,354 23,326,932 77 

Iowa ........................ 20,282,000 267,648 7,375,994 36 

Kansas ................... 19,603,000 18,143 11,165,231 57 

Kentucky ................ 23,838,000 728,915 10,744,098 45 

Louisiana ............... 25,037,000 543,563 12,093,956 48 

Maine ..................... 15,232,000 672,150 10,434,854 69 

Maryland ............... 28,037,000 379,785 16,665,648 59 

Massachusetts ....... 31,020,000 3,020,181 17,888,354 58 

Michigan ................ 42,162,000 194,246 12,329,274 29 

Minnesota .............. 26,690,000 494,163 16,031,381 60 

Mississippi ............. 20,083,000 391,420 8,010,850 40 

Missouri ................. 28,697,000 3,092,700 13,957,000 49 

Montana ................. 14,047,000 86,157 10,220,280 73 

Nebraska ................ 16,568,000 1,503,965 12,300,789 74 

Nevada ................... 17,935,000 845,534 14,437,350 80 

New Hampshire .... 15,172,000 61,911 8,488,729 56 

New Jersey ............ 37,671,000 2,318,265 10,142,511 27 

New Mexico ........... 16,956,000 0 4,055,589 24 

New York ............... 70,172,000 60,000,000 63,000,000 90 

North Carolina ...... 36,840,000 250,620 17,575,785 48 

North Dakota ........ 13,200,000 148,962 7,688,381 58 

Northern Mariana 

Islands ................ 3,963,000 0 1,006,511 25 

Ohio ........................ 46,378,000 1,500,277 28,437,748 61 

Oklahoma .............. 21,996,000 183,362 3,189,827 15 

Oregon .................... 22,081,000 675,958 11,729,706 53 

Pennsylvania ......... 49,189,000 866,720 18,318,697 37 

Puerto Rico ............ 23,118,000 0 0 0 

Rhode Island .......... 14,540,000 9,285,838 10,647,548 73 

South Carolina ...... 23,882,000 262,375 15,127,185 63 

South Dakota ......... 13,591,000 0 11,230,930 83 

Tennessee .............. 29,080,000 0 8,261,025 28 

Texas ...................... 78,238,000 649,310 50,318,015 64 

Utah ....................... 18,374,000 3,388,303 13,904,574 76 

Vermont ................. 13,147,000 559,084 8,922,639 68 

Virginia .................. 33,683,000 11,140,543 31,434,282 93 

Virgin Islands ........ 4,085,000 0 3,523,107 86 

Washington ............ 29,917,000 1,211,789 12,773,364 43 

West Virginia ........ 16,792,000 0 12,565,609 75 

Wisconsin ............... 27,985,000 4,595,725 24,491,538 88 

Wyoming ................ 12,784,000 0 6,425,046 50

Grand total 1,500,000,000 156,409,171 759,595,402 51
14

State 

FY 2004 Homeland Security Program 

Awarded

($2.2B) 

Drawn

April 2005

($317M) 

Percent

Drawn

(14%) 

Alabama .................................. $36,853,000 $2,714,470 7

Alaska ..................................... 19,465,000 1,558,172 8

American Samoa .................... 5,776,000 345,872 6

Arizona .................................... 41,243,000 4,516,940 11

Arkansas ................................. 28,815,000 4,907,162 17

California ................................ 175,457,000 6,853,827 4

Colorado .................................. 36,944,000 9,369,112 25 

Connecticut ............................. 32,403,000 0 0

Delaware ................................. 20,206,000 36,042 0

District of Columbia ............... 19,248,000 0 0

Florida ..................................... 92,182,000 4,201,648 5

Georgia .................................... 55,288,000 4,462,400 8

Guam ....................................... 6,217,000 0 0

Hawaii ..................................... 22,186,000 363,684 2

Idaho ....................................... 22,621,000 1,648,342 7

Illinois ..................................... 73,571,000 20,142,691 27

Indiana .................................... 44,422,000 4,719,597 11

Iowa ......................................... 29,841,000 1,863,059 6

Kansas ..................................... 28,842,000 765,145 3

Kentucky ................................. 35,073,000 1,086,071 3

Louisiana ................................ 36,836,000 1,334,610 4

Maine ...................................... 22,409,000 4,575,818 20

Maryland ................................. 41,251,000 1,158,382 3

Massachusetts ........................ 45,638,500 2,199,964 5

Michigan ................................. 62,032,000 3,944,784 6

Minnesota ............................... 39,267,000 5,347,176 14

Mississippi .............................. 29,547,000 1,829,395 6

Missouri .................................. 42,221,000 10,413,200 25

Montana .................................. 20,668,000 1,075,630 5

Nebraska ................................. 24,376,000 4,234,831 17

Nevada .................................... 26,387,000 3,886,240 15

New Hampshire ...................... 22,321,000 189,655 1

New Jersey ............................. 55,424,000 3,518,168 6

New Mexico ............................. 24,946,000 307,972 1

New York ................................ 103,243,000 88,671,000 86

North Carolina ....................... 54,203,000 88,960 0

North Dakota .......................... 19,421,000 5,753,980 30

Northern Mariana Islands ..... 5,830,000 0 0

Ohio ......................................... 68,235,000 21,261,300 31

Oklahoma ................................ 32,362,000 319,486 1

Oregon ..................................... 32,487,000 7,552,711 23

Pennsylvania .......................... 72,370,500 1,055,308 1

Puerto Rico ............................. 34,014,000 0 0

Rhode Island ........................... 21,392,000 1,631,709 8

South Carolina ....................... 35,138,000 1,796,420 5

South Dakota .......................... 19,996,000 4,946,423 25 

Tennessee ................................ 42,786,000 1,316,749 3 

Texas ....................................... 115,110,000 17,806,205 15

Utah ........................................ 27,033,000 9,691,504 36

Vermont .................................. 19,342,000 3,912,941 20

Virginia ................................... 49,556,000 14,257,501 29 

Virgin Islands ......................... 6,009,000 153,185 3

Washington ............................. 44,015,000 884,477 2 

West Virginia .......................... 24,705,000 9,279,040 38

Wisconsin ................................ 41,173,000 13,814,902 34 

Wyoming ................................. 18,809,000 0 0

Grand total 2,207,206,000 317,763,857 14
15

Attachment 2

MIGRATION OF DHS GRANT PROGRAMS 

Administering

Office Program 

Appropriation Migration

Year FY 2004 FY 2005

DHS/SLGCP Homeland Security Grant Program $3,195,000,000 $2,610.000,000 2004

- Formula-Based Grants/State Homeland Security Grant Program (ODP) 1,700,000,000 1,100,000,000 2004- Law Enforcement Terrorism Prevention Grants (ODP) 500,000,000 400,000,000 2004- Citizen Corps (EP&R) 40,000,000 15,000,000 2004- High-Threat, High–Density Urban Areas Grants/Urban Areas Security Initiative (ODP) 

725,000,000 885,000,000 2005

- Emergency Management Performance Grants (EP&R) 180,000,000 180,000,000 2005- Metropolitan Medical Response System (EP&R) 50,000,000 30,000,000 2005Demonstration/Continuing/Competitive Training Grants (ODP) 60,000,000 55,000,000 2005Firefighter Assistance Grants (EP&R) 750,000,000 715,000,000 2004Rail, Freight, and Transit Security Grants N/A 150,000,000 N/APort Security Grants (TSA) 125,000,000 150,000,000 2005Intercity Bus Security Grants (TSA) 10,000,000 10,000,000 2005Trucking Industry Security Grants (TSA) 22,000,000 5,000,000 2005

DHS/EP&R Urban Search and Rescue 60,000,000 30,000,000 N/A

National Disaster Medical System 34,000,000 34,000,000 N/A

Sources: House Report 108–774; House Report 108–280; DHS 

Fiscal Year 2005 Homeland Security Grant Program—Program Guidelines and Application Kit; and DHS/SLGCP A–133 Audit 
16

Mr. KING. Thank you, Mr. Berman. 

I now recognize Dr. de Rugy. 

STATEMENT OF DR. VERONIQUE de RUGY, FELLOW, 

AMERICAN ENTERPRISE INSTITUTE 

Ms. DE RUGY. Chairman King, Congressmen, and members of the 

subcommittee, it is my pleasure to appear before you today to discuss the need for grant reform and the Faster and Smarter Funding for First Responders Act of 2005. 

The terrorist attack of September 11 revealed some gaps in the 

ability of local officials to respond to terrorist attacks on major 

urban centers. In response, Congress moved swiftly to appropriate 

homeland security funds to state and local governments. A significant portion of that effort was directed to first responder programs. 

However, on the issue of homeland security, the most important 

question is whether America is getting the maximum level of benefit in exchange for this increasing spending. Because we are talking of homeland security and of the safety of the American people, 

there is no room for wasteful spending for pork or for politics. Any 

dollar misspent or wasted is a dollar that is not spent to protect 

us. 

Our first priority should be to ensure that the funding is directed 

to where the intelligence and law enforcement assessment indicates 

that it is the most needed. A recurring recommendation from GAO 

over the years has been the need to use risk management and 

other important elements in developing a national strategy to fight 

terrorism. Risk management is about assessing risk and setting 

priorities. It is about sound cost and benefit analysis and it is 

about tradeoffs. It means spending our resources on the places 

where we are the most vulnerable, and not spending money where 

we are not. 

Here, ‘‘vulnerable’’ is defined as places where attacks are likely 

or if successful, would be devastating. As Secretary Chertoff noted, 

we have to put our resources where the highest risks are. Risk 

management means taking a finite security budget and making the 

best use of it. 

Unfortunately, terrorism grants to state and local governments 

are allocated based in part on a political formula that provides 

every state with an equal guaranteed minimum amount of state 

grants regardless of risk and need. Many glitches in homeland security grant distribution are the result of this formula. Currently, 

state and rural, less populated areas or populated area, but less 

likely to be targeted by terrorist acts, often receive a disproportionate amount of grant money. For instance, Wyoming and Alaska 

ranked number one and two in per capita spending, while New 

York and California finished around the bottom respectively. 

The underlying theory behind this all-state minimum formula is 

that terrorists could strike anywhere. That is true. What is not 

true, though, is that each state and locality faces an equal threat. 

We could talk about this. Accordingly, reforms to the grant system 

is a real priority. It is the priority. The highest priority for the federal government spending is not to service every one of state and 

local governments needs. The priority must be to create a true national preparedness system. To that effect, we should ask ourselves 
17

1 Author’s calculation based on The Budget of the United States Government, Fiscal year 2006,

Table S–5, (Washington: Government printing Office, February 2005) and Office of Management 

and Budget, ‘‘Securing the homeland, Strengthening the Nation’’ http://www.whitehouse.gov/

homeland/homeland—security—book.pdf 2 Author’s calculation based on The Budget of the United States Government, Fiscal year 

2006, Table S–5, (Washington: Government printing Office, February 2005) and Current Population Survey, March 2003. 

whether the grant system, which has been proven many, many 

times to be a very ineffective way to provide government service, 

is really the best way to provide homeland security. We should also 

figure out who is the best player suited to address a given risk: the 

federal, the state or local government, or the private sector. 

Finally, funds should be distributed strictly based on risk and 

vulnerability. The first step in that direction should be to get rid 

of the requirement that every state get part of the homeland security money. To the extent that state minimums are included, these 

minimums should be kept low in order to provide maximum funding to areas of our greatest need. 

The legislation you are considering today would change the criteria used to distribute funding based on risk of attack and the 

magnitude of potential damages. Under Chairman Cox’s proposal, 

most states would get 0.25 percent of the available first responder 

dollars instead of 0.75 percent. However, those states with substantial lands or water borders with Canada and Mexico would be eligible for 0.45 percent. Compared to the status quo, the Faster and 

Smarter Funding for First Responders Act of 2005 would be an important step in the right direction and a serious improvement on 

how we are spending homeland security funds to protect our nation. 

Thank you for the opportunity to appear before this committee 

today. I would be happy to answer your questions. 

[The statement of Ms. de Rugy follows:]

PREPARED STATEMENT OF DR. VERONIQUE DE RUGY

Chairman King, Congressman and members of the subcommittee, my name is 

Veronique de Rugy, and I am a research scholar at the American Enterprise Institute, here in Washington DC. It is my pleasure to appear before you today to discuss 

‘‘The Need for Grant Reform and The Faster and Smarter Funding for First Responders Act of 2005.’’ 

International terrorism is probably the greatest security challenge America faces 

today. Policy makers have responded in two ways—going after terrorists abroad and 

improving security against terrorism at home by boosting homeland security funding. Regarding the latter, Congress and the administration moved swiftly to create 

a Department of Homeland Security and increased total funding for homeland security activities by 195 percent between FY2001 and FY2006.1 Total spending directed 

to homeland security activities will be at least $49.9 billion for FY 2006, roughly 

$450 per American household.2

On the issue of homeland security, the most important question is whether America is getting the maximum level of benefit in exchange for this increase in spending. A substantial portion of new homeland security spending is being used for 

grants to state and local governments. However, currently grants to the state and 

local government appear to be allocated without risk and cost benefit analysis, leading to a large amount of wasteful spending. Unfortunately, in the realm of homeland 

security, wasteful spending jeopardizes the American people security. 

The absolute amount of money spent on homeland security is not the issue in this 

testimony, but the political process leading to the way the money is spent is. Economics suggests that if homeland security spending decisions are made on a political basis rather than on a sound cost benefit analysis, it will lead to the traditional 

public choice failures that plague government spending more generally. As a result, 
18

3For a good discussion about the concept of tradeoffs see James Buchanan, Cost and Choice, 

An Inquiry in Economic Theory, Collected Works of James Buchanan Volume 6, (Indianapolis: 

Liberty Fund). 4The difficulty of estimating low probability risks is stressed by Kunreuther et al. (1978). 

5See Manuel Trajtenberg, ‘‘Defense R&D in the Anti-Terrorist Era,’’ NBER Working Paper 

No. 9725, May 2003. 6 Becker, Gary. ‘‘Crime and punishment: An economic approach,’’ Journal of Political Economic, 1968. 

homeland security funding is likely to be misallocated, resulting in a less than optimal level of security in America. 

In the first part of my testimony I will look at the way economists think about 

homeland security spending decisions in general. Then I will apply these conclusions 

to the particular problem of grants to first responders. I conclude that there is an 

urgent need to reform the grant system toward a risk-based system, which would 

include removing the provision for minimum state allocations.

II. The Economics of Homeland Security 

The terrorist attacks in 2001 stimulated a concerted effort to adopt security measures that would reduce the risks of similar events in the future. This was and is 

a logical response, as security, by definition, is about prevention of adverse consequences from the intentional actions of others. Economists think about security 

policies in terms of tradeoffs, formally comparing the costs and the benefits, both 

pecuniary and non pecuniary.3

We all make security tradeoffs. For example, when we lock the door to our house 

in the morning, we assess the small inconvenience of carrying a key in exchange 

for a modicum of security against a burglary. People make security decision tradeoffs all the time, choosing more or less security as situations change. Optimal security decisions and policies require a good understanding of the risks and tradeoffs 

we face. 

Even presuming that politicians have chosen the level of spending on Homeland 

Security desired by voters, it is natural to ask whether that level is optimal. It is 

difficult both for scientists and for citizens to assess risks of events with low probability—such as acts of terrorism.4 Uncertainty is what could greatly magnify the 

terrorist threat, far beyond the actual damage that any single terrorist strike has 

historically caused. In fact, it seems that it is precisely because of the uncertainty 

that accompanies the terrorist threat, and the associated costs (e.g. the provision of 

security at a myriad potential targets, reduced investments because of generalized 

uncertainty, disruption of travel, tourism, and perhaps also trade), that few terrorists, armed with relatively primitive means, can effectively threaten even a powerful 

nation.5

Thus, while the risks are difficult to quantify, there is reason to suspect that individuals may irrationally ratchet up their assessments of terrorist risk, and hence, 

may ratchet up their demand for homeland security spending. This may induce Congress to invest in projects that would not pass a cost benefit test. But again, the 

problem is doing falling to make efficient spending choice is that each misspent dollar is one that we do not direct to an effective protection of the American people 

and as such is one that reduces our security.

What to invest in? 

While terrorism is only recently the dominant security issue in the U.S., economists have long studied the optimal provision of security more generally. In Gary 

Becker’s seminal paper on the economics of crime, he uses the tools of economics 

to think about the incentives of criminals and how to influence their behavior.6 He 

explains that we can decrease unwanted behaviors by increasing their expected 

costs or decreasing their expected benefits. This approach applies to terrorism as 

well. 

The primary method of discouraging terrorists is to make it more difficult to attack our assets. In effect, this reduces the ‘‘benefit’’ of a terrorist attack—since there 

presumably will be less damage—and forces terrorists to incur higher ‘‘cost’’ as they 

seek alternate targets. We install Jersey barriers to keep trucks away from important buildings, screen airline passengers, and employ internet firewalls. But it is important to make sure that the resources used to fight terrorism are being used effectively. This is not always the case. If a certain strategy reduces the threat of terrorism but has very high costs, it may not be the best use of resources if there is 

another approach that generates similar benefits but has lower costs to society. 

For traditional criminals, potential incarceration is an important ‘‘cost’’ consideration and an efficient tool in deterring crime. And it is an effective use of resources 

since imposing stiff jail sentences is cheaper than guarding every house. Unfortu-
19

7See John R. Lott Jr. (2001), The Bias Against Gun: Why Almost Everything You Have Heard 

About Gun Control is Wrong, (Washington DC: Regnery Publishing, Inc), Chapter 6. Lott tests 

the economic model (that if you make something more difficult or increase the cost of being 

caught for doing something people do less of it) on perpetrators of multiple victim public killers. 

He finds that in this case, although legal sanctions such as higher death penalty execution rates 

should imply both fewer attacks and fewer people harmed, it is less of a significant factor in 

deterring multiple victim killings than it is in deterring normal murders. Also See Frey et al 

(2003) 

nately, this approach is generally not effective against terrorists because they tend 

to be ideological extremists who give little weight to the personal costs of their actions. Suicide bombers, for example, will not be deterred by jail time. The most serious implication is that the possibility of deterrence is greatly reduced.7

Second, we can combat terrorism by decreasing the expected benefits to terrorists, 

either by increasing the probability of thwarting an attack or by decreasing the 

damage from a non-thwarted attack. To thwart attacks, we spend money on the 

CIA, FBI, and law enforcement to try to detect terrorist plots in advance. To decrease the damage from attack, we spend money on first responders, build fewer 

skyscrapers, and buy gas masks. One important implication of Becker (1968) is that 

there are tradeoffs between thwarting attacks and decreasing their damage: the 

more effective we are at thwarting attacks, the less we presumably should spend 

on decreasing their damage, and vice versa. 

Taking the analysis a step further, the most efficient options to combat terrorism 

tend to be efforts to detect terrorists themselves or to respond effectively to minimize the damage after an attack has occurred. Spending to defend particular targets 

is generally less efficient. Both results stem from the fact that there are an almost 

unlimited number of targets, and the terrorist gets to choose where to attack. For 

example, suppose there are 100 potential targets that we could perfectly defend for 

$20,000 a piece, that the damage from un-defended attack would be $500,000, and 

that we could mitigate one-tenth the damage from attack by spending $50,000 on 

first responders. 

If we knew where the terrorists would attack, we could spend $20,000 to save 

$500,000, which would be a prudent investment. But if don’t know the target, we 

would have to spend $2,000,000 to defend all 100 targets, which outweighs the 

$500,000 in damage. On the other hand, even if we did not know the target, we 

could spend $50,000 on first responders to reduce the damage by $250,000, which 

is an efficient tradeoff. 

Of course, if we could track down terrorists in advance successfully, that would 

to prevent attacks on all possible targets, that approach would have similar efficiency properties as spending on first responders. In fact, it is possible that spending more money on intelligence and investigation might be far more cost effective 

than spending a little on every possible target or even waiting to be attacked and 

then cleaning up efficiently. 

This raises again the notion of tradeoffs. Since the number of possible attacks is 

effectively unlimited and the resources we can devote to the fight against terror are 

limited, it means that spending should not occur without a careful cost-benefit analysis. It is perfectly reasonable to decide not to implement an antiterrorism measure, 

not because it has no benefit, but because the tradeoffs are too high. For instance, 

locking up every Arab-looking person would reduce the potential for terrorism perpetrated by Islamic fundamentalists, but no reasonable person would suggest this 

approach because the costs (both pecuniary and moral) are too high. In the US, 

there are laws that prohibit police from profiling by characteristics like race, because we believe that such measures are unacceptable, but not because we believe 

them to be ineffective. 

In the same way, some antiterrorist countermeasures might yield very high returns and reduce exposure to attacks tremendously, but the costs of implementing 

them are extremely high. If we install Jersey barriers around all major buildings 

and critical assets in the country, our exposure to attacks will be substantially 

lower, but the costs involved would be astronomically high.
20

8See for example Gold (1999) for a good review of the literature and a discussion of defense 

as a public good. 9Of course, saying that some areas of homeland security have public features and should 

probably be provided by the government does not exclude the possibility of inefficient and wasteful provision of that good. 10 An argument in favor of federalization of these investments is that because investing in protection is likely to displace a terror attack, the private sector or local and state governments 

might have an incentive to overspend on homeland security.

Table 1. Cost Effectiveness of Selected Antiterrorism Expenditures 

Wasteful Outlays Major Sacrifices 

High 

Cost 

Screen Every airline 

passenger 

Surround all critical 

infrastructure with 

concrete Jersey barriers 

Cost to Prevent 

Terrorist Attack Simple Steps Efficient Outlays 

Low 

Cost 

Store fewer chemicals 

at water-treatment 

plants 

Place barricades on 

airplane cockpit doors

High Benefit Low Benefit 

Benefit From Reduced Exposure to Attack

Efficient expenditures concentrate limited resources on the most cost-effective expenditure rather than simply on the effective ones. In other words, because security 

always involves a tradeoff, more security spending does not always mean more security and more security does not always make us better off.

Who should pay for Homeland Security? 

Before turning to an evaluation of grant programs, one should also evaluate the 

economic reasoning behind federal provision of homeland security. National defense 

is often cited as the archetypal public good, i.e., one person’s consumption of the 

good does not prevent another person from consuming the same good.8 Another 

characteristic of public goods is that they are non-excludable, i.e., it is hard or impossible to prevent anybody that desires from getting access to and enjoying the 

public good once it is produced. Private goods have opposite characteristics: they are 

rival and excludable. 

Economic theory suggests that it is efficient to have governments provide public 

goods, but to resort to private markets for the provision of non-public goods, e.g., 

governments should provide national defense, but markets should produce washing 

machines. 

As already mentioned, a key feature of terrorism is that the threat is generalized 

(it can happen anywhere, at any time) and yet any particular attack is ‘‘local.’’ By 

implication, homeland security is a mix of public and private goods. Accordingly, 

governments should provide some types of homeland security, while other types are 

best left to private markets. For example, governments should invest in intelligence 

gathering to track down terrorists, since this is a public good that benefits all citizens. But the protection of private property, such as personal residences, should be 

left to individuals because it is not a public good.9

A similar logic applies to which aspects of homeland security are public goods at 

the national versus state level. (See Table 2.) Espionage, intelligence, and immigration control benefit all the states, so the federal government should make these investments. But the benefits of protection of public infrastructure like bridges and 

water treatment plants are enjoyed by the residents of a particular state, rather 

than many states, so these investments should be made at the state level. In the 

same way, the benefits of building a strong first responder’s capacity will be enjoyed 

by the residents of a particular state, so the investment should be made at the state 

level. This is not to say that the entire economy might not suffer were a specific 

bridge to be destroyed, but rather, that the principle economic impact of such an 

unfortunate event would be felt locally.10 Identically, even the entire country will 
21

11See James Buchanan and Gordon Tullock (1962), The Calculus of Consent, University of 

Michigan Press, Ann Harbor. 12 James Buchanan, Cost and Choice, An Inquiry in Economic Theory, Collected Works of 

James Buchanan Volume 6, (Indianapolis: Liberty Fund). 13For a discussion about the economics of interest groups see Mancur Olson (1982), ‘The logic’, 

in The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities, New 

Haven: Yale University Press, p. 17–35, Also see George J. Stigler (1974), ‘Free Riders and Collective Action: An Apendix to Theories of Economic Regulation’, Bell Journal of Economics and 

Management Science, 5 (2), p. 359–65. Gary S. Becker (1983), ‘Theory of Competition Among 

Pressure Groups for Political Influence’, Quarterly Journal of Economics, XCVIII (3), August, 

p. 371–400. For a good description of the theory of rent seeking see Gordon Tullock (1967), ‘The 

Welfare Costs of Tariffs, Monopolies, and Theft’, Western Economics Journal, V, p. 224–32 and 

Robert Tollison (1982), ‘Rent Thinking: A Survey’, Kylos, 35 (4), p. 575–601. 14For discussion about the dynamic of pressure groups see Becker, G. (1983), ‘‘A Theory of 

Competition among Interest Groups for Political Influence,’’ Quarterly Journal of Economics98, 

371–400 and Becker, G. and C. Mulligan (1998), ‘‘Deadweight Costs and the Size of Government,’’ NBER Working Paper 6789. 15For a discussion on pork Barrel Spending see for example Acemoglu, D. and J. Robinson 

(2001), ‘‘Inefficient Redistribution,’’ American Political Science ReView 95, 649–61 and Baron, 

D. (1991), ‘‘Majoritarian Incentives, Pork Barrel Programs, and Procedural Control,’’ American 

Journal of Political Science35, 57–90. See also Coate, S. and S. Morris (1995), ‘‘On the Form 

of transfers to Special Interests,’’ Journal of Political Economy103, 1210–35 and Shepsle, K. and 

B. Weingast, (1981), ‘‘Political Preferences for the Pork Barrel: A Generalization,’’ American 

Journal of Political Science 25, 96–112. 

suffer if one given state was suffer a successful terrorist attack, the benefits of a 

well functioning first responder’s response are mainly local ones. 

Table 2: Who should be responsible for Homeland Security? 

Federal Government State and Local

Government Private Sector 

Espionage 

Intelligence 

Immigration 

Electric 

Protection of Infrastructure such as: Bridges, 

Water Preservoirs, and 

Ports First Responders.

Protections of Infrastructures such as: Privately 

owned infrastructures 

Stadiums, Skyscrapers 

and individual houses 

A Public Choice Approach to Homeland Security Spending 

Public choice theory also can be applied to homeland security spending. Many decisions on homeland security come through the political process. According to public 

choice economics, each participant has an incentive to maximize the political benefits of any particular action. This means that decisions are not always based on an 

assessment of the common good. 

Public Choice theory underlines the different incentives and processes that operate when goods are sought through political means rather than through economic 

means.11 For instance, if you have to use your own money to buy the lock on the 

door to protect your house, you will make sure that the increased security from the 

lock is worth the price of the lock. In the words of Buchanan (1969), an individual 

spending his own money makes sure that anticipated benefits exceed the costs.12 In 

the political process though, the people buying the lock are rarely the ones paying 

for the lock. As such, they have less reason to balance costs and benefits. 

The political appropriation and distribution of goods concentrates its benefits and 

disperses its costs. Many people can be taxed at a low rate so a small number of 

people can be given large sums. Special interests groups have an incentive to lobby 

the government to see that wealth is transferred to them. The term economists use 

to describe such lobbying is ‘‘rent-seeking.’’ 13 These pressure groups have a clear 

advantage in a political process where politicians are frequently accused of hearing 

nothing from the many and a lot from the few.14

But policymakers represent an interest group too. In seeking reelection, they have 

an incentive to please those who might have money or votes to contribute to them. 

For instance, being elected by state voters rather than federal ones, a Congressman 

has an incentive to try to bring back to his state as much federal money as possible 

rather than to fight to cut down federal spending.15 A good example of this phenomenon is the increasing number of low priority and wasteful spending items—also 

called pork barrel spending—introduced by Congress at the last moment into federal 

spending bills and directed at a specific state locality or at a specific facility. In the 
22

16Grossman, G. M. and E. Helpman (1994),‘‘Protection for Sale,’’ American Economic Review 

84, 833–50. 17Timothy Besley and Stephen Coate (1999), ‘‘Centralized Versus Decentralized Provision of 

Local Public Good: A Political Economy Analysis,’’ NBER Working Paper No. 7084. 18See also, Stephen Coate (1997), ‘‘Distributive Policy Making as a Source of Inefficiency in 

Representative Democracies, Institute of Economic Research, University of Pennsylvania, Working Paper No. 97–041. 19 Author’s calculation based on The Budget of the United States Government, Fiscal year 2006 

Appendix, Department of Homeland Security, Department of Justice, and Department of Health 

and Humane Services and Chairman Cox (2004), House Select Committee On Homeland Security, ‘‘An Analysis of First Responder Grant Funding,’’ p. 25. 20Shawn Reese, ‘‘FY2006 Appropriations for State and Local Homeland Security,’’ Congressional Research Service, RS22050, February 14, 2005, p.1. http://www.ndu.edu/library/docs/crs/

crs—rs22050—14feb05.pdf 21The data on funding can be found in House Select Committee On Homeland Security, ‘‘An 

Analysis of First Responder Grant Funding,’’ p. 25. 

same way, politicians are likely to favor and transfer wealth to targeted industries—

like the farm or the automobile industry.16

Thus, constituencies and interest groups are created for each particular political 

benefit program, and it may become, if this theory is correct, nearly impossible to 

develop policy initiatives without their input. This of course has major implications 

for the way politicians will make decisions about homeland security spending. First, 

because policymakers who are ultimately making homeland security decisions are 

often not the ones making the tradeoffs, it is possible that they will throw money 

at the problem rather than finding the most cost-effective antiterrorist measure to 

adopt. Also, lawmakers are likely to use homeland security funds to achieve nonhomeland security agendas through the use of pork barrel spending and corporate 

welfare. 

Finally, ‘‘homeland security’’ pressure groups—e.g. first responders, state officials 

and/or specific industries like the airline industry—may have an incentive to lobby 

lawmakers to try to grab a bigger share of the funding allocated to homeland security programs and /or to transfer their responsibilities to the federal government. 

In a recent paper, Besley et al. (1999) look at the tradeoffs between centralized and 

decentralized provision of local public and private goods.17 They emphasize the importance of the politics of decision making for the move toward more centralization 

of local responsibilities and the inefficient allocation of resources resulting from this 

process.18 Federalization of airline screeners and the trend toward the federalization 

of law enforcement and first responder programs are recent examples that may be 

consistent with this evidence. 

V. First Responder Grants 

The September 11th attacks revealed some gaps in the ability of local officials to 

respond to terrorist attacks on major urban cities. In response, Congress moved 

swiftly to appropriate homeland security funds to state and local governments. Total 

federal homeland security spending to state and local governments increased from 

$2.7 billion in FY2001 to $8 billion in FY2006 (a 1962 percent increase).19

A significant portion of that effort was directed to ‘‘first responder’’ programs—

essentially federal funds for state and local police and fire departments. Homeland 

Security funding to state and local governments for first responder programs increased from $616 million in FY2001 to $3.36 billion in FY2006 (a 500 percent increase).20 But the biggest share of this first responder program explosion took place 

in the form of grants to lower level governments. 

While the quantity of funds is significant, the funds are not being allocated according to a plan that was devised by security experts or by economists. In keeping 

with the way Washington spreads federal taxpayer’s money to the states—whether 

for highways, education or emergency preparedness—DHS follows in part a formula 

set by Congress that provides every state with a guaranteed minimum amount of 

state grants regardless of risk or need. Specifically, the formula written into law by 

Congress into the Patriot Act after September 11th guaranteed each state 0.75 percent of the total amount appropriated to DHS for state terrorism preparedness 

grants, with smaller shares going to territories like Puerto Rico. It amounts to 40 

percent of the total pot of money being divided up equally among the states, regardless of size, risk, or need. 

Prior to September 11th, total funding covered by the formula—i.e the State 

Homeland Security Grant Programs (SHSGP), which is the sum of a series of separate grants, plus Critical Infrastructure Protection Grants—amounted to $97 million.21 It means that in 2001 the guaranteed minimum each state would receive was 

less than $1 million. However, due to the 20-fold increase in this program between 

FY2001 and FY2003 from $97 million to $2,066 million the minimum guaranteed 
23

22 In FY2003 the amount covered by the formula was $2.066 billion. The $15.5 million is cal- culated with the following formula: $2.066.000*0.0075 = $15.49 million. 23 Author’s calculation based on data collected from The Office of Domestic Preparedness, 

FY2003, State Homeland Security Grant Program (SHSGP), part I, http://www.ojp.usdoj.gov/odp/

docs/ODPApplication.txt and Part II http://www.ojp.usdoj.gov/odp/docs/fy03shsgp2.pdf 24 Amanda Ripley, ‘‘How We Got Homeland Security Wrong,’’ Time Magazine, Monday March 

22, 2004. 25The Insurance Services Office, ‘‘ISO continues to help you response to the Terrorism 

Insurrance Act of 2002,’’ May 2003. For more detailed information see www.iso.com. 26 Author’s calculation based The Office of Domestic Preparedness, FY2004, State Homeland 

Security Grant Program (SHSGP), part I, and Part II. 27 Congressional Quarterly, ‘‘Republican Cox Delivers Remarks at McGraw-Hill Homeland Security Summit,’’ June 4, 2004. 

amount each state was receiving went from $1 million to $15.5 million regardless 

of risk or need.22 In FY2004, this minimum guaranteed sum was roughly $13 million In FY2005, the amount allocated decreased along with the minimum guaranteed but still be significant. 

After this 40 percent of SHSGP is allocated to states, the 60 percent left over is 

apportioned among states based on population, not risk. For the smallest states, this 

formula means an additional $2 million on top of the guaranteed minimum. In 

FY2004, the two combined allocation formulas resulted in Wyoming, the least populous state, receiving $17.5 million and California, the most populous state, receiving 

$164 million regardless of risk or need.23 And according to the same calculation, in 

FY2004 Wyoming is guaranteed to receive a minimum of $15 million and California, 

the most populated state, at least $133 million. 

The underlying theory behind this all-state-minimum formula is that terrorists 

could strike anywhere and that heads of homeland security agencies in rural and 

small states throughout the country have now become convinced that their turf is 

just as threatened as Washington, New York or Chicago. The journalist Amanda 

Ripley adds in the New York Times Magazine ‘‘when asked about relative risks, 

these officials talk about relative worth and the right of their citizens to get the 

same kind of protection that they are afforded in other places in the country.’’ 24

The theory that money should be spent smoothly across states has not been supported by reasoned analysis during the public policy debate. And experts in the field 

have reached different conclusions. The Insurance Services Office (ISO)—a private 

company—serves the insurance industry by maintaining data on risks of all kinds 

and helping insurance companies underwrite policies at prices commensurate with 

those risks. In 2003 ISO did a research project to set objective prices for terrorism 

insurance. They surveyed five former FBI, CIA and Pentagon intelligence experts 

and applied their opinions to a database of 300,000 potential targets. They then 

used this information to set baseline rates for terrorism insurance. Their conclusion 

is the following: The highest risk cities in the U.S. are New York, Washington, DC, 

Chicago, San Francisco and those at high risk of attack are Los Angeles, Philadelphia, Houston, Seattle and Boston.25

Many other glitches in the homeland security grant distribution are the result of 

those two government formulas. For instance, among the top 10 states and districts 

receiving grants only the District of Columbia also appeared on a list of the top 10 

most at risk places.26 Currently, states in rural, less populated areas, or populated 

areas—but less likely to be targeted by terrorist acts—often receive a disproportionate amount of grant money. 

Table 4 shows how much in dollars per capita each state received from State 

Homeland Security Grants Programs for FY2004. New York State received 4.68 percent of general grant money while its population accounts for 6.55 percent of the 

nation’s population. California received 7.95 percent of general grant money while 

its population accounts for 12 percent of the nation’s population. And Wyoming, 

which has a population that accounts for 0.17 percent of the nation’s population, receives 0.85 percent of all the grant monies. This translates to $5.41 per capita in 

New York State, $4.97 per capita in California and $37.74 per capita in Wyoming. 

And spending on U.S. territories is equally variable. In FY2004, the US Virgin Islands received $104.35 per capita, Guam $90.36, and Northern Mariana Islands $54. 

One should not conclude that more money should be handed to states with a 

lower dollar grant per capita or with a large population like California or that 

money should be taken away from small states with high dollar per capita. Cox 

(2004) points out ‘‘It is not the case that American Samoa should receive proportionately less or should, in the nature of things, receive more or less than anywhere 

else, except in my view, if security needs require it.’’ 27 In other words, grant money 

should only be distributed based on an evaluation of risk and security need and 
24

28 House Select Committee On Homeland Security, ‘‘An Analysis of First Responder Grant 

Funding,’’ p. 6. 29 James Jay Carafano, ‘‘Homeland Security Dollars and Sense #1: Current Spending Formulas Waste Aid to States,’’ 2004. 30 House Select Committee On Homeland Security, ‘‘An Analysis of First Responder Grant 

Funding,’’ p. 9.

nothing else. The political formulas used now to allocate the money disconnect the 

funding from the risk of being attacked. 

The same lack of assessment of risk and need exists in the way states allocate 

or pass through the funding from DHS to their localities (they are obligated to pass 

through 80 percent of the money received).28 For instance, Carafano (2004) reports 

‘‘California distributes its federal grants in base-amounts of $5,000 to each county, 

an amount so small and arbitrary it seems that it is difficult to imagine how it could 

be used productively.’’ 29

Finally, almost three years after the State Homeland Security Grant Program was 

launched, first responders across the Nation have not received the vast majority of 

the $6.3 billion that congress and the Administration have allocated in terrorism 

preparedness grants since September 11 (FY2002 to FY2004).30 In fact $5.2 billion 

in the Department of Homeland Security grant money remains in the administration pipeline, waiting to be used. And soon the money allocated for FY2005 and requested by the President FY2006 will be added to the funding pipeline (another $5.2 

billion). 

Table 4. Dollars Per Capita Received by States From Homeland Security First Responder 

Grant Programs for FY2004 

State 

Grant 

Dollars 

per 

Capita 

State 

Grant 

Dollars 

per 

Capita 

Virgin Islands .......................... 104.35 Oregon ...................................... 9.18 

Guam ........................................ 90.36 Puerto Rico .............................. 8.82 

Northern Marina Islands ........ 54.00 Kentucky .................................. 8.57

Wyoming .................................. 37.74 South Carolina ........................ 8.52 

American Samoa ...................... 37.54 Alabama ................................... 8.24

District of Columbia ................ 34.16 Louisiana ................................. 8.24

Vermont .................................... 31.43 Colorado ................................... 8.17

North Dakota ........................... 30.82 Minnesota ................................ 7.81

Alaska ....................................... 30.18 Wisconsin ................................. 7.57

South Dakota ........................... 26.32 Maryland ................................. 7.53

Delaware .................................. 24.86 Missouri ................................... 7.45

Montana ................................... 22.66 Arizona ..................................... 7.43

Rhode Island ............................ 20.00 Tennessee ................................ 7.37

Hawaii ...................................... 17.75 Washington .............................. 7.22

New Hampshire ....................... 17.44 Indiana ..................................... 7.21

Maine ........................................ 17.26 Massachusetts ......................... 7.14

Idaho ......................................... 16.65 Virginia .................................... 6.75

Nebraska .................................. 14.10 North Carolina ........................ 6.49 

West Virginia ........................... 13.73 New Jersey .............................. 6.45

New Mexico .............................. 13.39 Georgia ..................................... 6.40

Nevada ..................................... 11.84 Michigan .................................. 6.19

Utah .......................................... 11.56 Ohio .......................................... 6.00

Kansas ...................................... 10.65 Pennsylvania ........................... 5.89

Arkansas .................................. 10.63 Illinois ...................................... 5.85

Mississippi ............................... 10.32 Florida ...................................... 5.45

Iowa .......................................... 10.20 New York ................................. 5.41

Connecticut .............................. 9.30 Texas ........................................ 5.24

Oklahoma ................................. 9.27 California ................................. 4.97

Source: Author’s calculation based on Office of Domestic Preparedness, ‘‘Fiscal Year 

2004 Homeland Security Grant Program’’ and US Census Bureau, ‘‘Annual Population Estimates 2000–2003.’’
25

31This is not surprising considering that, until recently, the planning to spend first responder 

grants often occurred after the grants were actually received. 32 Congressional Quarterly, ‘‘Transcript of Senate Budget Committee Hearing on FY2005 

Homeland Security Department Budget,’’ February 25, 2004. 33 House Select Committee On Homeland Security, ‘‘An Analysis of First Responder Grant 

Funding,’’ p. 7. 34 House Select Committee On Homeland Security, ‘‘An Analysis of First Responder Grant 

Funding,’’ p. 7, followed up with an interview of Mason County Sheriff on March 3rd. 35 Ibid, p. 7. 36 House Select Committee On Homeland Security, ‘‘An Analysis of First Responder Grant 

Funding,’’ p. 8. 37 Ibid. 38 Alice Lipowicz, ‘‘For Michigan Volunteers, Free Training Course Proves Too Expensive,’’ 

Congressional Quarterly, March 11, 2004. 39 Alice Lipowicz, ‘‘North Pole Receives Homeland Security Funds,’’ Congressional Quarterly, 

October 22, 2002. 40 CBS News, ‘‘Handouts for Homeland,’’ 60 minutes transcript, April 10, 2005. http://

www.cbsnews.com/stories/2005/03/31/60minutes/printable684349.shtml 41 Congressional Quarterly, ‘‘Transcript of Senate Budget Committee Hearing on FY2005 

Homeland Security Department Budget,’’ February 25, 2004, p. 7. 42 Congressional Quarterly, ‘‘Transcript of Senate Budget Committee Hearing on FY2005 

Homeland Security Department Budget,’’ February 25, 2004. 43 ‘‘Anti-terrorism Funds Buy Wide Array of Pet Projects; Some of Region’s Unused Million 

Could be Lost,’’ JoBecker, Sarah Cohen, and Spencer S. Hsu, The Washington Post, November 

23, 2003, followed up with aninterview of D.C. Deputy Mayor’s office, March 2, 2005. 44 ‘‘Anti-terrorism Funds Buy Wide Array of Pet Projects; Some of Region’s Unused Million 

Could be Lost,’’ JoBecker, Sarah Cohen, and Spencer S. Hsu, The Washington Post, November 

23, 2003. 

VI. Use Of Homeland Security Grants 

The lack of risk-based funding coupled with the absence of federal terrorism preparedness standards or goals to guide expenditure of funds at the state and local 

levels has resulted already in some questionable uses of homeland security grants 

(whether they are DOJ, HHS or DHS grants).31 Expressing his concern, former Senate Budget Committee Chairman Nickles notes, ‘‘Congress is creating programs 

under the banner of homeland security, which in some cases, some cities and some 

states are using as more or less revenue sharing.’’ 32 And Chairman Chris Cox notes 

that ‘‘there have been numerous reports suggesting that the first responder monies 

that have been received and spent to date have not necessarily gone to the first responders who need it most, or for projects that materially enhance our homeland 

security.’’33

The data support their fears. The misuse of federal funds by states and local governments includes: 

• 63,000 spent on a decontamination unit that is now stored in a warehouse in 

rural Washington State because the state does not have a HAZMAT team to use 

it.34

• $22,800 spent by Mason County, WA to buy six radios that are incompatible with 

county radios.35

• $30,000 used by officials in Lake County, TN, to help a high school buy a 

defibrillator to have on hand for a basketball tournament.36

• $500,000 spent by Outagamie County, WI. (pop. 165,000) to buy chemical suits, 

generators, rescue saws, disaster-response trailers, emergency lighting, escape hood, 

and a bomb disposal vehicle.37

• $98,000 spent on training courses in incident management by the Tecumseh fire 

department in Lenawee County, MI that no one attended.38

$557,400 awarded to North Pole, a town in Alaska (1,570 people), for homeland security rescue and communications equipment.39

• $183,000 spent by Tiptonville, TN (7,900 people) to by an all-terrain vehicle, a 

couple of defrillators and protective suits for the volunteer fire department.40

These are not isolated cases of unfortunate uses of homeland security funds. 

Meanwhile, as Senator Nickles points out, ‘‘[Large and high risk cities] are as likely 

to waste homeland funds as low risk areas.’’ 41 Senator Conrad notes, ‘‘I have heard 

from individual departments that spending initiatives that were pending previously 

that were not approved, once they were given the label of homeland security, whether or not they fit the description, sailed through.’’42 For instance, Washington DC—

incontestably one of the high threat areas in the country—used the region’s first 

wave of homeland security aid as ‘‘seed money’’ for a computerized car towing system that the mayor had promised for three years to help combat fraud by private 

towing companies and to buy leather jackets.43 D.C. also used $100,000 to fund the 

mayor’s popular summer jobs program.44
26

45Office of Inspector General, Department of Homeland Security, ‘‘An Audit of Distributing 

and Spending ‘FirstResponder’ Grant Funds,’’ March 2004, http://www.dhs.gov/interweb/

assetlibrary/OIG—ODP—03–04.pdf 46Office of Inspector General, January 2005, p. 34. 47Kate O’Beirne, ‘‘Introducing Pork-Barrel Homeland Security,’’ National Review, August 11, 

2003. 48For a brief history of the federal grant system see Congressional Research Service, ‘‘Federal 

Grants to State and Local Governments: A Brief History,’’ Library of Congress, February 19, 

2003. Also see General Accounting Office, ‘‘Federal Assistance: Grant System continues To Be 

Highly Fragmented,’’ United States Accounting Office, GAO–03–718T, April 29, 2003. 49The Budget of the United States Government, FY2006, Analytical Perspectives, p. 123. 50GAO–03–718T, p. 4. 51For a comprehensive criticism of the Federal Grant Programs see Chris Edwards, 

‘‘Downsizing the Federal Government,’’ Cato Institute Policy Analysis no. 515, June 2, 2004. 52For an excellent discussion about federalism see Michael Greve, ‘‘Big Government Federalism,’’ Federalist Outlook No. 3, March 1st, 2001. http://www.aei.org/publications/filter.,pubID.12576/pub—detail.asp 53GAO–03–718T, p. 6. 

According to DHS officials, DHS spending has been the subject of many audits, 

none of which found any systemic cases of fraud or abuse of program funds. Indeed, 

many of the purchases made with DHS funds were allowable and justified under 

Department guidelines. To end the discussion there, however, ignores the larger 

point that the system for disbursing homeland security funds is flawed and does not 

ensure that the greatest priorities are funded. While the audits did not find systemic problems, some of their specific recommendations fit well with Chairmen 

Nickles and Cox’ arguments on this point. For instance, the Inspector General’s 

audit of first responder grants admonishes, ‘‘Efforts to monitor and measure the impact of first responder grants needs to be improved.’’ 45 The Inspector General’s report on Port Security Grant Program notes that many grants were given to port security projects that ‘‘appeared to be for a purpose other than security against an 

act of terrorism.’’ 46

Spending $58,000 on a rescue vehicle capable of boring through concrete to search 

for victims in collapsed buildings in Colchester, Vermont (18,000 people), for example, may be allowable and justifiable under DHS guidelines, but are those guidelines 

appropriate? 47 And while there may be some ways to justify spending homeland security funds in this location, we should question whether locations like Vermont, 

Michigan, or Tennessee are truly the front lines in the war on terror. 

VII. Are Federal Grants to States Efficient? 

The real question is whether these problems with homeland security grants to the 

states are not simply symptomatic of any federal grant system. If that is the case, 

it means there are more productive ways to protect America than federal grant programs to state and local governments. 

In theory, the United States is a federal system, meaning that the federal government was designed to have specific limited powers with most basic functions left to 

the States. But in the last fifty years, the federal government has undertaken a 

large number of activities that were traditionally and constitutionally reserved to 

the states. To extend its power into state affairs the federal government has developed a vast and complex system of grants to states and local government.48

In FY2005, the total amount of federal grants paid out to the states and local government is scheduled to reach well over $425.8 billion. President Bush requested 

$435.7 billion for grants for FY2006.49 According to the GAO, over the past 20 years 

the number of federal grant programs to states and local government has proliferated from less than 450 in 1980 to roughly 700 in 2001.50 These grants are directed towards a huge range of activities such as education, healthcare, transportation, housing and more. 

To be sure, these grants are an imposition of federal priorities on state and local 

government.51 But are they an economically efficient way to manage homeland security spending? 52

Numerous reports have pointed at the complexity and redundancy in the federal 

grant industry as well as at the mismanagement, fraud and abuse of federal funds. 

The GAO notes ‘‘GAO’s work has been pointing out the chronic problems of federal 

grants since at least 1975.53 And in spite of GAO recommendations and occasional 

reforms, the same problems remain. So although the initial goal of grant programs 

might be a high-minded purpose—such as help for poorer regions or homeland security—they frequently have turned out to be an extremely ineffective way to achieve 

a policy goal. 

The unsatisfactory performance of federal grant programs has been repeatedly reported. Indeed, the Office of Management and Budget regularly points out that 
27

54The Budget of the United States Government, FY2005, Analytical Perspectives, p. 114 and 

p. 119. 55 Ibid, p. 9. 56 House Select Committee On Homeland Security, ‘‘An Analysis of First Responder Grant 

Funding,’’ see Table p. 25. 57The Budget of the United States Government, FY2006, Analytical Perspectives, p. 123. 58GAO–03–718T, p. 13. 59 Ibid. p. 13. 60 Chris Edwards, ‘‘Downsizing the Federal Government,’’ p. 32. 61 Ibid, p.32. 62 Congressional Quarterly, ‘‘Transcript of Senate Budget Committee Hearing on FY2005 

Homeland Security Department Budget,’’ February 25, 2004, p. 2 and p. 9. 63The Council On Foreign Relations, Independent Task Force, Emergency responders: Drastically Underfunded, Dangerously Unprepared, 2003, p. 13. http://www.cfr.org/pdf/Responders—

TF.pdf 

grant programs have poorer performance, on average, than other federal programs.54 These grants often come within the frame of one-size-fits all federal regulation, which reduces States’ incentive to be innovative. 

This abundant literature serves as evidence that federal grants and funds to 

states are a wasteful way of providing government services to Americans. There is 

no reason to believe that it will suddenly become an effective way to enhance America’s homeland security. In addition to the problems underlined in the previous section, GAO reports that homeland security grants are already following the same 

troubling pattern of other federal grants.55 First, the amount of homeland security 

funds transferred to lower level governments is growing at an impressive rate. 

Homeland security funds—which included grants from DHS, DOJ and HHS—handed down to the states for first responders alone increased from $2.7 billion in 

FY2001 to $5.5 billion in FY2005.56 In FY2005, a total of $8.4 billion will be paid 

by the Department of Homeland Security in the form of grants to state and local 

governments to finance homeland security activities. The president’s FY2006 budget 

proposed to raise that amount to $9.1 billion.57

Second, excessive complexity and duplication in the federal homeland security 

grant industry is already quite evident. For instance, GAO describes the extreme 

complexity and fragmentation of the major federal homeland security assistance 

programs targeted to first responders.58 Some grants go to state emergency management agencies, some go to state fire marshals, some go directly to local first responders and some go to the cities. Some grants are paid by DHS through the Office 

of Domestic Preparedness and/or through FEMA, some are paid by the Department 

of Justice through the Office of Justice Programs and/or through the Office of Community Policing Services and others are paid by the Department of Health and 

Human Services through the CDC and/or through the health Resources and Service 

Administration. Finally, there at least 16 overlapping grant programs for local first 

responders such as firefighters and local law enforcement—highlighting the problem 

of duplication in the federal grant program.59

And like other grant programs, homeland security grants have spurred much 

wasteful lobbying activity.60 Edwards (2004) reports ‘‘On March 4th 2004, 3,000 officials flew into Washington to lobby Congress for larger first responder grants; they 

were followed on March 16 by firefighters from across the country coming to lobby 

Congress.’’ 61 Other officials are coming to complain about the level of grants they 

are getting compared to others and asking for a level playing field. 

And yet, when Senator Nickles asked Homeland Secretary Ridge in February 

2004 ‘‘these [first responder] funds, correct me if I am wrong, these funds really 

aren’t supposed to be a subsidy for local police and fire, is that correct?’’ former Secretary Ridge replied without blinking ‘‘That’s correct.’’ 62

Our homeland security is only as strong as the weakest link. Most dollars spent 

on anything else than the weakest link—in term of probability of something happening, the likelihood of it succeeding and the consequences of it occurring—are 

likely to be a waste of money. It means that giving state and local government 

money to increase their capacity to response to a terrorist attacks is the wrong answer. The Council on Foreign Relations measured the cost of equipping every sate 

and U.S. territory with enough resources to conduct each critical homeland security 

task could be at least $103 billion per year.63 And this level of funding could not 

even guaranty the U.S against devastating attacks. 

According to security expert Bruce Schneier ‘‘critical to any security decision is 

this notion of trade-offs, meaning the cost—in terms of money, convenience, comfort, 

freedoms and so on—that inevitably attached themselves to any security system.’’ 

He adds ‘‘better understanding of trade-offs leads to a better understanding of secu-
28

64 Bruce Schneier, Beyond Fear: Thinking Sensibly About Security in an Uncertain World,

(New York: Copernicus Books, 2003), p. 3 65General Accounting Office, ‘‘Homeland Security A risk Management Approach Can Guide 

Preparedness Efforts,’’ GAO–02–208T, October 31, 2001, p. 2. Also see ‘‘Combating Terrorism: 

Selected Challenges and related Recommendations,’’ GAO–01–822 September 20, 2001. 66 Jeremy Torobin, ‘‘Preventing Terrorism Tops Cox’s Agenda for New House Homeland Security Committee,’’ Congressional Quarterly, Tuesday, February 11, 2003. 67 Ibid. 68Mitt Romney, Testimony before the Committee on Governmental Affairs, U.S. Senate, May 

5, 2003. http://www.senate.gov/∼gov—affairs/051503romney.pdf 69 James Carafano, ‘‘Homeland Security Dollars and Sense #2: Misplaced Maritime Priorities,’’ 

Webmemo #648, February 2005. 

rity decisions.’’64 A recurring recommendation from the GAO over the years has 

been the need to use risk management as an important element in developing a national strategy to fight terrorism.65

Risk management is about playing the odds. It is figuring out which attacks are 

worth worrying about and spending money on and which are better left ignored. It 

is spending more resources on the serious attacks—defined as being very likely or 

if successful having devastating effects—and spending less on the trivial ones. It is 

taking a finite security budget and making the best use of it. In other words, homeland security should be about wise choices, not just increased spending. 

Risk management is also about figuring out who is the best player suited to address a given risk. At the federal level, homeland security should be about preventing adverse consequences from the intentional and unwarranted actions of others. In that sense, federal homeland security grants are not making us more secure. 

The grant programs—especially the first responder grants—are predicated on the 

notion of cleaning up after terrorists successfully attack. This is a huge waste of our 

scarce federal resources. Cox (2003) notes, ‘‘The mission of the Department of Homeland Security must be first and foremost to prevent another deadly attack on the 

United States.’’ 66 And he adds ‘‘A dollar spent on preventing the next terror attack 

is vastly superior to spending dollars on cleaning up the mess when we fail to do 

job one, which is preventing terrorism.’’ 67

Homeland security should be based on the investigation, interdiction and elimination of terrorist threats. As Governor Mitt Romney (R–MA), co-chairman of the 

National Governors Association’s homeland security efforts, points out ‘‘Many states 

are focusing too much efforts on preparing to respond when the most important investment would be preventing terrorist attacks.’’ 68 It means that the billions going 

to states and local governments would be best spent on bolstering the ability of federal law enforcement and intelligence services to achieve these goals instead of subsidizing local fire stations throughout the country. 

Alternatively, instead of wasting money on building response capacity, federal 

funding could be spent to create a truly national prevention system with a robust 

capacity for state and local intelligence, early warning, exchange and exploitation 

of information and domestic counterterrorism. According to James Carafano (2004), 

grant programs have proven far more effective when federal money has been used 

to fund vulnerability assessments and to encourage public-private partnerships that 

adopt sustainable and effective security programs.69

It does not mean that investing money on first responders in not important. However, states and local communities should be in charge of most of their preparedness 

efforts. If police officers feel they need more equipment to do their job, or firefighters 

need training or gym memberships they are not getting right now, they should turn 

to their state and local officials for funding. 

More importantly, leaving the responsibility for developing proper first responder 

policies to the states makes much sense. Federalizing first responder programs accentuates the public choice problem that already plagues the political process. When 

first responder programs are funded at the federal level, a Congressman from Wyoming has no incentive admitting that his state is not a likely target or that if it 

ever were a target, the level of damages would be limited. This same Congressman 

has no incentive to turn down federal money, and even less incentive to volunteer 

sending his state taxpayer’s dollars to benefit other states. By contrast, when first 

responder programs are states’ responsibility, then this same Wyoming Congressman in theory should have a stronger incentive to assess risk and potential damages to his state accurately. He should have an incentive to decide whether to spend 

more on homeland security or on other accounts. 

It does not mean that local communities would never have any claim to federal 

funds in case of a terrorist attack. But these funds should be accessed only when 

needed in case of an emergency, in the same way that FEMA funds can be accessed 
29

70This of course does not mean that we think FEMA is doing an effective job. The media constantly reports about the mismagement of FEMA and its failure to deliver disaster relief. See 

for instance Washington Post, ‘‘Housing Problems Beset FEMA in Florida,’’ Monday August 23 

2004, p A 2.71 71The National Commission on Terrorist Attacks Upon the United States, The 9/11 Commission Report, (Washington: GPO, July 22 2004), p. 396.72 72 Information on ‘‘The Faster and Smarter Funding for First Responders,’’ HR. 3266, can be 

found at http://homelandsecurity.house.gov/release.cfm?id=216 73 Amanda Ripley, ‘‘How We Got Homeland Security Wrong,’’ March, 2004, p. 5. 74 Alice Lipowicz, ‘‘First Responder Groups Endorse Risk-Based Grants Formula,’’ Congressional Quarterly, October 22nd, 2004. 

following a natural disaster.70 But implementing this system should not be an excuse to federalize the cost of state and local responsibilities. 

Economics and public choice theory suggest a natural organization that appears 

to have eluded lawmakers so far. Not every jurisdiction needs a bomb squad. What 

every jurisdiction needs is to know where they can get a bomb squad if they need 

one, and/or where to ask if they need to find a bomb squad. Today, it is incredibly 

easy and fast for a team of specialized responders to fly from one state to another 

and to help the state in distress. After September 11th, individuals, firefighters, police officers and many others all over the country mobilized to help New York and 

Washington. And that would happen again.

VIII. The Need for Grant Reform 

The evidence suggests that homeland security grants to state and local governments are at times wasted. Accordingly, reform of this system is a worthy priority. 

The highest priority for federal spending is not to service every one of state and 

local governments’ needs. The priority must be to create a true national preparedness system. To that effect, funds should be distributing strictly based on risk and 

vulnerability. A first step in that direction would be to eschew the requirement that 

every state get part of the homeland security money. Also, because the grant system 

has proven to be very ineffective in the past, money should not be allocated through 

grants. 

On July 22, 2004, the National Commission on Terrorist Attacks Upon the United 

States (9/11 Commission) issued The 9/11 Commission report recommending among 

other things that federal homeland security assistance be distributed to state and 

local government based on risk and vulnerability. It added that, ‘‘Federal homeland 

security assistance should not remain a program for general revenue sharing. It 

should supplement state and local resources based on the risks or vulnerabilities 

that merit additional support.’’ 71

Other critics of the present funding distribution method include House Homeland 

Security Committee Chairman Chris Cox. To that effect, his legislation, the ‘‘Faster 

and Smarter Funding for First Responders Act of 2005’’ would authorize the Secretary of the Department of Homeland Security (DHS) to change the criteria used 

to distribute funding to DHS’ major programs in order to base grants to state and 

local governments primarily based on the risk of terrorist attacks and the magnitude of potential damages—not population.72 Under the Cox proposal, most states 

would get a 0.25 percent of the available first responder dollars—instead of 0.75 percent. However, those States with substantial land or water borders with Canada 

and Mexico would be eligible for 0.45 percent. 

Last year, the House version of intelligence reform legislation (HR10) included 

language, which originated in the House Selected Committee on Homeland Security, 

changing the funding formula to base homeland security grants on risk assessment 

and changing the formula so each state would receive at least 0.25 percent of the 

total grant pool (versus 0.75 percent with the current formula). It immediately triggered very strong oppositions in the Senate. Senator Leahy (D–VT), member of the 

powerful Homeland Security Appropriations Subcommittee, for instance, has argued 

that dropping the all-state minimum formula would ‘‘shortchange rural states.’’ 73 In 

the end, the language did not survive the House-Senate conference. 

A surprising endorsement of the intelligence bill’s risk or threat-based model came 

from seventeen fire and police organizations. In a letter to Rep. Peter Hoekstra (R–

Mich), chairman of the congressional conference committee, they wrote ‘‘We believe 

that the funds should be distributed based on a risk or threat-based model.’’ 74 They 

even went further than the House version of the intelligence bill (HR10). They 

wrote, ‘‘To the extent that state minimums are included, we urge that the minimums be kept low, in order to provide maximum funding to areas of greatest 
30

75 Alice Lipowicz, ‘‘First Responder Groups Endorse Risk-Based Grants Formula,’’ Congressional Quarterly, October 22nd, 2004. 76 Budget of the United States FY2006, Appendix, p. 478. 77 Jim Morris, ‘‘Chertoff Orders Thorough Review of the DHS structure and Operations,’’ Congressional Quarterly,March 2nd, 2005. 78Sean Madigan, ‘‘Senate Restores $855 Million in First Responder Funding,’’ Congressional 

Quarterly, March 17, 2005. 

need.’’ 75 Yet, again the victory of logic over state dependency did not see the light 

of day due to the extreme resistance to the idea. 

This year, the President’s FY2006 budget also tries to move toward a risk based 

allocation of homeland security funds. To that effect, the administration’s budget 

rightfully restraints the amount of grants going to state and local governments. It 

also makes an effort to restructure DHS grants to focus on strategic needs rather 

than giving fixed allocations to individual states. Moreover, the President decided 

to adopt the basic principles of the ‘‘Faster and Smarter Funding for First responders Act,’’ as passed by the House in H.R. 10 during the 108th Congress and change 

the formula so that states would get a 0.25 percent of the available funds.76

Secretary Chertoff explains ‘‘We have to put the resources where the highest 

threats are.’’ He has ordered an internal review of his agency’s organization, operations and policies. In a statement before the House Appropriations Committee’s 

Homeland Security Subcommittee, Chertoff said,’’ I want to emphasize that our 

analysis of threats and risks posed to the United States by terrorists will drive the 

structure, operations, policies and missions of the department, and not the other 

way around.’’ 77

Delivering a speech at the George Washington University Homeland Security Policy Institute, the Secretary explained, ‘‘We need to adopt a risk-based approach in 

both our operations and our philosophy. Risk management is fundamental to managing the threat, while retaining our quality of life and living in freedom.’’ More importantly, he added, ‘‘Here I inject a note of caution because the media and the public often focus principally on threats. Threats are important, but they should not be 

automatic instigators of action. A terrorist attack on the two-lane bridge down the 

street from my house is bad but has a relatively low consequence compared to an 

attack on the Golden Gate Bridge. At the other end of the spectrum, even a remote 

threat to detonate a nuclear bomb is a high-level priority because of the catastrophic 

effect.’’

If the President’s proposal or the ‘‘Faster and Smarter Funding for First responders Act 2005’’ were adopted, it would be an important step in the right direction 

and a serious improvement of how we are spending homeland security funds to protect our nation. However, it probably won’t go through without other serious resistances in the Senate. 

The Senate already offered signs that lawmakers may buck the Bush administration on spending priorities. An amendment to the 2006 budget resolution (S Con Res 

18) offered by Senator Susan Collins (R-Maine) and Joe Lieberman (D–Conn.) restoring $855 million in first responder funding that was eliminated by the administration was approved earlier in March. In a prepared statement, Joe Lieberman explained ‘‘Homeland security cannot be had on the cheap and our first responders 

must have the training and equipment they need to keep our community as safe 

as possible.’’ 78

In a few days, Senator Collins will reintroduce her S. 2845 bill, the Senate version 

of the intelligence reform legislation. Unfortunately, S. 2845 retains some of the 

flawed structure for allocating homeland security assistance grants. Under S. 2845, 

DHS would first allocate the higher base amount to each State, and then an additional amount on the basis of risk. The failure of S. 2845 to reform this structure 

means that DHS will be instructed to allocate far too much funding without regard 

to any risk. Also, S. 2845 does not require DHS to evaluate and prioritize applications based upon risk or need. 

At the end of the day, the differences between the House and the Senate can be 

explained by the fact that Senators from rural States have grown accustomed to 

grabbing disproportionate slices of the federal money pie. More generally, block 

grants are to the states and localities what entitlements are to citizens: money that 

flows to them automatically from the federal government. The lure of easy money 

for their recipients has made them popular with Congress.

X. Conclusion 

In the largest open society in the world, improving homeland security is a challenging task. Among other vulnerable targets, the United States has thousands of 

miles of borders, thousands of bridges, sports stadiums and shopping malls, hundreds of skyscrapers and power plants. Certainly, the attacks on Washington DC 
31

and New York have put immense pressure on the Administration and Congress to 

show that security against future attacks is being enhanced. 

A common path to bad security is knee jerk reaction to the news of the day. Sadly, 

too much of the U.S. government’s response post 9/11 seems to be exactly that. 

Some are telling is that we are in graver danger than ever everywhere in the country and that in order to be secure, homeland security spending needed to increase 

drastically. Yet, because most of the money is allocated on a political basis rather 

than a sound cost benefit analysis, much of the new spending will not result in 

sound security. In other words, the security we are getting against terrorism is likely to be ineffective, yet comes at an enormous expense. 

By definition, the purpose of homeland security is to make America safer. As 

such, wasteful spending and grants to state and local governments do not achieve 

that goal. In the same way, the federalization of law enforcement and fire departments appear to be ineffective ways to address our homeland security problem. In 

some cases, they might increase our feeling of security but in reality they might 

even make us less safe. 

Economics suggests the following: spending decisions should be based on a true 

cost benefit analyses. It means that homeland security money should be spent strictly based on risk and potential damage. To that extend, minimum guaranteed of 

funding for state and local government is inappropriate. Identically, tools that have 

be proven to be ineffective in the past should not be used for homeland security. 

It means that we should move away from the grant system altogether. To the extend that this pure reform could not be achieve, it is clear that moving to system 

that mainly allocates money based on risk is an option far superior to the status 

quo. 

Economics also underlines the need to more formally deliberate what level of government is the best suited to make homeland security investments taking under 

considerations the public choice ramifications of the alternatives. And finally, it requires paying particular attentions to pork barrel spending and sanctioning it. 

The challenge of determining what the best security investments are will remain 

and should be left to security experts rather than politicians. Governments, by nature, are very inefficient institutions. We must accept this as fact. So instead of 

thinking that the solution to 9/11 is more and more of the same approaches that 

failed us, policymakers should start doing the analysis needed and making the 

tradeoffs as to where we should focus our limited security resources.

Mr. KING. Thank you, Dr. de Rugy. 

Dr. Jenkins? 

STATEMENT OF DR. WILLIAM O. JENKINS, JR., DIRECTOR, 

HOMELAND SECURITY AND JUSTICE ISSUES, GOVERNMENT 

ACCOUNTABILITY OFFICE 

Mr. JENKINS. Mr. Chairman and members of the subcommittee, 

I appreciate the opportunity to be here today to discuss our work 

on federal first responder grants. These grants are one means of 

achieving a very important goal: enhancing the ability of first responders to prevent where possible, prepare for, respond to, and recover from terrorist and other incidents with well-planned, well-coordinated and effective efforts that involve a variety of first responders from multiple jurisdictions. 

In the 3 1/2 years since the tragic events of September 11, the 

federal government has significantly increased the resources and 

attention it has devoted to national preparedness and the capabilities of first responders. ODP has led federal efforts to enhance first 

responder capabilities in part through its management of federal 

first responder grants. In fiscal years 2002 through 2005, ODP 

grant funding, primarily for first responders, rose from about $435 

million to almost $3.3 billion. About 70 percent of these funds were 

for two programs: the state homeland security grants and the 

urban areas security initiative grants. 

These increases have been accompanied by debate on the most 

appropriate means of allocating the funds, developing priorities for 
32

their use, and assessing their use. As ODP grant guidance and reporting requirements have evolved, it has been faced with the need 

to balance flexibility and speed with the need for consistency and 

appropriate planning. ODP has provided states with flexibility in 

determining how to manage and allocate their grant funds, and 

states have varied in the methods used to allocate and manage 

their first responder grants. ODP expects to issue a compendium 

of grant management best practices across states and localities in 

May of this year. 

To encourage greater consistency in the way in which states and 

localities approach assessing new needs in developing their plans, 

ODP has also developed an initial set of 15 scenarios, 12 of which 

are terrorist events. These scenarios form the basis for identifying 

needed key first responder capabilities that can be used to assess 

existing gaps in capabilities, developing plans for closing those 

gaps, and assess progress in achieving and maintaining those designated capabilities. 

As we noted in our May 2004 report on the management of funds 

in the national capital region, effectively managing first responder 

grant funds requires the ability to measure progress and provide 

accountability for the use of the funds. To do this, it is necessary 

to, one, develop and implement strategies for the use of the funds 

that identify key goals and priorities; two, establish performance 

baselines; three, develop and implement performance goals and 

data quality standards; four, collect reliable data; five, annualize 

that date; six, assess the results of that analysis; and seven, take 

action based on those results. 

This strategic approach to homeland security includes identifying 

threats and managing risks, aligning resources to address them, 

and assessing progress in preparing for those threats and risks. At 

the same time, it is important to recognize that the equipment, 

skills and training required to prepare for identified terrorists 

threats and risks might be applicable to non-terrorist risk as well. 

For example, the equipment, skills and training required to respond effectively to a discharge of lethal chlorine gas from a rail 

car is much the same where the cause of the discharge is a derailment or a terrorist act. 

DHS’s task of defining a national preparedness goal and translating that definition into capabilities that are meaningful and 

readily transferable to a wide variety of local jurisdictions around 

the nation is not yet complete. DHS must continue to listen and 

respond constructively to the concerns of states, local jurisdictions, 

tribal governments and other interested parties as it strives to 

complete this task, one that is necessarily iterative. 

At the same time, state and local and tribal governments and the 

private sector must recognize that the process is iterative. It will 

include periodic adjustments and refinements and that risks are 

not equally distributed across the nation. 

In closing, no one level of government can successfully address 

the challenges of developing needed first responder capabilities 

alone. A fundamental challenge has been and remains the need for 

regional and statewide planning. The federal government can play 

a leadership role in developing requirements and providing support 
33

1Grants funds for domestic preparedness programs for state and local governments are also 

provided by other DHS components and other agencies, including the Departments of Justice 

and Health and Human Services. 2 2In fiscal year 2002, the grant program was called the State Domestic Preparedness Program. 3See GAO, Homeland Security: Management of First Responder Grant Programs Has Improved, but Challenges Remain, GAO–05–121, (Washington, D.C.: Feb. 2, 2005). As part of the 

review, we visited five selected states: Arizona, California, Florida, Missouri, and Pennsylvania. 

We conducted our work from November 2003 through November 2004 in accordance with generally accepted government auditing standards. See also GAO, Homeland Security: Management 

of First Responder Grants in the National Capital Region Reflects the Need for Coordinated 

Planning and Performance Goals, GAO–04–443, (Washington, D.C.: May 28, 2004).

for state, regional and local governments to assess, develop and 

maintain needed first responder capabilities. 

That concludes my statement, Mr. Chairman. I would be pleased 

to answer any questions you or other members of the committee 

may have. 

[The statement of Mr. Jenkins follows:]

PREPARED STATEMENT OF WILLIAM O. JENKINS, JR. 

HOMELAND SECURITY 

Management of First Responder Grant Programs and 

Efforts to Improve Accountability Continue to Evolve 

Mr. Chairman and Members of the Subcommittee: I am pleased to be here today 

to discuss federal funding for first responders. The events of September 11, 2001, 

highlighted the critical role of the nation’s first responders in preventing, preparing 

for, responding to, and recovering from the effects of a terrorist attack. In fiscal 

years 2002 through 2005, the Office for Domestic Preparedness (ODP) within the 

Department of Homeland Security (DHS)1 managed first responder grants totaling 

approximately $10.5 billion. The bulk of this funding has been for the State Homeland Security Grant Program2 (statewide) and the Urban Areas Security Initiative 

(urban area) grants. Although the grant programs have evolved over time, this 

money has generally been available for planning, equipment, exercises, training, 

and administrative costs. The grants have also generally been targeted at preventing, preparing for, responding to, and recovering from terrorist events. 

The amount of federal funding for ODP grant programs has increased significantly since September 11. Accompanying this increase has been a discussion at the 

federal, state, and local levels of the most appropriate means of allocating these 

funds, developing plans that set priorities for their use, and assessing the effective 

use of the funds. Several factors could affect how these things are done in the future. For example, recent congressional proposals have addressed the most appropriate means to allocate grant funds to states. In addition, the issuance of Homeland Security Presidential Directive 8 (HSPD–8) in December 2003—calling for, 

among other things, a new national preparedness goal and performance measure 

that pertained to ‘‘all hazards’’—placed first responder grant programs, including 

those managed by ODP, into a broader context that is to consider the nation’s readiness to respond to all major events, including natural disasters as well as acts of 

terrorism. 

We are currently conducting a review of DHS’s implementation of HSPD–8 and 

expect to issue our report in the summer of 2005, looking at how DHS is working 

with state and local governments and first responders to implement it. 

My statement today provides information on the history and evolution of the two 

largest grant programs, particularly with respect to ODP grant award procedures; 

timelines for awarding and transferring grant funds; and accountability for effective 

use of grant funds. My comments are based on our report 3 on the management of 

first responder grant programs as well as updated information on DHS’s progress 

since the report’s issuance in addressing its challenges. 
34

Summary 

Federal first responder grants are a means of achieving an important goal—enhancing the ability—through equipment, skills, and training—of first responders to 

prevent, prepare for, respond to, and recover from terrorist and other incidents with 

well-planned, well-coordinated efforts that involve police, fire, emergency medical, 

public health, and other personnel from multiple jurisdictions. As we noted in our 

May 2004 report on the management of first responder funds in the National Capital Region, effectively managing first responder grant funds requires the ability to 

measure progress and provide accountability for the use of public funds. This includes developing and implementing strategies, establishing baselines, developing 

and implementing performance goals and data quality standards, collecting reliable 

data, analyzing the data, assessing the results, and taking action based on the results. This strategic approach to homeland security includes identifying threats and 

managing risks, aligning resources to address them, and assessing progress in preparing for those threats and risks. 

ODP has modified grant award procedures for states and localities. ODP developed procedures and guidelines for awarding statewide and urban area grants to 

states, and for determining how states and localities could expend funds and seek 

reimbursement for first responder equipment or services they purchased. As part of 

this process, ODP gave states some flexibility by allowing them to determine how 

grant funds were to be managed and distributed within their states and whether 

purchases would be made locally or at the state level. 

Congress, ODP, states, and localities have acted to expedite grant awards by setting time limits for the grant application, award, and distribution processes and by 

instituting other procedures. ODP also took steps to expedite the transfer of funds 

from states to local jurisdictions, allowing states, for example, to transfer grant 

funds to localities before all required documentation had been submitted to ODP. 

Nevertheless, the ability of states and localities to spend grant funds expeditiously 

was complicated by the need to fulfill state and local legal and procurement requirements, which in some cases added months to the purchasing process. Some states 

have modified their procurement practices, and ODP is identifying best practices to 

aid in the effort, but challenges remain. 

ODP has taken steps to improve accountability in the state preparedness planning process. For example, in fiscal year 2003, ODP required states to update homeland security strategies. These strategies are intended to guide state and local jurisdictions in targeting grant funds. In tandem with this effort, ODP revised its grantreporting method, moving away from requiring states, localities, and urban areas 

to submit itemized lists of first responder equipment they plan to purchase toward 

a more results-based approach, whereby grant managers at all levels must demonstrate how grant expenditures are linked to larger projects that support goals in 

the states’ homeland security strategies. In addition, as part of a broader effort to 

meet mandates contained in HSPD–8, ODP has begun drafting national preparedness standards that are intended to ensure more assessments of first responder 

needs on a national basis. DHS recently issued a document entitled ‘‘Interim National Preparedness Goal’’, which reflects the department’s progress in developing 

readiness targets, priorities, standards for preparedness assessments and strategies, 

and a system for assessing the nation’s overall level of preparedness. 

In our prior work, we have recommended that expenditures in the National Capital Region and state and local expenditures for interoperable communications be 

guided by a strategic plan that identifies priorities, and that fund expenditures be 

monitored to ensure that they are targeted in compliance with the goals and priorities identified in the plan. The National Capital Region’s Senior Policy Group and 

DHS generally agreed with these respective recommendations. The Senior Policy 

Group, in conjunction with representatives from the jurisdictions in the National 

Capital Region, has been working to develop a regionwide plan for the use of first 

responder funds. On November 1, 2004, DHS’s SAFECOM program issued its methodology to assist states in developing statewide interoperable communications plans 

that could be used to guide future expenditures. 

The task of enhancing first responder capabilities across the nation is a complex 

and daunting one. ODP must continue to work with state, local, and tribal governments, and the private sector to finish the tasks it has begun. At the same time, 

state, local, and tribal governments, and the private sector must recognize that the 

process is iterative, will include periodic adjustments and refinements, and that 

risks are not equally distributed across the nation.

Background 

The Department of Justice established the ODP in 1998 within the Office of Justice Programs to assist state and local first responders in acquiring specialized 
35

training and equipment needed to respond to and manage terrorist incidents involving weapons of mass destruction. ODP, which was transferred to DHS upon its creation in March 2003, has been a principal source of domestic preparedness grant 

funds. These grants are a means of achieving an important goal—enhancing the 

ability of first responders to prevent, prepare for, respond to, and recover from terrorist incidents with well-planned and well-coordinated efforts that involve police, 

fire, emergency medical, public health, and other personnel from multiple jurisdictions. In March 2004, the Secretary of Homeland Security consolidated ODP with 

the Office of State and Local Government Coordination to form the Office of State 

and Local Government Coordination and Preparedness (SLGCP). In addition, other 

preparedness grant programs from agencies within DHS were also transferred to 

SLGCP. SLGCP, which reports directly to the Secretary, was created to provide a 

one-stop shop for the numerous federal preparedness initiatives applicable to state 

and local first responders. Within SLGCP, ODP continues to have program management and monitoring responsibilities for the domestic preparedness grants.

Status of Grant Funding and Allocation 

From fiscal year 2002 through fiscal year 2005, the amount of domestic preparedness grants awarded by ODP increased from about $436 million to about $10.5 billion. The scope of ODP’s grant programs expanded as well, from funding only first 

responder advanced equipment, exercises, and administrative activities in fiscal 

year 2002 to funding a range of preparedness planning activities, exercises, training, 

equipment purchases, and related program management and administrative costs in 

fiscal year 2005. During fiscal years 2002 through 2005, the State Homeland Security Grant Program and Urban Areas Security Initiative program accounted for 

about 69 percent of total ODP grant funds. Table 1 shows the amounts provided for 

the domestic preparedness grant programs.
36

Table 1: ODP Grant Program Funding for Fiscal Years 2002 through 2005 

Dollars in thousands 

Grant program 2002 2003 2004 2005 Total 

Percent

of total

funding 

State Homeland Security Grant Program ......... $315,700 $2,066,295 $1,675,058 $1,062,285 $5,119,338 48.9Urban Areas Security Initiative ......................... (a) 596,351 671,017 854,657 2,122,025 20.3Subtotal ................................................................ 315,700 2,662,646 2,346,075 1,916,942 7,241,363 69.2Other Grants ....................................................... b 119,979 c 388,081 d 1,349,491 e 1,361,637 3,219,188 30.8Total .................................................................... 435,679 3,050,727 3,695,566 3,278,579 10,460,551 100.0
37

4The current formula provides each state, the District of Columbia, and the Commonwealth 

of Puerto Rico 0.75 percent and each territory 0.25 percent of the total grant funds. The remaining grant funds are allocated to states and territories on a population-share basis. 5The funding formula was also used in fiscal years 2004 and 2005 for two other grant programs managed by ODP: the Law Enforcement Terrorism Prevention Program and Citizen 

Corps Program. 

Source: ODP.

a Not funded in this year.

b Includes the following five grant programs: Law Enforcement Enhancement Program, New York

Equipment Replacement Program, National Domestic Preparedness Consortium, Homeland Defense

Equipment Reuse Program Pilot Project Support Grant, and Domestic Preparedness Training and

Technical Assistance Program—St. Petersburg College.

c Includes the following 15 grant programs: Urban Areas Security Initiative Port Security Grant

Program, Urban Areas Security Initiative Transit Security Grant Program, Urban Areas Security Initia- tive Pilot Projects, Urban Areas Security Initiative Radiological Defense System, Counterterrorism

Institute Grant Program, TOPOFF II, Washington Metropolitan Area Transit Authority, Airborne Im- aging in Support of Emergency Operations, Testing and Evaluation of Emergency Response

Equipment, Terrorism Early Alert and Strategic Planning System, Homeland Defense Equipment

Reuse Program, Northern Virginia Emergency Response Coalition Grant Program, Domestic Prepared- ness Equipment Training and Technical Assistance Program, National Domestic Preparedness Consor- tium and Multistate Anti-Terrorism Information Exchange Project.

d Includes the following seven grant programs: Assistance to Firefighters Grant, Citizen Corps

Program, Competitive Training Grants Program, Information Technology and Evaluation Program,

Law Enforcement Terrorism Prevention Program, Operation Safe Commerce—Phase III, and Urban

Areas Security Initiative Transit Security Program.

e Includes the following eight grant programs: Assistance to Firefighters Grant, Buffer Zone Protec- tion Program, Citizen Corps Program, Competitive Training Grants Program, Emergency Management

Performance Grants, Law Enforcement Terrorism Prevention Program, Metropolitan Medical Response

System, and Operation Safe Commerce—Phase III.

For fiscal years 2002 through 2005, ODP awarded approximately $2.1 billion in 

urban area grant funds to selected urban areas identified by DHS. The amount of 

individual urban area grants is determined through a combination of factors, including current threat estimates, an assessment of each area’s critical assets, and population density. For the same period, ODP awarded approximately $5.1 billion in 

statewide grant funds to states to enhance domestic preparedness. Under its current 

funding formula,4 approximately 40 percent of statewide grant funds are shared 

equally among states, while the remaining amount is distributed according to state 

population.5

Several congressional proposals have been advanced to alter the statewide funding formula to base it more directly on risk considerations. One proposal would 

largely maintain the portion of funds shared equally by the states but would base 

the distribution of the remaining funds on a risk-based formula similar to the one 

currently used for urban area grants. Another proposal from the House Homeland 

Security Committee would reduce the minimum amount of funding shared equally 

by states to approximately 14 percent of total funding and establish a board to allocate the remaining funds through an evaluation of threat, vulnerability, and the potential consequences of a terrorist attack. 

GAO supports a risk-based approach to homeland security. Adoption of a risk 

management framework can aid in assessing risk by determining which 

vulnerabilities should be addressed in what ways within available resources. Assessing risk for specific assets or locations is defined by two conditions: (1) probability 

or likelihood, quantitative or qualitative, that an adverse event would occur, and (2) 

consequences, the damage resulting from the event, should it occur. Because it is 

unlikely that sufficient resources will be available to address all risks, it becomes 

necessary to prioritize both risks and the actions taken to reduce those risks, taking 

cost into consideration. For example, which actions will have the greatest net potential benefit in reducing one or more risks?

ODP Grant Award Procedures 

Over time, ODP has modified its grant application processes and procedures for 

awarding grants to states, governing how states distribute funds to local jurisdictions, and facilitating reimbursements for states and localities. To obtain funding, 

state and urban area grantees must submit applications to ODP and have them approved. In fiscal year 2004, ODP began to streamline the application process. According to ODP, based on feedback from the grantees, and to continue to improve 

the grant programs, it combined three grant programs into a single grant application solicitation. In fiscal year 2005, the number of combined programs increased 
38

6The seven urban area recipients were Los Angeles and San Francisco, California; Chicago, 

Illinois; New York City, New York; Houston, Texas; Seattle, Washington; and the National Capital Region. Since then, urban area recipients have grown to include 50 recipients in 27 states 

and the National Capital Region in fiscal year 2005. 7The Comptroller’s Office within the Office of Justice Programs continues to act as financial 

manager for DHS first responder grant programs. DHS plans to establish its own Office of 

Grant Operations within ODP during fiscal year 2005.

to six. ODP stated that the consolidation was done to streamline the grant application process and better coordinate federal, state, and local grant funding distribution 

and operations. 

For the statewide grant programs, ODP has allowed the states flexibility in deciding how the grant programs are structured and implemented in their states. In general, states are allowed to determine such things as the following: • the formula for distributing grant funds to local jurisdictional units; . • the definition of what constitutes a local jurisdiction eligible to receive funds, 

such as a multicounty area; . 

• the organization or agency that would be designated to manage the grant program; and . 

• whether the state or local jurisdictions would purchase grant-funded items for 

the local jurisdictions. 

Urban area grantees, for the most part, have had flexibilities similar to those of 

the states and could, in coordination with members of the Urban Area Working 

Group, designate contiguous jurisdictions to receive grant funds. For the first round 

of the urban area grants in fiscal year 2003, the grants were made directly to the 

seven urban areas identified as recipients.6 Starting with the second round of urban 

area grants in 2003, grants were made to states, which then subgranted the funds 

to the designated urban areas, but retained responsibility for administering the 

grant program. The core city and county/counties work with the state administrative 

agency to define the geographic borders of the urban area and coordinate with the 

Urban Area Working Group. 

Once the grant funds are awarded to the states and then subgranted to the local 

jurisdictions or urban areas, certain legal and procurement requirements have to be 

met, such as a city council’s approval to accept grant awards. Once these requirements are satisfied, states, local jurisdictions, and urban areas can then obligate 

their funds for first responder equipment, exercises, training, and services. Generally, when a local jurisdiction or urban area directly incurs an expenditure, it submits related procurement documents, such as invoices, to the state. The state then 

draws down the funds from the Justice Department’s Office of Justice Programs.7

According to this office, funds from the U.S. Treasury are usually deposited with 

the states’ financial institution within 48 hours. The states, in turn, provide the 

funds to the local jurisdiction or urban area. 

Timelines Established for Awarding and Transferring Grant Funds 

Since the first announcement of the dramatic increase in first responder grants 

after the terrorist attacks of September 11, 2001, the speed with which the funding 

reached localities has been a matter of concern and some criticism. Congress, state 

and local officials, and others expressed concerns about the time ODP was taking 

to award grant funds to states and for states to transfer grant funds to local jurisdictions. Beginning in fiscal year 2003, ODP, at congressional direction, demonstrated significant progress in expediting grant awards to states. For the fiscal 

year 2002 statewide grants, ODP was not required to award funds to states within 

a specific time frame. During fiscal year 2002, ODP took 123 days to make the 

statewide grant application available to states and, on average, about 21 days to approve states’ applications after receipt. For the second round of fiscal year 2003 

statewide grants, however, the appropriations act required that ODP make the 

grant application available to states within 15 days of enactment of the appropriation and approve or disapprove states’ applications within 15 days of receipt. According to ODP data, ODP made the grant application for this round of grants available 

to states within the required deadline and awarded over 90 percent of the grants 

within 14 days of receiving the applications. The appropriations act also mandated 

that states submit grant applications within 30 days of the grant announcement. 

According to ODP data, all states met the statutory 30-day mandate; in fact, the 

average number of days from grant announcement to application submission declined from about 81 days in fiscal year 2002 to about 23 days for the second round 

of fiscal year 2003 statewide grants. 

The transfer of funds from states to local jurisdictions has also received attention 

from Congress and ODP. To expedite the transfer of grant funds from the states 

to local jurisdictions, ODP program guidelines and subsequent appropriations acts 
39

8For the second round of fiscal year 2003 statewide grants, states had to certify that they 

had met the statutory requirement to transfer 80 percent of the awarded funds for first responder preparedness and 50 percent of the awarded funds for critical infrastructure protection 

to local jurisdictions within the required 45-day period. According to ODP, letters were distributed to states that had not submitted the certification form or were not certified, followed by 

a series of phone calls to collect the pertinent information. 

imposed additional deadlines on states. For the fiscal year 2002 statewide grants, 

there were no mandatory deadlines or dates by which states should transfer grant 

funds to localities. One of the states we visited, for example, took 91 days to transfer 

these grant funds to a local jurisdiction while another state we visited took 305 

days. Beginning with the first round of fiscal year 2003 statewide grants, ODP required in its program guidelines that states transfer grant funds to local jurisdictions within 45 days of the grant award date. Congress subsequently included this 

requirement in the appropriations act for the second round of fiscal year 2003 statewide grant funds. To ensure compliance, ODP required states to submit a certification form indicating that all awarded grant funds had been transferred within the 

required 45-day period. States that were unable to meet the 45-day period had to 

explain the reasons for not transferring the funds and indicate when the funds 

would be transferred. According to ODP, for the first and second rounds of the fiscal 

year 2003 grants, respectively, 33 and 31 states certified that the required 45-day 

period had been met.8

To further assist states in expediting the transfer of grant funds to local jurisdictions, ODP also modified its requirements for documentation to be submitted as part 

of the grant application process for fiscal years 2002 and 2003. In fiscal year 2002, 

ODP required states to submit and have approved by ODP budget detail worksheets 

and program narratives indicating how the grant funds would be used for equipment, exercises, and administration. If a state failed to submit the required documentation, ODP would award the grant funds, with the special condition that the 

state could not transfer, expend, or draw down any grant funds until the required 

documentation was submitted and approved. In fiscal year 2002, ODP imposed special conditions on 37 states for failure to submit the required documentation and 

removed the condition only after the states submitted the documentation. The time 

required to remove the special conditions ranged from about 1 month to 21 months. 

For example, in one state we reviewed, ODP awarded the fiscal year 2002 statewide 

grant funds and notified the state of the special conditions on September 13, 2002; 

the special conditions were removed about 6 months later on March 18, 2003, after 

the state had met those conditions. 

In fiscal year 2003, however, ODP allowed states to move forward more quickly, 

by permitting them to transfer grant funds to local jurisdictions before all required 

grant documents had been submitted. If a state failed to submit the required documentation for the first round of fiscal year 2003 statewide grants, ODP awarded the 

grant funds and allowed the state to transfer the funds to local jurisdictions. While 

the state and local jurisdictions could not expend—and the state could not draw 

down—the grant funds until the required documentation was submitted and approved, they could plan their expenditures and begin state and locally required procedures, such as obtaining approval of the state legislature or city council to use the 

funds. Later that fiscal year, ODP further relaxed this requirement and allowed the 

states to transfer, expend, and draw down grant funds immediately after ODP 

awarded the grant funds. The states only had to submit all documentation along 

with their biannual progress reports. 

Despite congressional and ODP efforts to expedite the award of grant funds to 

states and the transfer of those funds to localities, some states and local jurisdictions could not expend the grant funds to purchase equipment or services until 

other, nonfederal requirements were met. Some state and local officials’ ability to 

spend grant funds was complicated by the need to meet various state and local legal 

and procurement requirements and approval processes, which could add months to 

the process of purchasing equipment after grant funds had been awarded. For example, in one state we visited, the legislature must approve how the grant funds will 

be expended. If the state legislature is not in session when the grant funds are 

awarded, it could take as long as 4 months to obtain state approval to spend the 

funds. 

Some states, in conjunction with DHS, have modified their procurement practices 

to expedite the procurement of equipment and services. Officials in two of the five 

states we visited told us they established centralized purchasing systems that allow 

equipment and services to be purchased by the state on behalf of local jurisdictions, 

freeing them from some local legal and procurement requirements. In addition, the 

DHS’s Homeland Security Advisory Council Task Force reported that several states 
40

9 U.S. Department of Homeland Security, The Homeland Security Advisory Council, A Report 

from the Task Force on State and Local Homeland Security Funding (June 2004). 10Pub. L. No. 108–334, § 521, 118 Stat. 1298, 1319 (2004). 

developed statewide procurement contracts that allow local jurisdictions to buy 

equipment and services using a prenegotiated state contract. DHS has also offered 

options for equipment procurement, through agreements with the U.S. Department 

of Defense’s Defense Logistics Agency and the Marine Corps Systems Command, to 

allow state and local jurisdictions to purchase equipment directly from their prime 

vendors. These agreements provide an alternative to state and local procurement 

processes and, according to DHS, often result in a more rapid product delivery at 

a lower cost. 

Congress has also taken steps to address a problem that some states and localities 

cited concerning a federal law, the Cash Management Improvement Act (CMIA), 

that provides for reimbursement to states and localities only after they have incurred an obligation, such as a purchase order, to pay for goods and services. Until 

fiscal year 2005, after submitting the appropriate documentation, states and localities could receive federal funds to pay for these goods and services several days before the payment was due so that they did not have to use their own funds for payment. However, according to DHS’s Homeland Security Advisory Council Task Force 

report, many municipalities and counties had difficulty participating in this process 

either because they did not receive their federal funds before payment had to be 

made or their local governments required funds to be on hand before commencing 

the procurement process.9 Officials in one city we visited said that, to solve the latter problem, the city had to set up a new emergency operations account with its own 

funds. The task force recommended that for fiscal year 2005, ODP homeland security grants be exempt from a provision of CMIA to allow funds to be provided to 

states and municipalities up to 120 days in advance of expenditures. In response, 

the fiscal year 2005 DHS appropriations legislation 10 included a provision that exempts formula-based grants (e.g., the State Homeland Security Grant Program 

grants) and discretionary grants, including the Urban Areas Security Initiative and 

other ODP grants, from the CMIA’s requirement that an agency schedule the transfer of funds to a state so as to minimize the time elapsing between the transfer of 

funds from the U.S. Treasury and the state’s disbursement of the funds for program 

purposes. ODP’s fiscal year 2005 program guidelines informed grantees and subgrantees that they are allowed to draw down funds up to 120 days prior to expenditure. 

In addition, DHS efforts are under way to identify and disseminate best practices, 

including how states and localities manage legal and procurement issues that affect 

grant distribution. DHS’s Homeland Security Advisory Council Task Force reported 

that some jurisdictions have been ‘‘very innovative’’ in developing mechanisms to 

support the procurement and delivery of emergency-responserelated equipment. The 

task force recommended that, among other things, DHS should, in coordination with 

state, county, and other governments, identify, compile, and disseminate best practices to help states address grant management issues. ODP has responded by establishing a new Homeland Security Preparedness Technical Assistance Program service to enhance the grant management capabilities of state administrative agencies 

and by surveying states to identify their technical needs and best practices they 

have developed related to managing and accounting for ODP grants, including the 

procurement of equipment and services at the state and local levels. This information is to serve as a foundation for the development of a tailored, on-site assistance 

program for states to ensure that identified best practices are implemented and critical grant management needs and problems are addressed. According to ODP, the 

technical assistance service was made operational in December 2004, however, the 

final compendium of best grants management practices will not be formally released 

until May 2005. 

Despite efforts to streamline local procurement practices, some challenges remain 

at the state and local levels. An ODP requirement that is based on language in the 

appropriations act could delay procurements, particularly in states that have a centralized purchasing system. Specifically, beginning with the fiscal year 2004 grant 

cycle, states were required by law to pass through no less than 80 percent of total 

grant funding to local jurisdictions within 60 days of the award. In order for states 

to retain grant funds beyond the 60-day limit, ODP requires states and local jurisdictions to sign a memorandum of understanding (MOU) indicating that states may 

retain—at the local jurisdiction’s request—some or all funds in order to make purchases on a local jurisdiction’s behalf. The MOU must specify the amount of funds 

to be retained by the state. This requirement may pose problems for some states. 

A state official in one state we visited said that, while the state’s centralized pur-
41

11 In fiscal year 2003, the urban area grantees were required to prepare and obtain approval 

of their urban area strategies. 

chasing system had worked well in prior years, the state has discontinued using it 

because of the MOU requirement, since establishing MOUs with every locality 

might take years. The state transferred the fiscal year 2004 grant funds to local jurisdictions so they can make their own purchases. In another state, officials expressed concern that this requirement would negatively affect their ability to maintain homeland security training provided to local jurisdictions at state colleges that 

had been previously funded from local jurisdictions’ grant funds. In the fiscal year 

2005 grant program guidelines, states were encouraged, but not required, to submit 

their MOUs to ODP for review by DHS’s Office of General Counsel to ensure compliance.

Accountability for Effective Use of Grant Funds 

In distributing federal funds to states to assist first responders in preventing, preparing for, and responding to terrorist threats, the federal government has required 

states to develop strategies to address their homeland security needs as a condition 

for receiving funding. The details of this federal requirement have also evolved over 

time. 

Before the events of September 11, 2001, ODP required states to develop homeland security strategies that would provide a roadmap of where each state should 

target grant funds. To assist the states in developing these strategies, state agencies 

and local jurisdictions were directed to conduct needs assessments on the basis of 

their own threat and vulnerability assessments. The needs assessments were to include related equipment, training, exercise, technical assistance, and research and 

development needs. In addition, state and local officials were to identify current and 

required capabilities of first responders to help determine gaps in capabilities. 

In fiscal year 2003, ODP directed the states to update their homeland security 

strategies to better reflect post-September 11 realities and to identify progress on 

the priorities originally outlined in the initial strategies.11 As required by statute, 

completion and approval of these updated strategies were a condition for awarding 

fiscal year 2004 grant funds. 

ODP has also revised its approach on how states and localities report on grant 

spending and use. ODP took steps to shift the emphasis away from reporting on specific items purchased and toward results-based reporting on the impact of states’ expenditures on preparedness. ODP maintains an authorized equipment list that includes such diverse items as personal protection suits for dealing with hazardous 

materials and contamination, bomb response vehicles, and medical supplies. This information is in turn listed on the budget worksheets that localities submitted to 

states for their review. Until the fiscal year 2004 grant cycle, states were required 

to submit itemized budget detail worksheets that itemized each item to be purchased under first responder grants. ODP found, however, that, while the worksheets reflected the number and cost of specific items that states and localities 

planned to purchase, neither states nor ODP had a reporting mechanism to specifically assess how well these purchases would, in the aggregate, meet preparedness 

planning needs or priorities, or the goals and objectives contained in state or urban 

area homeland security strategies. Accordingly, ODP revised its approach for fiscal 

year 2004 and required that states, instead of submitting budget detail worksheets 

to ODP, submit new ‘‘Initial Strategy Implementation Plans’’ (ISIP). These ISIPs 

are intended to show how planned grant expenditures for all funds received are 

linked to one or more larger projects, which in turn support specific goals and objectives in either a state or urban area homeland security strategy. In addition to the 

ISIPs, ODP now requires the states to submit biannual strategy implementation reports showing how the actual expenditure of grant funds at both the state and local 

levels was linked by projects to the goals and objectives in the state and urban area 

strategy. 

Reports by GAO and DHS’s Office of Inspector General, as well as by the House 

Homeland Security Committee, have identified the need for clear national guidance 

in defining the appropriate level of preparedness and setting priorities to achieve 

it. The lack of such guidance has in the past been identified as hindering state and 

local efforts to prioritize their needs and plan how best to allocate their homeland 

security funding. We have reported that national preparedness standards that can 

be used to assess existing first responder capacities, identify gaps in those capacities, and measure progress in achieving specific performance goals are essential to 

effectively managing federal first responder grant funds as well as to the ability to 

measure progress and provide accountability for the use of public funds. 
42

12 U.S. Department of Homeland Security, Office of State and Local Government Coordination 

and Preparedness, Target Capabilities List: Version 1.0 (January 2005). 13The act required ODP to provide state and local jurisdictions with nationally accepted first 

responder preparedness levels no later than January 31, 2005. 14 Included are the District of Columbia, Montgomery and Prince George’s Counties in Maryland; Arlington, Fairfax, Loudoun, and Prince William Counties and the City of Alexandria in 

Virginia; and all cities and other unites of government within the geographic areas of such district, counties, and city. Our work focused on the eight largest jurisdictions. 

ODP has responded to the calls for national preparedness standards and specifically to HSPD–8 that required DHS to develop a new national preparedness goal 

and performance measures, standards for preparedness assessments and strategies, 

and a system for assessing the nation’s overall preparedness. In order to develop 

performance standards that will allow ODP to measure the nation’s success in 

achieving this goal, ODP is using a capabilities-based planning approach—one that 

defines the capabilities required by states and local jurisdictions to respond effectively to likely threats. These capability requirements are to establish the minimum 

levels of capability required to provide a reasonable assurance of success against a 

standardized set of 15 scenarios for threats and hazards of national significance. 

The scenarios include such potential emergencies as a biological, nuclear or cyber 

attack, two natural disasters, and a flu pandemic. The objective is to develop the 

minimum number of credible, high-consequence scenarios needed to identify a broad 

range of prevention and response requirements. 

As part of the HSPD–8 implementation process, in January 2005, ODP issued a 

list of capability requirements 12 in keeping with a requirement of the fiscal year 

2005 DHS appropriations act.13 To help define the capabilities that jurisdictions 

should set as targets, ODP first defined the essential tasks that need to be performed from the incident scene to the national level for major events illustrated by 

the 15 scenarios. It then developed a Target Capabilities List that identifies 36 

areas in which responding agencies are expected to be proficient in order to perform 

these critical tasks. ODP further plans to develop performance measures, on the 

basis of the target capability standards that define the minimal acceptable proficiency required in performing the tasks outlined in the task list. According to 

ODP’s plan, the measures will allow the development of a rating methodology that 

incorporates preparedness resources and information about overall performance into 

a summary report that represents a jurisdiction’s or agency’s ability to perform essential prevention, response, or recovery tasks. The office acknowledges that this 

schedule may result in a product that requires future incremental refinements but 

has concluded that this is preferable to spending years attempting to develop a ‘‘perfect’’ process. 

On March 31, 2005, DHS issued a document entitled ‘‘Interim National Preparedness Goal’’ that reflects the department’s progress in developing readiness targets, 

priorities, standards for preparedness assessments and strategies, and a system for 

assessing the nation’s overall level of preparedness. The document also states that 

National Preparedness Guidance will follow within 2 weeks. This guidance is to include, in DHS’ words, ‘‘detailed instructions on how communities can use the Goal 

and a description of how the Goal will generally be used in the future to allocate 

Federal preparedness assistance.’’ DHS expects to issue a Final Goal and an updated target capabilities list on October 1, 2005. Over the next several months, ODP 

plans to work with its stakeholders to identify the levels of capabilities that various 

types of jurisdictions should possess in order for the Nation to reach the desired 

state of national preparedness.

Prior GAO Recommendations with Regard to First Responder Grants 

In May 2004, we reported on the use of first responder grant monies in the National Capital Region, which includes the District of Columbia and specified surrounding jurisdictions in the states of Maryland and Virginia.14 We found that the 

grant monies were not being spent in accordance with a regional plan for their use. 

To ensure that emergency preparedness grants and associated funds were managed 

in a way that maximizes their effectiveness, we recommended that the Secretary of 

Homeland Security work with NCR jurisdictions to develop a coordinated strategic 

plan to establish goals and priorities for the use of funds, monitor the plan’s implementation to ensure that funds are used in a way that are not unnecessarily duplicative, and evaluate the effectiveness of expenditures in addressing gaps in preparedness. DHS and the Senior Policy Group of the National Capital Region generally agreed with our recommendations and have been working to implement them. 

In our report on interoperable communications for first responders, we found that 

federal assistance programs to state and local government did not fully support regional planning for communications interoperability. We also found that federal 
43

15See GAO, Homeland Security: Federal Leadership and Intergovernmental Cooperation Required to Achieve First Responder Interoperable Communications, GAO–04–740 (Washington, 

D.C.: July 20, 2004).

grants that support interoperability had inconsistent requirements to tie funding to 

interoperable communications plans. In addition, uncoordinated federal and state 

level grant reviews limited the government’s ability to ensure that federal funds 

were used to effectively support improved regional and statewide communications 

systems. We recommended that DHS grant guidance encourage states to establish 

a single statewide body responsible for interoperable communications that would 

prepare a single comprehensive statewide interoperability plan for federal, state, 

and local communications systems in all frequency bands. We also recommended 

that at the appropriate time, that DHS grant guidance should require that federal 

grant funding for interoperable communications equipment should be approved only 

upon certification by the statewide body that such grant applications were in conformance with the statewide interoperability plan. In its comments on our draft report, DHS did not address the second recommendation. However, on November 1, 

2004, the SAFECOM office with DHS Office of Interoperability and Compatibility 

issued its methodology for developing a statewide interoperability communications 

plan.

Concluding Observations 

In summary, Mr. Chairman, since the tragic events of September 11, 2001, the 

federal government has dramatically increased the resources and attention it has 

devoted to national preparedness and the capabilities of first responders. The grant 

programs managed by ODP have expanded rapidly in their scope and funding levels. 

Over the 3-1/2 years since the terrorist attacks, Congress, ODP, states, and local 

governments encountered obstacles, some of them frustrating and unexpected, in delivering grant funds to their ultimate recipients in a timely manner and ensuring 

they are used most effectively. All levels of government have attempted to address 

these obstacles and succeeded in resolving or ameliorating many of them. Some of 

the changes made are relatively new; thus, it is still too early to determine if they 

will have the desired outcome. 

ODP’s focus has changed over time from examining and approving, for example, 

specific items of equipment proposed for purchase under first responder grants to 

defining the capabilities that states and local jurisdictions need to attain—that is, 

establishing performance standards. Such a results-based orientation could prove to 

be the most practical and effective grants management approach at the federal level 

to help ensure accountability and effectiveness of results. DHS must also continue 

to ensure that an effective system for monitoring and accounting for limited federal 

funds intended for enhancing the nation’s ability to respond to terrorist attacks or 

natural disasters exists at the state and local level. 

DHS’s task of defining a national preparedness goal and translating that definition into capabilities that are meaningful and readily transferable to the wide variety of local jurisdictions around the nation is still not complete. As the department 

has acknowledged, the process will necessarily be iterative. As we have stressed before, during this process DHS must continue to listen and respond constructively to 

the concerns of states, local jurisdictions, and other interested parties. Such collaboration will be essential to ensuring that the nation’s emergency response capabilities 

are appropriately identified, assessed, and strengthened. At the same time, state, 

local, and tribal governments, and the private sector must recognize that the process 

is iterative, will include periodic adjustments and refinements, and that risks are 

not equally distributed across the nation. 

The challenges we noted in developing effective interoperable communications for 

first responders are applicable to developing effective first responder capabilities for 

major emergencies, regardless of cause.15 A fundamental challenge has been limited 

regional and statewide planning, coordination, and cooperation. No one level of government can successfully address the challenges of developing needed first responder capabilities alone. The federal government can play a leadership role in developing requirements and providing support for state, regional, and local governments to: assess first responder capabilities; identify gaps in meeting those capabilities; develop coordinated plans and priorities for closing those gaps; and assess success in developing and maintaining the needed capabilities. 

Mr. Chairman, this concludes my statement. I would be pleased to answer any 

questions that you or other members of the subcommittee may have.

Contact Information: For further information on this testimony, please contact William O. Jenkins, Jr., at (202) 512–8777. Individuals making key con-
44

tributions to this testimony included Amy Bernstein, David Brown, Frances 

Cook, James Cook, Christopher Keisling, Katrina Moss, Sandra Tasic, John 

Vocino, and Robert White. 

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Mr. KING. Thank you, Dr. Jenkins. 

I want to thank all the members of the panel. 

I have some questions for Dr. de Rugy. 

I fully agree with your premise that every dollar that is not 

spent properly for homeland security is one less dollar that we 

have to protect ourselves. That is wrong. I am really asking you to 

expand on this, if you will, and take as much time as you want up 

to the 5 minutes. 

How would you define risk? How would you determine it? Theoretically, every municipality is at risk in the country. There is a 

level of risk anywhere. How would you define risk and where would 

you draw the line as far as above that line should get the predominance of the money and those below it would not? 
45

Again, what factors and who would make that determination? 

Ms. DE RUGY. Thank you, Mr. Chairman. It is a very good question. 

I am not sure I am entirely capable of answering it because I am 

not a risk assessment expert. I am an economist. However, there 

is an industry that does that very well, and that is the insurance 

industry. I suspect that we could draw a lot of information based 

on their research. 

However, I have an idea. The definition of ‘‘risk’’ when we talk 

about homeland security should really be based on how much damage, how likely a target is to be, and how much damage if the attack is successful, are we going to sustain. Basically, we have to 

remember that our homeland security is only as strong as our 

weakest link, again defined as the likelihood of being attacked and 

the damage incurred if we were attacked. 

So it means that we absolutely must look so we can rank every 

possible target, every possible risk, across the board, across the industries, agriculture, chemicals, all those things, and then assess 

where the most damage would be. And we could do it at the national level or state by state. Actually, we should do it in a phase. 

I actually think it is, again, the insurance industry has done that. 

It is their job and they have done that very successfully for years 

and we should draw from their research. 

And then the other question really is, once we have this panel 

of risk defined, and if we order them by priority, maybe one of the 

ways to define where the line should be is by trying to think of who 

should be actually in charge of the risk. So the idea is not necessarily to ignore completely some risks and only take care of others. It could be that the federal government should be taking care 

of the highest and the most damaging threats if the attack is successful, and leave it up to the states to take care of the other risks. 

So there is a range of options that we should be studying. 

Mr. KING. You mentioned in your testimony, I believe, you would 

also have the private sector become involved. 

Ms. DE RUGY. Yes. For instance, again, I think it is a very, very, 

very important question that I do not see addressed enough is who 

should be in charge of what. So we have four essential players, the 

federal government, the state government, the local government 

and the private sector. The federal government should be in charge 

of risks that would affect the entire nation. That should be our priority. In fact, that should be the best use of our dollars. 

The state and local governments should be in charge of things 

that are more local, like for instance if a bridge is destroyed in a 

given state it does not mean that the entire nation could not be affected one way or another. But the main damage would be sustained by the state. It means then that the state should be in 

charge. 

The private sector, for instance, critical infrastructures are privately owned. It makes a lot of sense to give a lot of the responsibility to the owners of the assets, which does not mean that there 

could not be a partnership, that the private sector should have a 

role to play. 

If we think that the only player who should be in charge of our 

security is the federal government, we are never going to be able 
46

to achieve anything. That is one of my concerns with the first responders grants, is it seems that a lot of what we are saying is the 

result of every player turning to the federal government as if the 

federal government should be in charge of absolutely everything. 

Mr. KING. Thank you, Doctor. 

Mr. Pascrell? 

Mr. PASCRELL. Thank you. I want to respond to that last answer. 

We have decided that the best idea is to make sure that the Fire 

Act grants which I think you just referred to, are entirely separate 

from homeland security in that the fire grants were a response to 

basic needs that companies needed before 9/11. Let’s get it straight 

as to when each of them occurred. I am really flabbergasted at your 

last answer, that the grants, I think you are talking about those 

grants, use fire grants, and I expect that is what you are looking 

at. 

Ms. DE RUGY. I said first responder grants. 

Mr. PASCRELL. You are not talking about the fire grants, then? 

Ms. DE RUGY. No. 

Mr. PASCRELL. You are not talking about those separate grants. 

Ms. DE RUGY. No. 

Mr. PASCRELL. Okay. We need to make that clear, if you will, because we are not discussing the fire grants today. We are talking 

about the first responder grants. 

Ms. DE RUGY. No, we are not. I said first responder grants. 

Mr. PASCRELL. Okay, because we do have a system of monitoring 

with fire grants. Are you saying you do not think we have a system 

to monitor how money is spent for first responders for homeland 

security? Is that your point? 

Ms. DE RUGY. It is part of my point, yes, but the larger part is 

really to try to think whether it is the best use of our federal dollars to spend on first responders. Isn’t that the role of the state and 

local governments? That is a question that is not trivial and I think 

should be addressed. 

Again, it does not mean, if we reach the conclusion that first responders is the responsibility of the state and local governments, 

it does not mean that the federal government does not have a role 

to play in case of an attack, that help could not be provided, funding could not be provided to the states to help them. 

Mr. PASCRELL. I would like to ask, and come back to this point, 

to Mr. Berman. How does the Department of Homeland Security 

visit state and local governments to see how the homeland security 

money is being spent? 

Mr. BERMAN. That has been a problem, certainly up through fiscal year 2004. Starting in 2004, they did increase their staff and 

develop some additional guidelines for doing that, but up until that 

point, their monitoring at the state and local level was very poor. 

This is also true within some of the states; the state organizations 

do not always have the staff to monitor at the local level, but that 

has been a problem. 

Mr. PASCRELL. And Mr. Berman, when a municipality, a locality 

or state applies for federal money for homeland security, doesn’t 

that entity have to prove need? 

Mr. BERMAN. Part of the problem with the way this program has 

evolved is the guidelines, the federal guidelines were relatively 
47

broad. The initial state vulnerability assessments that were prepared were largely wish lists in some cases, rather than vulnerability studies. So because of the lack of clear federal guidelines, 

some of these programs really did not amount to a matter of need. 

It was a matter of want. When the localities finally were awarded 

the grants, in some cases they simply abandoned the earlier plans 

they had made and re-looked at how they wanted to spend that 

money. 

So up until now, the question of what was—. 

Mr. PASCRELL. Excuse me. Are you saying that when they finally 

did get reimbursed, it was not for a particular item that they applied for? 

Mr. BERMAN. In some cases, when they finally were allocated the 

funds and before they went to spend them, they actually abandoned their earlier plans and simply substituted new ones. 

Mr. PASCRELL. Well, Mr. Chairman, that is not the case, of 

course, it is something we are not discussing for the Fire Act. The 

Fire Act, it is a competitive situation. You are only going to get 

money when you are competing against other departments 

throughout the country. As you well know, that money has to be 

spent on the item. Do you understand what I am saying, Mr. Berman? 

Mr. BERMAN. Absolutely. 

Mr. PASCRELL. Let me ask you a question, Dr. Jenkins, then I 

will conclude. What steps should we take to speed up the process 

from when the states receive homeland security funding to when 

local governments receive it from the states? What would you suggest, from your vantage point, that we do? 

Mr. JENKINS. From our vantage point, speed is less important 

than spending the money well, having a plan to spend the money 

well. That has been part of the problem, as Mr. Berman has said. 

Part of the problem is having a clear plan of how you are going to 

spend the money, what you are going to try to do, what you are 

going to accomplish with it. As he pointed out also, it is possible, 

given the way the program has been structured, to spend the 

money according to grant guidance, because the grant guidance has 

been very broad, but not necessarily spend it especially well or intelligently. 

So I think our view would be very much what this committee is 

talking about, it is very important to have a plan in place. It is 

very easy, then, to get that money down and get it down quickly 

if you have a clear plan in place. Part of what has held up getting 

the money down is that they have not had a plan in place. In many 

states, they were not going to let you use this money, and ODP has 

said we are not going to let you use this money, until we have seen 

a plan for how you are going to spend it. 

The issue has been less getting the money down. The money has 

been allocated very quickly down in the last couple of years, both 

from ODP to the states and the states to the localities. The problem has been the localities very often have run into problems in 

being able to use the money because they have to have a city council that votes or in some cases a state legislature has to vote to accept the money. They have to then go through procurement processes that are fairly extensive and so forth. So that takes a long 
48

time for the pipeline to be able to use the money because of these 

various requirements and hoops that the localities themselves have 

to go through. That varies across the states. Some states are much 

quicker about using that than others. 

Mr. PASCRELL. In conclusion, you are suggesting look at the 

whole process, because, Mr. Chairman, in most of these grants that 

we are talking about in homeland security, you need to spend the 

money and then you are reimbursed. Correct, Dr. Jenkins? 

Mr. JENKINS. Right. Except for 2005, there is an exception to the 

Cash Management Act in 2005 in which they can get the money 

120 days in advance of their needs. 

Mr. PASCRELL. Which do you think is the best? 

Mr. JENKINS. I think that the basic thing is how the money is 

spent, as opposed to this. I think if you get it way far in advance, 

you give it all far in advance, you can have problems like there 

have been with other grants where they get it in advance and they 

bank it and they do not spend it for a long time. 

Mr. PASCRELL. Thank you. 

Thank you, Mr. Chairman. 

Mr. KING. Chairman Cox? 

Mr. COX. Thank you. 

I would just observe that it may be that we would have a problem with localities not spending the money and banking it if we 

gave it to them up front. It is hard to imagine that it would be any 

more serious than the problem that we have right now where twothirds of the money that Congress has appropriated since fiscal 

year 2002 is not yet spent. The first responders are not seeing it. 

One of the four reasons that we have discovered for why this is 

happening is that the states are operating on a 100 percent reimbursement system. So if you are a locality, you must find your own 

money, go out and buy the stuff, and then get reimbursed and go 

through an application process and so on. That is a lot of menacing 

bureaucracy and red tape when the point is to try and get things 

to the front lines when they are needed. 

So I think we could surely deal with the problem of people banking the money. But the main thing we want to make sure of is that 

recipients plan for this money before they get it so that it does not 

arrive in somebody’s lap as if they have won the Publisher’s Clearinghouse sweepstakes and think, now how do I spend this money. 

We have too much of that. 

I want to focus on something, while we have this expertise at the 

table, that has not been mentioned much thus far. That is, although it has been alluded to in several of your comments, the importance of cooperation among jurisdictions. With UASI, the Urban 

Area Security Initiative, we are plunking money down in individual 

cities. We are not necessarily promoting regionalism. We are sitting 

right here in the middle of the national capital region. The Pentagon is not part of the District of Columbia. The Pentagon was attacked in the 9/11 events, yet we all recognize the Capitol or the 

White House might just as well have been hit by those airplanes. 

Thinking of the national capital region from a mutual aid standpoint clearly makes more sense than thinking of D.C. and it’s, 

strictly speaking, 500,000 people all by themselves. 
49

We do not really have a system right now in law that permits 

us to do that. I wonder if you could comment on the importance of 

regionalism and mutual aid, and ways that we can encourage that 

behavior so that we are not buying new fire trucks for every municipality, but rather to the extent we are buying equipment or 

training, we are sharing all of that. I would address that to each 

of the members of the panel. 

Mr. BERMAN. Sure. Mr. Chairman, I think one of the key tenets 

of DHS’ new preparedness plan is regional collaboration. It certainly makes a lot of sense to incorporate that in the way that 

planning is going to be structured. By starting with 15 threat scenarios, and then developing uniform task lists for not only what 

needs to be accomplished to respond to those kinds of scenarios, 

but what needs to happen at the federal, state and local levels, the 

process should produce a much clearer picture for those that need 

to plan to spend this money as to what their priorities are and 

what their roles are. 

A lot of the states that we visited in our report did have regionalized planning and centralized procurement, and those are among 

the best practices. But certainly there is a long way to go to actually work out the details following the preparedness plan. There is 

additional guidance coming out this month, and as we develop year 

by year, the states are going to have to, under this plan, redevelop 

their plans by October 2005 as a basis for the 2006 funding. So we 

should see a lot more regionalization built into those plans. 

Mr. COX. Mr. Jenkins? 

Mr. JENKINS. I think a couple of things here. One of the things 

is this, when we did our work on interoperability, stovepiping has 

been a traditional problem in that. One of the things that we found 

is that the grants, for example, for interoperability were inconsistent in encouraging regionalism. Some, they defined ‘‘regions’’ 

differently so that if you were complying with one grant, the region 

that you were, you could not comply with the other grant because 

the regions in the two grants were defined separately. 

So one of the things is making sure that the federal government 

in terms of its grant guidance is encouraging that and giving some 

flexibility in that, and not saying region A for this grant is this, 

and region A is a totally different jurisdiction for this grant over 

here. It creates lots of problems for them being able to match up 

grant monies and be able to take a look at the totality of what they 

are doing. 

As Mr. Berman said, the scenarios are designed to try to focus 

looking at regional capacity. It is very important as well that the 

grants focus on the capabilities that you need and you need to have 

versus capabilities that you need to have access to. Those are not 

necessarily the same thing. For example, it is very important not 

only to consider regional, but for example to look at where are the 

other kinds of assets that I can draw on, like the National Guard 

civil assistance teams. What can I draw on them and what can I 

get from them? 

So it is not only just regional. In many instances, as here in the 

District as you know, the regions cross state lines and so there 

needs to be encouragement to work across state lines, to find regions across state lines in areas like Kansas City, Philadelphia, 
50

New Jersey, Cincinnati, et cetera. They do not fit neatly into state 

lines and there needs to be encouragement to do that. 

The plans need to show and the accountability needs to show 

when you are reporting on it how it is that what you are doing is 

going to enhance regional capacity, as opposed to the capacity of 

my individual jurisdiction. So it has to be built into the accountability structure and reporting structure as well. 

Mr. COX. Dr. de Rugy? 

Ms. DE RUGY. I think it is a very important question and it goes 

to the core of the way we are spending the money right now. It 

seems that the role of the federal government in helping state and 

local governments should be to help them create this true national 

preparedness system. When you look at the way things are done, 

it really seems that by designing a system where each state has an 

incentive to buy decontamination units or everything to protect 

itself against absolutely everything, without regard to whether a 

neighbor state already has all those things, or a neighboring town 

or what have you, goes to the core of the ineffectiveness of the system. 

What we need the federal government to do instead, and what 

DHS should have bee doing, is for instance it seems that to have 

this true national system, we need DHS to set standards, for instance, for communications systems. Right now, the way things are 

done is just exactly the opposite. States have an incentive to buy 

whatever radios they want, and they end up with radios that are 

not compatible within a given state or even with other states. 

So I think really the best way to use federal dollars to enhance 

states’s preparedness is to put our money in creating this national 

system. It would be to enhance communication and to have standards that are the same for all, and that then we could use. Because 

what matters is not so much of everyone having a decontamination 

unit or is full-blown prepared for everything, but we know where 

to get the information. I think right now this is not done. 

Mr. KING. The gentlelady from California, Ms. Sanchez. 

Ms. SANCHEZ. Thank you, Chairman King. 

Thank you all for being before us today. 

I really in the last few years have been visiting a lot of my law 

enforcement people and my fire emergency units, and also our hospitals. I think our hospitals are an area where people have not 

really concentrated on them as being first responders. But for example, I have a nuclear power plant 20 miles away from me, and 

the port of Long Beach–Los Angeles 20 minutes away from me; 

Disneyland in my backyard, or maybe I am in their backyard. I am 

not sure. 

I always worry about if there is a major incident to what will 

happen to our hospitals. So I think there is a whole array of first 

responders that we really need to deal with. But in speaking to 

many of them, and I happen to have large law enforcement agencies, for example, you know, 600 sworn officers, 800 sworn officers, 

pretty large groups. They still say that they are not receiving their 

monies in a timely way, part of it because they have to spent it up 

front, and part of it because it is just not coming down from the 

state. 
51

So I guess, Dr. Jenkins, do you really believe that the money is 

flowing better right now? What do you think the lag time is? Because, especially for example, two of my major cities got Urban 

Area Security Initiative monies announced. They actually flew out 

and had a big press conference, announced $14 million and $12 

million respectively. We have not see a lot of that money yet and 

that was done over a year ago. 

So what do you see? What do you think the lag time is? 

Mr. JENKINS. Well, it depends. The thing to understand is, there 

are two things. One is simply announcing the money and allocating 

the money. That is the first step, so that you know how much you 

are going to have. They have changed to where you do not have to, 

it used to be that before you could use the money, you could have 

the money, that you had to have a detailed spending plan, what 

equipment you were going to buy with it and so forth and so on. 

Now, ODP allows you to begin planning on how you are going to 

spend that money without having all that documentation up front. 

But I know in many instances in California, I do not know about 

your particular district, but when we did look in California that a 

lot of the hold up is not from the state. It is from the localities. 

That is, the city council has to agree that they are going to take 

the money. 

Ms. SANCHEZ. That I will tell you is not the problem in Anaheim 

or Santa Ana. We are very sophisticated. We have councils that 

meet at least once a week, very staffed-up cities. I mean, this is 

not about we do not know what we are doing or it has taken a 

month before we meet the next time. These are very sophisticated 

cities. 

Mr. JENKINS. Then the other thing has to do with what your plan 

is for spending the money and how you are going to spend it, 

whether or not there is a requirement locally that in order to be 

able to purchase something that you have to have the money inhand first. That was one of the reasons for the change in 2005. 

Some people were saying, well, we have to borrow from Peter to 

pay Paul in order to do this because of our local requirements; we 

cannot wait for the reimbursement; we have to have the cash in 

hand under local regulations before we can actually purchase this. 

So that is one of the other things that has created a problem. 

It depends very much, I think, when you understand specific 

things, as to how the government structure works within a state 

and how they are structured to do it. In Massachusetts, for example, it is a much more centralized process than it is in California. 

It comes down through the counties in California. So you really, in 

order to know what is going on and why there is a holdup, you 

have to really understand the particular governance structure in 

that particular locality, what the requirements are, what it is that 

they have to do in order to use the money; what strings, if any, 

states have placed on it, and that is an evolving thing. It is not the 

same from year to year. States have been changing how they have 

managed the money, what kind of requirements that they are putting on it as it goes down. 

So it is very difficult for me to say specifically what is going on 

in your area, but I do know that there are three things that we 

have found that you have to look at. One is what the grant guid-
52

ance says. One is what is required before you can start using the 

money, actually starting making purchasing decisions, whatever. 

And the other is the whole procurement process in terms of whether or not you need competitive bids and so forth and so on, and how 

that procurement process works. 

Ms. SANCHEZ. What do you think about disbursing some of the 

funds directly to the agencies and not going through the state 

structures, particularly in a place like California where we are 

under mutual aid agreements; we do have standards for our operating equipment that goes across. We work with each other if there 

is a major disaster. Orange County falls under Sheriff Baca, for example, of Los Angeles. We have a very known, and we practice who 

reports to what and how we do it. What about when you have sophisticated agencies like that, why are we passing the money 

through the state when we have a plan? We have a plan that is 

on an annual basis reviewed by the state. We have these mutual 

aid agreements. Why the holdup in sending it to the state? 

Mr. JENKINS. Well, the basic theory behind giving it to the 

states, rightly or wrongly, the basic theory behind giving it to the 

states is that the states are the grantees and the localities are not 

the grantees. It is the states that have to report to ODP. The states 

are the legal grantees, not the localities. The localities are subgrantees under this program. The states, then, are the ones that 

are accountable ultimately for the use of the funds in terms of 

whether or not they are being spent in accordance with state plans 

and so forth and so on. So that is the reason that they are sending 

through the states. 

It is certainly a lot easier for ODP to deal with 50 grantees plus 

the localities, plus the territories and the districts, than it is to 

deal with thousands, just from an administrative standpoint, from 

their perspective. 

Ms. SANCHEZ. Okay, thank you. 

Mr. Berman, do you have anything to say? 

Mr. BERMAN. I think one thing to keep in mind, too, in addition 

to what Dr. Jenkins said, this program started at a point, and I 

am not speaking specifically about California, but when many 

states and the homeland security organizations in those states, 

were simply not prepared to handle this amount of money in this 

period of time. I guess the good news is some states actually slowed 

down enough to try to spend it the right way, but over time the 

individual states, through the best practices of other states, I believe will be improving significantly, even under the current rules, 

in how fast they are able to use this money. 

The second point, and again I cannot speak specifically to California, although we did just recently visit there to look at how the 

funds are actually being spent at the state and local level, not all 

of these state plans are what we consider adequate. Based on the 

early rules under which these plans were developed, it was kind of 

a bottoms-up approach. The individual plans from the localities 

that rolled up into the state plans were, as I said before, in many 

cases wish lists, rather than vulnerability studies. They came in 

with lists of projects and equipment for hundreds of millions of dollars for small communities, which simply was not realistic. 
53

So again, those plans are all going to have to be re-worked now 

that the new guidelines will be coming out, and again all of the 

states are going to have to revamp their plans at the end of fiscal 

year 2005 for use in 2006. So hopefully a lot of this will change. 

The states and localities will have a better idea of how they fit in. 

Obviously not every county and not every locality needs the same 

equipment. To the extent that better regionalized plans come in, 

hopefully by that time additional efforts can be made to speed up 

the flow because you have a better idea of how the money is being 

spent. You will have a better assurance that it will be spent in accordance with the national guidelines. 

But I think until that happens, until you have those clear goals 

throughout the nation, that it would be risky to simply send the 

money directly to the localities or directly to the first responders 

without some better idea of how it is all being spent. 

Ms. SANCHEZ. Thank you, Mr. Chairman. 

I just wanted to add for the record that at least the major law 

enforcement agencies in my area, and up in Los Angeles County 

also, are still saying that even though they have been promised the 

money, they have not seen the money. So the pipeline problem still 

exists from our standpoint. 

Mr. KING. I thank the gentlelady for questioning and for the 

comments. 

The gentleman from Alabama, Mr. Rogers. 

Mr. ROGERS. Thank you, Mr. Chairman. 

I represent a rural district in Alabama, a state where agriculture 

is far and away the number one industry. Each of you advocated 

pretty enthusiastically moving away from this grant structure to a 

risk-based distribution formula. When you think about my constituency in my state, what words of reassurance would each of you 

offer the state and local leaders in Alabama that they will be treated not so much equitably, but in a reasonable and fair way under 

this new funding formula? I would start with Mr. Berman. 

Mr. BERMAN. It is hard to predict exactly how all of the details 

will work out, but one of the things that the new preparedness goal 

envisions is that when you get down to specific scenarios or specific 

vulnerabilities, one of those is agriculture. It may well be that the 

localities, the local units, will get a higher distribution of funds to 

protect against various agriculture scenarios, whether it is contamination of crops or livestock or what have you, as opposed to 

some of the kinds of specific equipment needs that the urban areas 

have. 

Again, until the guidelines have gone all the way through and 

the new plans are sent in and approved, it is hard to say specifically, but at least that is the concept. 

Mr. ROGERS. Dr. Jenkins? 

Mr. JENKINS. As Mr. Berman said, I think of the 15 scenarios, 

2 are agricultural events, that affect agriculture in one way or another. And so they are, as he said, part of that will then meet much 

of the capabilities that are required in order to be able to deal with 

the consequences of such an event. 

The other things is in terms of just the risk management, what 

you are trying to do, I mean it is not a sense of encouragement, 

I guess, to your constituents, but what you try to do is think what 
54

is the probability that there will be this adverse event and then 

what are the consequences of that adverse event. You know, how 

extensive, how bad are they? What is the depth of the consequences, the geographic range, et cetera. One of these scenarios 

is looking at basically poisoning our food supply while it is still in 

the fields. Then what do localities need in order to be able to deal 

with that? In that sense, clearly localities in rural areas are going 

to need certain capacities because they are going to be the first 

ones on the scene. You are not going to have somebody coming in 

from Chicago to try to deal with the wheat down-state. 

The other thing they are trying to do is look at, and this would 

affect different areas based on population and other things, they 

are trying to tier these capabilities. That is, that not everybody 

needs the same, depending on what you are dealing with, so that 

the intensity of, say, for example the capabilities to deal with something in agriculture would be very different than it would be if you 

are trying to deal with something that is an urban event. So they 

are trying to look at what is it that those people in that neighborhood and that area actually need? What are the baseline capabilities that they need in order to be able to do that? And then what 

do they also need to be able to draw on? 

So I think one of the things is to really, as they play this out, 

the guidance that is going to come out on how to do this, supposedly at the end of the month, is to really look at these agricultural scenarios and what are the capabilities that they are saying 

are needed for that, and how is it that they say that state and local 

first responders need to be able to start getting ready for that; 

what are the capabilities that they need. 

Ms. DE RUGY. Again, it is not clear that, first, your state would 

be getting some money because there are still minimum guarantees 

for each state. And it is not clear at all that your state would not 

be getting as much money as it is getting right now, depending on 

how the details work out. 

One of the things I would advise everyone to think about is really to start thinking seriously about what actually is the probability 

of horrible events to happen. It is very hard, and again I could not 

be the person putting this number on each event for each state for 

each locality, but I actually have the feeling that there is a terrorist threat, that we are letting terrorist win in a sense if we 

think that everything is likely to happen with the same probability 

and is going to create the same amount of damage. 

I think we need to think calmly about it, and that is what this 

management is about, about the likelihood of a given event to happen in a given place. I think once we do that, I think we will all 

feel much better if we do not have the sense that it is extremely 

likely that the worst possible thing is going to happen to us at any 

moment. So I think this is the way to look at things. Again, it is 

not clear to me that your state would be a big loser, depending on 

how the details evolve. 

Mr. ROGERS. Thank you very much. 

Thank you, Mr. Chairman. 

Mr. KING. The gentleman from New Mexico. 

Mr. PEARCE. Thank you, Mr. Chairman. 
55

Mr. Berman, as we talk about accountability, if the department 

were to have all the funds expended to date, does the department 

have a clear understanding of what objectives they would really 

like to see in place across the nation? 

Mr. BERMAN. Unfortunately, that has been the biggest weakness 

in the program so far. The goals so far are very broad. By the time 

they get down to the local level, as you see some of these reports 

in the paper, everybody has their own idea of how different expenditures relate to homeland security. 

Mr. PEARCE. Do you find the department doing something to rectify that? 

Mr. BERMAN. About the only thing the department can do at this 

point is look to the future. Each year, the guidelines change. They 

get a little tighter each year, but a lot of these expenditures that 

are being reported in the paper now I would guess came out in 

the2002 program. 

Mr. PEARCE. So you would say that even though the funds are 

not expended, that it is too late to do anything, that it would be 

impossible to go back and say, with all due respect, we should have 

probably quantified this a little bit better. Those funds that have 

not been taken now need to fall under this criteria. Is the department not proactive at all on that? 

Mr. BERMAN. I do not think that. If anything, right now they 

seem to be sticking to even more than we would like to see, that 

the rules for each year—. 

Mr. PEARCE. We are going to spend money. Let’s go ahead and 

spend it faster. Is that—. 

Mr. BERMAN. It is not so much expenditure. Again, the money at 

this point has been granted to the states. 

Mr. PEARCE. I am sorry, but what I am hearing today is not very 

reassuring that we are spending it wisely. So there is no attempt 

to interdict and say, you know, we have wasted a certain number 

of billions so far, we should probably avoid that. The department 

does not have that kind of a mindset? 

Mr. BERMAN. The department is certainly working with the 

states as best they can. But to the extent that money has already 

been committed, though, to the local governments, I have not seen 

any effort to overturn those. 

Mr. PEARCE. Thank you, if I could move on. 

Dr. Jenkins, as you went through your study, do you find any 

mechanism to identify poor performers, the individuals who poorly 

oversee the spending of taxpayer dollars? In other words, we get 

report cards in junior high and high school. Those report cards followed some to college. It seems like many times the same people 

who misallocate or do not oversee properly $200 million get to not 

oversee that properly again. Is there a reporting mechanism that 

you find anywhere in this whole grants procedure? 

Mr. JENKINS. Part of the issue, as Mr. Berman said, is that you 

do not even know what the states have committed. In other words, 

the only data that ODP has is outlay data, cash out the door, on 

with the draw-down. They really do not have and do not collect 

consistent data on what states have actually committed to spend. 

That is the first thing. In other things, when you are trying to look 

at how the money is being spent, you really do not have a good idea 
56

of how they plan to spend the money because you do not have a 

good idea of those obligations that they have entered into, the commitments that they have really made. 

The principal mechanism for assuring accountability is two 

things. One is looking at the state homeland security plans and 

plans to spend the money in relation to that. The other are these 

monitoring visits that, as Mr. Berman pointed out, that they did 

not complete. They need people to complete that were not doing it. 

Well, and so those monitoring visits are very important, though, in 

terms of on-site monitoring visits. If you are really going to look at 

how the money is being spent and how it has been used, it is very 

important to do that. They have had a difficult time doing that due 

to personnel turnover, a lack of people and so forth. So I would say, 

to date, that it has been a very, very mixed bag in terms of their 

accountability. 

Mr. PEARCE. I appreciate that. 

If we find that states do not have an emergency preparedness 

plan or any reaction plan, does that somehow penalize them in the 

process? Or do they simply still get the same treatment as other 

states? Because I do not think many states, frankly, have a clear 

idea of what they are trying to accomplish. 

Mr. JENKINS. There is a difference in this grant process between, 

say, the statewide emergency management plan and a homeland 

security strategy. They are not really held accountable for having 

a emergency management plan statewide, just what their state 

homeland security plan is. As Mr. Berman pointed out, some of 

these are very broad, very vague, and you can do an awful lot and 

still say I am in compliance with it. 

Mr. PEARCE. Mr. Chairman, I would just close with the request 

that we consider some sort of accountability on the part of the 

states to develop these plans. I would also like to see us try to identify poor performing individuals in the oversight of spending dollars 

and poor-performing regions so that there is a penalty if they misused public funds. The stories yesterday in The Washington Post, 

this was more border issues, but it comes back to the same thing. 

Those are distressing when we see hundreds of millions of dollars 

squandered, and probably without substantive effect. 

Thank you, Mr. Chairman. 

Mr. KING. Thank you, Mr. Pearce. Obviously, the point you raise 

is very well taken. I think the legislation attempts to address some 

of that, but possibly a subsequent hearing could be used for that 

purpose. 

The gentleman from North Carolina? 

Mr. ETHERIDGE. Thank you, Mr. Chairman. 

Let me thank our panelists for being here. The question I have 

is somewhat general, and then I will get a little bit more specific 

if my time does not run out. 

When we talk about this, we are talking about security protection of our country. Having come from a state, and we will hear 

from our Secretary of our Department of Crime in our state who 

will be here, and who I does I think an excellent job in North Carolina, in a few minutes, but it does not matter if you are a citizen 

whether you are hit by a natural disaster or a man-made disaster. 

The results are the same. 
57

Do we agree on that? It makes no difference? 

Mr. JENKINS. Right. 

Mr. ETHERIDGE. So I think sometimes we get caught up in the 

accountability of funds going out for a man-made disaster, when it 

is easy to find fault unless you are the one in that hurricane that 

comes in at 100 miles an hour or a tornado or flood. And we zero 

in on a man-made, and as a matter of fact, one of these affects hundreds of thousands, and it is multistate in some cases. Certainly for 

North Carolina, we get hit about every time one comes out of the 

Caribbean. 

My question is this, though, what role should the federal government play in assisting states in, number one, preparing for natural 

disasters, which we can guarantee will affect this country for sure 

and have for many years, in preparation and response to a hurricane or tornadoes that have now been hitting parts of the country, 

which affect many times not just one state, but multiple states. Is 

this solely a state responsibility? 

Mr. BERMAN. No, sir, not at all. 

Mr. ETHERIDGE. Thank you. 

Dr. Jenkins? 

Mr. JENKINS. No. As a matter of fact in these 15 scenarios, one 

of those scenarios is a hurricane. 

Ms. DE RUGY. It is mainly a state responsibility, but it does not 

mean that the federal government cannot come through a mechanism like FEMA, like we have done with FEMA, and come and 

help when such a disaster occurs. 

Mr. ETHERIDGE. Then you are saying that the federal government’s response to the past to hurricanes like hit in Florida and 

in North Carolina and in Texas and the Midwest, that it is a state 

responsibility when it is so overwhelming that it would destroy the 

economy of those states? 

Ms. DE RUGY. You are talking about preparedness. 

Mr. ETHERIDGE. That is part of the preparedness. 

Ms. DE RUGY. I think each state should prepare for, if North 

Carolina is hit systematically with hurricanes, which is the case, 

and it is really sad, the state should prepare for the occurrence of 

these events as best as possible to protect their constituents. However, it does not mean that there is no role for the federal government to come and help. 

Mr. ETHERIDGE. You and I are going to disagree on that, simply 

because if you have a state in the Midwest that is not hit, I think 

that is a joint issue between the federal, state and local, in all 

these states and along the borders. The same thing with tornadoes. 

Thank you. 

Next question, can you suggest a division or percentage of resources that the federal government might supply for preparation 

and then for response, which is an entirely different issue. Preparation is getting ready; the other becomes a response issue, whether 

it be minor or catastrophic like we had in Florida. 

Mr. BERMAN. I could not suggest a particular percentage at this 

point. 

Mr. JENKINS. I could not either. 

Ms. DE RUGY. I could not either, but I think the majority should 

be trying to prevent bad things from happening. 
58

Mr. ETHERIDGE. Okay. In your testimony, Ms. de Rugy, you advocate federal investments in what you call intelligence gathering. 

Since this is a public bill that benefits all citizens, I think we can 

agree on that, however, you go on to state that the protection of 

private property such as personal residences, should be left to individuals because it is not a public good. 

Ms. DE RUGY. Yes. 

Mr. ETHERIDGE. Let me follow that a bit when I ask this question, because I think I want to get this on the record. When the 

terrorists hit New York and Washington, not all those facilities 

were public facilities. Are you saying that the federal government 

should not have invested dollars in helping to get the economy 

going again, because those were private businesses, in some cases 

private homes and residences? 

Ms. DE RUGY. My point is that while deciding where to spend our 

federal dollars, we have to look at where it is the most efficient. 

The best use of our federal dollars is intelligence and not in protecting private homes. It does not mean, besides I mean, I could get 

back to you on that with literature about the fact that the insurance industry is actually very well equipped to answer these type 

of events at the private level. 

So my point is really when prior to an event, we have to be 

thinking about where our money will be the best used. When you 

think about the range of horrible things that could happen, we 

could always find that it would be nice for the federal government 

to intervene absolutely everywhere. It would be nice, but it is not 

the most effective way to do things. That was my point. 

Mr. ETHERIDGE. I would appreciate seeing your material. 

Ms. DE RUGY. I will definitely. 

Mr. ETHERIDGE. I have another question, but I assume my time 

is out. There are certain situations, I think, that your hypothesis 

does not work. I do not think when it comes to public schools, as 

an example, which I have some issues on, but Mr. Chairman, I 

think the time has expired and I will yield back. 

Mr. KING. The gentleman from Texas? 

Mr. MCCAUL. Thank you, Mr. Chairman. 

I, too, am an original cosponsor of the Cox–Thompson bill. I 

think it is long overdue, when you get states like Texas, that I am 

from, and California and New York, ranking almost dead last per 

capita in terms of dollars spent. In my work in the Justice Department, I actually saw, in my view, a lot of wasteful spending. It supplanted local budgets, and I do not think the money was really 

making us more prepared from a terrorist attack. 

There are a lot of resources for risk assessments out there. I 

know the FBI in each of their divisions has a risk assessment. The 

National Infrastructure Protection Center has basically broken 

down the private industry into sectors for critical infrastructure 

protection purposes. You mentioned the insurance companies. I 

think that is a great idea, from the private sectors. The border, in 

my view, is a tremendous risk, in my state and all of the southwest 

border states, when you have about three million people estimated 

crossing per year, and the threat that that poses in terms of a terrorist sneaking into our country. 
59

My question is really very fundamental. That is, how are we 

going to draw on all these risk assessments out there? How are we 

going to help the states use these resources out there? What is 

DHS going to do? How is DHS going to score or rank, if you will, 

these risk assessments for each state? 

Mr. BERMAN. Again, the process is evolving. There are a lot of 

ways to assess risk. I think the way that the department is going 

at it with this preparedness goal seems like a very solid beginning 

and would allow some reasonable decisions to be made. It allows 

for various scenarios. It allows each area, whether it is the border 

or elsewhere, to be addressed individually in a partnership between 

the federal government, state, local and private, in terms of how 

that region or how that state would actually respond or should respond, what capabilities are needed to respond to various scenarios. 

In the port area of Houston, for example, an attack there or a 

major disruption of that size port would have consequences 

throughout the United States. The ripple effects for a major port 

being pulled out of service would back up ships throughout the 

world in some cases. So those are the kinds of scenarios that have 

to be looked at, and then plans made. 

Again, the devil is in the details in this one. We have a long way 

to go. 

Mr. MCCAUL. So you are still formulating that process? 

Mr. BERMAN. Yes. 

Mr. MCCAUL. At DHS, will there be like a board to review? How 

is that going to work in DHS? 

Mr. BERMAN. Again, the individual plans by the states have to 

be resubmitted in October. Those will be going into the Office of 

State and Local Coordination and Funding submitted with the 

President’s budget in 2006. So that group would be evaluating 

those plans and then making distribution for 2006 based on those 

plans. 

Mr. MCCAUL. Okay. Well, I think we are moving in the right direction. I wonder if I could ask Dr. de Rugy on the intelligence 

issue. I believe that is the best prevention we have. If we can act 

on correct and accurate intelligence, we can stop an attack from 

happening. What type of investments did you propose or advocate 

for intelligence? 

Ms. DE RUGY. To go back very quickly to your previous question, 

I think running the risk of being redundant, I think one of the 

ways to facilitate knowing what we should do is again to try to 

think which player should be in charge of what, and then let them 

be in charge of the things that they are the best equipped for. And 

also then, they could see where they should get the information, 

where is the best information for them. 

I also would like to direct your attention to the Insurance Service 

Office, which is a private company that serves the insurance industry by maintaining data on risks of all kinds, ran a study in 2003 

and they used CIA data and FBI and they made a list of which cities were most at risk, were most likely to be targeted; which terrorist risks were the most likely. I could get back to you and send 

it to you, because I think the private sector and the insurance com-
60

panies were really well equipped to do that. That is their job and 

it could actually really help in this process. 

As for where we should invest in intelligence, again I am not a 

security expert. My assessment about the importance of intelligence is really based on the notion of tradeoff and cost-benefit 

analysis. It really seems that basically we will get the biggest bang 

for our buck by preventing bad things from happening to us, instead of spending a lot of money on cleaning up the mess once the 

attack has been successful. 

As such, I drew the conclusion that intelligence was so important. And as such, I drew the conclusion that to the extent that the 

federal government is helping state and local governments to be 

prepared for attack, we need to create a system that is not directed 

at building a maximum capacity in each single state, but more one 

where there would be collaboration and communication and something that would enhance intelligence and cooperation before 

things happen, rather than after things happen. 

This is the extent of my expertise on the topic, and you could 

find a lot of your true experts who could I am sure talk more about 

it. But I think we really, really must think about where our money 

will get us the best return. This is the most important thing to do, 

because if we stretch ourselves too thin, we are not going to be able 

to accomplish anything. It seems like if we do not want to suffer, 

we have to adopt all the mechanisms that prevent bad things from 

happening to us. 

Mr. MCCAUL. I know that joint terrorism task forces are a good, 

somewhat effective at intelligence sharing. Perhaps we should invest more in those as well, but I see my time has expired. 

Mr. KING. I thank the gentleman. 

Speaking of true experts on intelligence, the Chairman of the 

Subcommittee on Intelligence, the gentleman from Connecticut, 

Mr. Simmons? 

Mr. SIMMONS. I thank the gentleman. 

I appreciate very much the conversation that we have had this 

afternoon. I support the Chairman and the Ranking Member’s bill. 

I think it is a step in the right direction. I think it is important 

to prioritize our spending based on risk. It seems like the smart 

thing to do. I am reminded that the goal of this funding is to prevent, to prepare for and respond to and/or mitigate threatened or 

actual attacks. So two of the four precede the event. One is prevention; one is preparation for it. The other two are responding to and 

mitigating. They sort of come after the fact. 

I am reminded that when we do risk assessment and we try to 

apply dollars to the risk, that the French after World War I were 

correct in assessing Germany as a risk and they built the Maginot 

Line, which is the most complete and expensive and formidable defense system I think every created, with the possible exception of 

the Great Wall of China. But the Germans were able to defeat it 

with soldiers on bicycles. They went around. One could ask, well 

maybe instead of investing all of those dollars in fortifications in 

depth, maybe they should have spent half as much on the fortifications and then the other half on flexible forces that could move to 

fill the gaps. 
61

So just because we identify the risk does not mean that we have 

the key to the funding solution. I guess that is what we are really 

trying to figure out here today. Do we put the money into guards 

and gates? Do we put it into things that can be used both for intelligence and early warning purposes and after the fact, such as communications? Communications have multiple uses. Do we hold 

some of the money in reserve as an emergency fund? Should that 

be done at the state level or the federal level? The fact that some 

of the money has not been spent does not bother me as much as 

if it was spent, but for the wrong things. 

You know, I suspect that some of it is not being spent because 

there is uncertainty about the best way to deal with it. So I think 

this legislation is terrific. It is a step in the right direction, but I 

think that we as members of Congress have to continue to work 

with the Department of Homeland Security to refine and define 

how these expenditures are made so that we are properly investing 

the people’s dollars. 

I would ask if any of the panelists wish to respond to those comments. I would also recognize Mr. Berman as a graduate of the 

University of Connecticut. 

Mr. BERMAN. Yes, sir. 

Mr. SIMMONS. Go Huskies. 

[Laughter.] 

That is a resource we have to preserve and protect. 

[Laughter.] 

Mr. KING. The gentleman needs to control his enthusiasm and 

focus on the agenda. 

[Laughter.] 

Mr. BERMAN. I certainly agree with all of your remarks. Again, 

one of the things that the new preparedness plan also does is identify some specific priorities for the short term, one of which is the 

interoperable communications. That is, as we learned in New York, 

a key element of immediate communications and immediate intelligence about what is going on. It is also an extremely complex 

problem. It involves more than simply buying all the same radios 

for people. At some point, in the longer term, the Federal Communications Commission really needs to reallocate some of the band 

widths so that the interoperable communications can operate on a 

broader scale, but that is a long-term goal and certainly one that 

needs to be worked on. 

Mr. SIMMONS. I agree. 

Mr. JENKINS. I certainly agree about interoperable communications, and there are certainly it concerns us a little bit that there 

is a rush, or has been in some instances, a rush to buy equipment 

without a plan for how to actually use it, because the equipment 

that you buy and the kind of equipment that you need is not the 

first step, it is the last step. The first step is what am I going to 

do with it. What is the incident command structure going to be 

used. What kind of information do I need to share. When do I need 

to share it, under what circumstances, with whom, et cetera. And 

is it data-voice pictures? What is it? And that has a lot to do with 

what kind of equipment that you want and how you want to spend 

it, but there has sort of been this rush to go out and buy the equip-
62

ment without necessarily a good clear plan of how you are going 

to use it. 

I think the dilemma that you point out is a very important one. 

That is, obviously to the extent that one could, it is always better 

to prevent something than have to deal with it after it occurs. The 

difficulty that you have, of course, is imperfect information, and 

sometimes very odd information. For example, if you are trying to 

figure out what is at risk, where should the risks be just in terms 

of what the infrastructure is, we do not have a good inventory of 

infrastructure in this country. We just did a report on chemical and 

water sectors. There is not a real good figure on how many chemical facilities there are in this country. DHS thinks about 4,000; 

1,100 of those belong to two organizations, ACC and SOCMA and 

they have their own code, but we do not know how many others 

do or do not do things that they do. 

The other thing I think that is difficult in terms of even spending 

the money on prevention is simply something else that we found 

in this same work, and that is that the longer you go without something happening, the lesser vigilance is. One of the problems that 

water companies have, for example, is getting people to take seriously the fact that they ought to lock the doors to the pump houses 

when they leave them, or use the cards that they have, because 

nothing has happened, nothing is going to happen, and it is a pain 

in the neck to do it. 

So you have so many different variables that go into what you 

can do to prevent, and it is very difficult to figure out what proportion of resources you should use for that versus the other. There 

is a saying that you have heard many times, is that terrorists only 

have to succeed once. We have to be right every time. 

Ms. DE RUGY. I really appreciate your comment, maybe because 

of my sad heritage. I totally agree with you. I think one of the real 

difficulties about homeland security is the fact that even if we were 

to invest our entire budget in security spending, we would never 

be guaranteed never to be attacked again because we cannot envision every possible attack scenario or every possible move terrorists 

are going to make. 

Your point about the Maginot Line is a good one. One of my concerns about the way we are doing things right now is that it seems 

like we are trying to turn every single state, every port into a little 

Maginot Line. This has a horrendous cost, and on top of that, it 

does not guarantee us full security. So again, it seems that this is 

not how we are going to get the highest return on our money and 

we should do something else. 

Not doing anything is, of course, not the answer, and how much 

to do is, again, to be left to experts. But certainly, doing the Maginot Line is not the way to go. Port security, unfortunately, is kind 

of taking this way. We are trying to use limited resources to try 

to turn every port into a Maginot Line because there would be real 

consequences to terrorist attacks on one of our ports. Again, that 

is why I think a better use of the money would be to try to invest 

in intelligence, trying to prevent bad things from happening in our 

ports. 

To that effect, I have been kind of thinking about the Coast 

Guard and try to investigate what their functions are. It seems 
63

that a lot of their missions would be consistent with trying to prevent bad things from happening in our ports. And so I think we 

should make sure that some of their programs are well funded. 

Mr. SIMMONS. Thank you. 

Thank you, Mr. Chairman, a very good hearing. 

Mr. KING. Mr. Simmons, I do hope that you retract your statement about your parochial interests in Connecticut—. 

[Laughter.] 

I want to thank the panel very much for the testimony. It was 

a privilege having you here today. You provided tremendous input 

and the panelists are excused. Thank you very much. 

I call up the second panel. I would like to welcome our second 

panel, and thank them for their patience. 

First we have the Honorable Brian Beatty, Secretary for the Department of Crime Control and Public Safety from Mr. Etheridge’s 

State of North Carolina; Mr. Michael Chapman, Director of the 

Missouri Office of Homeland Security; and Mr. David Miller, the 

Administrator of the Iowa Homeland Security and Emergency 

Management Division. 

We will begin with Mr. Beatty. 

STATEMENT OF THE HONORABLE BRYAN E. BEATTY, 

SECRETARY, NORTH CAROLINA DEPARTMENT OF CRIME 

CONTROL AND PUBLIC SAFETY 

Mr. BEATTY. Thank you, Chairman King, Ranking Member 

Pascrell, distinguished members of the subcommittee. I appreciate 

the opportunity to testify today. 

North Carolina is the nation’s 11th largest state, with a population of approximately 8.5 million. But North Carolina is next-tolast in combined per capita homeland security funding for 2005. 

That does not mean that North Carolina does not have terrorists 

who have lived there, and it does not mean that North Carolina 

lacks potential terrorist targets. 

According to the 9/11 Commission report, the principal architect 

of the Al Qaida attacks was Khalid Sheikh Mohammed. He attended Chowan College near the Outer Banks of North Carolina 

and also North Carolina A&T State University in Greensboro. He 

learned about American life while living in North Carolina. 

Also, 3 years ago a group of Middle Eastern immigrants who entered the country fraudulently, were convicted in federal court in 

Charlotte, North Carolina in connection with a cigarette smuggling 

operation that was used to provide money to Hezbollah in Lebanon. 

And just last summer, an illegal Middle Eastern immigrant taking 

video footage of the Bank of America headquarters was apprehended by Charlotte police officers. 

Globally, terrorists have attacked military barracks in Beirut, 

embassies in Kenya and Tanzania, a Navy ship in Yemen, hotels 

and banks in North Africa and the Middle East and a train station 

in Madrid. I cite these examples because North Carolina is home 

to Fort Bragg, Camp Lejeune, Pope and Seymour Johnson Air 

Force Bases and Cherry Point Marine Air Station. The city of 

Charlotte is the nation’s second-largest banking center. We have 

three nuclear power plants within 20 miles of our largest cities, 

each of which have over 500,000 people. 
64

Our state has professional sports teams and major college athletics programs, with stadiums and coliseums seating tens of thousands. We have internationally renowned research centers, east 

coast highways and railways critical to the country’s transportation 

infrastructure, plus two deepwater ports. Our swine and poultry industries are among the nation’s largest, and the injection of footand-mouth disease or avian influenza would have disastrous economic consequences for the national economy. 

I would like to see funds distributed with more regard to the nature of the threat and the nature of the targets. Although our state 

is next to last in funding, I cannot believe that we are next to last 

in risk. 

After the attacks of 9/11, North Carolina’s legislature was quick 

to act. In November 2001, the General Assembly appropriated approximately $2 million and authorized our Governor Mike Easley 

to access the state’s rainy-day fund to spend over $10 million to enhance our state’s hazardous materials response, medical assistance, 

urban search and rescue, and health laboratory capabilities to meet 

the immediate threats as we understood them. 

We also saw immediately that food security is a major issue. Our 

state has combined the resources of state agencies, academia and 

private industry to develop a national model for vulnerability assessment, mitigation, response and recovery for all facets of food 

production, processing and transportation. We have done this thus 

far without any direct federal assistance. 

Our principal natural threats are from hurricanes and floods, 

which come with fair warning and unfold over hours and days. Terrorism strikes in seconds and minutes. We knew we needed to improve our coordination. We allocated our 2002 and 2003 federal 

homeland security funds among our 100 counties, using a per capita formula so that a dozen or more agencies within each county 

had to come together and share information and cooperate to receive funds. 

With 2004 money, we allocated only half by the per capita formula and used a statewide competitive grant process for the other 

half. Our top priority for the competitive grants as determined by 

our State Emergency Response Commission, was interoperable 

radio communications. We had already developed a statewide voice 

interoperability plan for emergency responders, or VIPER for short. 

This system will allow all first responders to migrate onto a statemaintained digital 800 MHz system. The total cost to build the infrastructure for VIPER is estimated to be $188 million. That is 

without buying a single user device or radio. 

In 2005, we have become still more focused. This year, we are 

awarding all of the funds by competitive grant with an emphasis 

on multi-county regional plans. We believe that this is the next logical step in improving our multi-jurisdictional response. At least 

half of the 2005 money will go to interoperable communications 

projects on the VIPER system. In addition, Governor Mike Easley 

recommended biennium budget includes $33 million in state money 

to fund construction of network infrastructure. Even so, this is only 

a fraction of what will be needed to complete the system. 
65

Mr. Chairman, PLO terrorist George Habash said that terrorists 

see the world as filled with lions and sheep. Why go after the lions 

when there are so many sheep? 

I look forward to working with the members of this committee 

and Congress in the years and months to come to make sure that 

every state is the lion. 

Thank you, sir. 

[The statement of Mr. Beatty follows:]

PREPARED STATEMENT OF BRYAN E. BEATTY

Chairman King, Ranking Member Pascrell, Distinguished Members of the Subcommittee: thank you for the opportunity to testify today. 

Mr. Chairman: I have come to Washington to report to you on North Carolina’s 

experience in administering Homeland Security Funds, and on how we are using 

those funds to improve our ability to respond to terrorist threats.

Terrorist risks to North Carolina 

North Carolina is the nation’s eleventh largest state with a population of approximately eight and a half million people. To give you context, Georgia is 9th and New 

Jersey is 10th. But North Carolina is next to last in combined per capita homeland 

security funding for 2005 according to the Congressional Research Service. The reason for that primarily is that we don’t have a major metropolitan area. We have 

several smaller cities like Raleigh, Durham, Charlotte, Greensboro and WinstonSalem. 

That does not mean that North Carolina does not have terrorists who have lived 

here, and it does not mean that North Carolina lacks potential terrorist targets. 

As former Director of my State Bureau of Investigation I am familiar with many 

domestic terrorist threats in North Carolina dating back to the Oklahoma City 

bombing. Just last summer, an illegal Middle Eastern immigrant was apprehended 

by a Charlotte Police Officer taking video footage of the Bank of America headquarters. That suspect was recently convicted of lying to Federal Agents during 

their questioning. 

According to the 9/11 report, the ‘‘principal architect’’ of the al Qaeda attacks was 

Khalid Sheikh Mohammed. He came to the United States in 1983 and attended 

Chowan College near the Outer Banks of North Carolina. Later he transferred to 

North Carolina A & T University in Greensboro and earned a degree in Mechanical 

Engineering. He attended there with his nephew, brother to Ramzi Yousef. Al 

Qaeda operatives learned about American life while living in North Carolina. 

Three years ago a group of Middle Eastern immigrants who entered the country 

fraudulently were convicted in federal court in Charlotte in connection with a cigarette smuggling operation that was used to provide money to Hezbullah in Lebenon. 

We know that terrorists choose a variety of targets. Globally, terrorists have attacked military barracks in Beirut, embassies in Kenya and Tanzania, a ship in harbor in Yemen, hotels and banks in North Africa and the Middle East, and a train 

station in Madrid. 

I cite these examples because North Carolina is home to Fort Bragg, Camp 

Lejeune, Pope and Seymour Johnson Air Force Bases, and Cherry Point Marine Air 

Station. The City of Charlotte is the nation’s second largest banking center. We 

have three nuclear power plants within 20 miles of our largest cities, each within 

a population of over a half million people. Our state has three professional sports 

teams and many major college athletics programs. We have stadiums seating tens 

of thousands of spectators. We have chemical plants, fuel farms, and internationally 

renown research centers. East Coast highways and railways that are critical to the 

country’s transportation infrastructure run through the state. We have two deepwater ports. Our swine and poultry industries are among the nation’s largest, and 

the injection of foot-and-mouth disease or avian flu would have disastrous economic 

consequences for the national economy. 

I would like to see future funds distributed with more regard to the nature of the 

threat and the nature of the targets. Although we are next to last in funding, I cannot believe we are next to last in risk. So we’ve done the best we can with what 

we’ve got.

Uses of Federal First Responder Funds in North Carolina 

Preparing to respond to terror threats has been an ongoing education for all of 

us. North Carolina received Nunn-Lugar-Domenici funds for terrorism planning for 

Raleigh, Greensboro and Charlotte after 1998 and we have been considering the 
66

threats longer than that. But like everyone else, the urgency became far more real 

after 9/11 and the anthrax attacks which followed. As a state, Governor Easley and 

our legislature were quick to act and immediately in 2001 provided over $10 million 

to enhance our state hazardous materials response, medical assistance, urban 

search and rescue and health laboratory capabilities to meet the immediate threats 

as we understood them. 

I want you also to know that in North Carolina we are acutely aware of food and 

agriculture as part of the nation’s critical infrastructure. Our state has combined 

the resources of state agencies, academia, and industry to develop a national model 

for vulnerability assessment, mitigation, response and recovery for all facets of food 

production, processing and transportation. We have been coordinating closely with 

USDA, FDA and DHS both in developing plans and serving as a national pilot 

training site as we work to harden the food chain from attack. 

When federal money came in for 2002 and 2003, we faced a significant dilemma. 

North Carolina’s population is fairly evenly dispersed into a few medium-sized cities 

and hundreds of small towns and communities. Like many states, we have a couple 

of thousand first responder agencies, including local police, sheriffs, firefighters and 

emergency medical personnel. Each has its own governance structure and funding 

mechanism. This highly fragmented system works well for daily response needs but 

is difficult to coordinate in a mass-victim, multi-jurisdictional event. Our principal 

natural hazards are hurricanes and floods, so we normally can work through these 

problems because the event comes with fair warning and unfolds over hours and 

days. 

Terrorism strikes in seconds and minutes. We knew we needed to improve our coordination, and federal funds gave us an opportunity to begin. We allocated our 

2002 and 2003 funding among our 100 counties as the smallest unit to receive 

grants. This meant that a dozen or more agencies within each county had to come 

together and share information and cooperate to receive funds. Some counties had 

done this for years, some did it for the first time. We allowed them to establish their 

own priorities for using the funds, so long as all the jurisdictions were included and 

the spending plans met the federal guidelines. 

With 2004 money we changed, and allocated only half by per capita formula, and 

used a competitive grant process to award the other half. Our scorers included representatives from local emergency response agencies across the various disciplines. 

Our top priority for the competitive grants was for interoperable communications. 

We had already developed a statewide Voice Interoperability Plan for Emergency 

Responders, or VIPER for short. When the grants were scored, most of the grants 

went to VIPER projects. This system will allow all local first responders to migrate 

onto a state-maintained digital 800 MHz system. We made this choice after lengthy 

consultation with local government and first responders’ associations, and the associations agreed this should be the top priority for the first responder community. 

The total cost to build the infrastructure for VIPER is estimated to be $188 million. 

As you know the GAO, the 9/11 Commission and many other assessments note 

that lack of interoperable communications is one of our greatest weaknesses. The 

lack of it constrained the responses in New York, in Washington, and at the crash 

site in Pennsylvania. In North Carolina, building this system will allow us to coordinate and leverage our dispersed capabilities in a way that will be both effective, and 

cost-effective. 

In 2005 we have become still more focused. This year we are awarding all of the 

funds by competitive grant with an emphasis on multi-county, regional plans. We 

believe that this is the next logical step in improving our multi-jurisdictional response. 

At least half of the 2005 money will all go to interoperable communications 

projects on the VIPER system. In addition, Governor Mike Easley’s recommended 

budget includes $33 million in state money to fund construction of infrastructure for 

the radio network in the upcoming biennium. Even so, this is still only a fraction 

of what is needed to complete the system. 

PLO Terrorist George Habash said that ‘‘terrorists see the world as full of lions 

and sheep. Why go after the lions when there are so many sheep.’’ I look forward 

to working with you in the months and years to come to make sure that every state 

is a lion.

Mr. KING. Thank you, Secretary Beatty. 

Mr. Chapman? 
67

STATEMENT OF MICHAEL CHAPMAN, DIRECTOR, MISSOURI 

OFFICE OF HOMELAND SECURITY 

Mr. CHAPMAN. Chairman Cox, Chairman King, Ranking Member 

Pascrell and distinguished members of the subcommittee, thank 

you for inviting me here today to talk about the critical issue of 

homeland security grant spending. 

I am honored to be here to relate to you the efforts of my Governor Matt Blunt, those that he has undertaken in Missouri to ensure that every single homeland security dollar the federal government awards Missouri is utilized to protect, prepare for and respond to terrorism-related emergencies in our state, or if need be, 

in neighboring states. 

On February 8, 2005, less than a month after his inauguration, 

Governor Blunt issued a memorandum to his department directors 

asking for information regarding homeland security grant spending. Specifically, Governor Blunt asked his department directors for 

a detailed analysis of what federal homeland security money the 

department has received and how it was spent. He asked for a list 

of grant requests that each department has made for federal homelands security money. He asked for a list of private company or any 

locality the department had partnered with to petition for federal 

homeland security grant funding. And he asked for a plan that lays 

out how the particular department might be able to utilize federal 

homeland security money better to prepare for and protect the public in case of future incidents. 

Governor Blunt asked for this information because of two specific 

incidents in Missouri that caused him to question the wisdom with 

which homeland security dollars had been spent by the previous 

administration. The first incident involved my predecessor in negotiating a contract with a company for a Web portal that would have 

in essence have provided duplicative communications capabilities to 

emergency responders. After this contract had been shepherded 

through to near completion, my predecessor departed state employment to work for the company. Governor Blunt has made very clear 

that even the appearance of impropriety in government contracting 

will not be tolerated in his administration, and this raised red flags 

that other homeland security spending ought to be examined to ensure that it was appropriate and that it was contributing in a 

meaningful way to the preparedness and protection of Missourians. 

The second incident was cited in the House Select Committee on 

Homeland Security’s report entitled An Analysis of First Responder 

Grant Funding. It involved the purchase of approximately 13,000 

chemical-biological protective suits, one for nearly every full-time 

law enforcement in the state. Some of the communities that received these suits needed them and are better prepared to respond 

to terrorist attacks because they have them. However, one would 

be hard-pressed to justify this spending for every full-time law enforcement officer in our state. Missouri has many rural areas 

where it was inappropriate for these suits to have been purchased, 

and it is clear that other equipment may have been a greater contributor to the safety of residents in those communities. Governor 

Blunt believes that regional solutions to responding to chemical-biological attacks should be explored. 
68

My office and the state Emergency Management Agency which 

administers homeland security grant funding for Missouri are in 

the process of evaluating the reports from these various department directors. These reports were due on March 31 to me, and 

they are currently under review. We plan to provide an executive 

summary of our findings to the Governor this week so that he can 

make informed decisions about how to better protect Missourians. 

Initial indications are that a comprehensive homeland security 

plan to protect Missouri needs to be further developed, refined and 

enhanced so that we can adequately respond in the unfortunate circumstance that a response would indeed be necessary. 

In no way should my testimony be construed to suggest that Missouri is vulnerable or that the previous administration jeopardized 

our citizens’s safety. The simple reality, though, is that Governor 

Blunt is certain that we can do better in terms of efficiency and 

effectively spending homeland security funds. Governor Blunt is 

committed to learning from other’s past mistakes and taking 

proactive steps to ensure that my office and other executive departments that are part of his administration are appropriately utilizing these valuable federal resources to protect Missourians. After 

all, that is why you, the federal government, have provided us with 

this money. 

Governor Blunt has also made structural changes to the Office 

of Homeland Security in Missouri to ensure that an integrated and 

coordinated system is in place to meet Missouri’s homeland security needs. He merged the Office of Homeland Security into the Department of Public Safety to foster collaboration and synergy between my officer and the various divisions within our Department 

of Public Safety. That department houses Missouri’s Capitol Police, 

the Division of Alcohol and Tobacco Control, fire safety, water patrol, the Adjutant General of the Missouri National Guard, and the 

Emergency Management Agency. 

By having Homeland Security reside in the same department as 

these agencies, we are better able to coordinate and plan for the 

safety and security of Missourians and will be better able to coordinate the administration of homeland security grant funding that 

the federal government provides. 

Homeland security grant funding is a nonpartisan issue and 

something that we should be constantly reexamining to ensure that 

we are doing it correctly both at the state and federal levels. Missouri is in the process of doing just that, but it makes a great deal 

of sense to have hearings such as this to discuss what we are doing 

right, what we can do better, and where we might make changes, 

modifications and corrections in the way we partner together to 

provide safety and security for the nation as a whole and states individually. 

As I understand it, Chairman Cox’s first responder bill directs 

the Secretary of Homeland Security to determine essential capabilities for different types of communities based on an analysis of critical infrastructure sectors, types of threat, geography, population, 

vulnerability, consequences and intelligence information regarding 

emerging threats, among other things. It is clear that standards 

defining threats and preparedness goals would assist states in preventing terrorist attacks. As these standards and goals are devel-
69

oped, though, it would be important to take non-traditional terrorism such as agro-terrorism into account. 

We have learned a great deal through the examination of previous homeland security grant spending by states and the federal 

government has responded based on findings from those studies. 

Its reexamination and retooling should be an ongoing process no 

matter what modifications are made to the grant formula, whether 

it be the adoption of a risk-based approach or some variant thereof. 

Constantly evaluating and reevaluating how best to prepare for, 

prevent, and protect against attacks is the business that we are in. 

It is not one where an approach that is adopted today necessarily 

will be the right one beyond the foreseeable future. 

Thank you again for inviting me to testify about this important 

issue and the steps that Governor Blunt has taken to ensure that 

we are the best stewards of the resources you give us. I would be 

happy to answer any questions you might have. 

[The statement of Mr. Chapman follows:]

PREPARED STATEMENT OF MICHAEL CHAPMAN

Chairman Cox, Chairman King, Ranking Member Pascrell and other members of 

the subcommittee. Thank you for inviting me here today to talk about the critical 

issue of Homeland Security Grant spending. I am honored to be here to relate to 

you the efforts that my governor, Matt Blunt, has undertaken in Missouri to ensure 

that every single Homeland Security dollar the federal government awards Missouri 

is utilized to protect, prepare for and respond to terrorism-related emergencies in 

our state, or if need be, in neighboring states. 

On February 8, 2005, less than one month after his inauguration, Governor Blunt 

issued a memorandum to his department directors asking for information regarding 

Homeland Security Grant spending. Specifically, Governor Blunt asked his department directors for: • A detailed analysis of what federal homeland security money that your department has received and how it was spent 

• A list of grant requests that your department has made for federal homeland 

security money 

• A list of any private company or any locality your department has partnered 

with to petition for federal homeland security grant funding; and 

• A plan that lays out how your particular department might be able to utilize 

federal homeland security money to better prepare for and protect the public 

in case of a future incident 

Governor Blunt asked for this information because of two specific incidents in 

Missouri that caused him to question the wisdom with which Homeland Security 

dollars had been spent by the previous administration. The first incident involved 

my predecessor negotiating a contract with a company for a web portal that would 

have in essence provided duplicative communications capabilities to emergency responders. After this contract had been shepherded through to near completion, my 

predecessor went to work for the company. Governor Blunt has made very clear that 

even the appearance of impropriety in government contracting will not be tolerated 

in his administration and this ‘‘raised flags’’ that other Homeland Security spending 

ought to be examined to ensure that it was appropriate and that it contributed in 

a meaningful way to the preparedness and protection of Missourians. 

The second incident was cited in the House Select Committee on Homeland Security’s report ‘‘An Analysis of First Responder Grant Funding’’ and involved the purchase of approximately 13,000 chem-bio warfare suits, one for nearly every full-time 

law enforcement officer in the state. Some of the communities that received these 

suits needed them and are better prepared to respond to terrorist attacks because 

they have them. However, one would be hard pressed to justify this spending for 

EVERY full-time law enforcement officer in our state. Missouri has many rural 

areas where it was inappropriate for these suits to have been purchased and it is 

clear that other equipment may have been a greater contributor to the safety of residents in those communities. Governor Blunt believes that regional solutions to responding to chemical-biological warfare should be explored. 

My office and the State Emergency Management Agency which administers 

Homeland Security Grant funding for Missouri are in the process of evaluating the 
70

reports from department directors which were due on March 31, 2005. We plan to 

provide an executive summary of our findings to the governor this week so that he 

can make informed decisions about how to better protect Missourians. Initial indications are that a comprehensive Homeland Security plan to protect Missouri needs 

to be further developed, refined and enhanced so that we can adequately respond 

in the unfortunate circumstance that a response would be necessary. 

In no way should my testimony be construed to suggest that Missouri is vulnerable or that the previous administration jeopardized our citizens’ safety. The simple 

reality though is that Governor Blunt is certain we can do better in terms of efficiently and effectively spending Homeland Security funds. Governor Blunt is committed to learning from others’ past mistakes and taking proactive steps to ensure 

that my office and the other executive departments that are part of his administration are appropriately utilizing these valuable federal resources to protect Missourians. After all that is why you, the federal government, provide us with this money. 

Governor Blunt has also made structural changes to the Office of Homeland Security in Missouri to ensure that an integrated and coordinated system is in place to 

meet Missouri’s Homeland Security needs. He merged the Office of Homeland Security into the Department of Public Safety to foster collaboration and synergy between my office and the various divisions within the Department. Public Safety 

houses Missouri’s Capitol Police, Division of Alcohol and Tobacco Control, Fire Safety, Highway Patrol, Water Patrol, Adjutant General and Emergency Management 

Agency. By having Homeland Security reside in the same department as these other 

agencies, I am better able to coordinate and plan for the safety and security of Missourians and will be better able to coordinate the administration of Homeland Security grant money that the federal government provides. 

Homeland Security grant funding is a non-partisan issue and something that we 

should be constantly reexamining to ensure that we are doing it correctly both at 

the state and federal level. Missouri is in the process of doing just that but it makes 

a great deal of sense to have hearings such as this one to discuss what we’re doing 

right, what we can do better and where we might make changes, modifications and 

corrections in the way that we partner together to provide safety and security for 

the nation as a whole and states individually. 

As I understand it, Chairman Cox’s First Responder bill directs the Secretary of 

Homeland Security to determine essential capabilities for different types of communities based upon an analysis of critical infrastructure sectors, types of threat, geography, population (including commuting and tourist), vulnerability, consequences, 

and intelligence information regarding emerging threats among other things. It is 

clear that standards defining threats and preparedness goals would assist states in 

preventing terrorist attacks. As these standards and goals are developed though, it 

will be important to take non-traditional terrorism, such as agro-terrorism, into account. 

We have learned a great deal through the examination of previous Homeland Security grant spending by states and the federal government has responded based 

on findings from those studies. This reexamination and retooling should be an ongoing process no matter what modifications are made to the grant formula, whether 

it be the adoption of the risk-based approach or some variant thereof. Constantly 

evaluating and reevaluating how best to prepare for, prevent and protect against 

attacks is the business that we are in, and it is not one where an approach that 

is adopted today necessarily will be the right one beyond the foreseeable future. 

Thank you again for inviting me to testify about this important issue and the 

steps Governor Blunt has taken to ensure we are the best stewards of the resources 

you give us that we can possibly be. I would be happy to answer any questions you 

might have.

Mr. KING. Thank you, Mr. Chapman. 

Mr. Miller? 

STATEMENT OF DAVID L. MILLER, ADMINISTRATOR, IOWA 

HOMELAND SECURITY AND EMERGENCY MANAGEMENT 

DIVISION 

Mr. MILLER. Chairman King, Chairman Cox, members of the 

committee, my name is David Miller, and I am the Administrator 

of the Iowa Division of Homeland Security and Emergency Management. 
71

In Iowa, we have been involved in antiterrorism activity since 

the first bombing of the World Trade Center and the bombing of 

the Murrah Building in Oklahoma City. Ellen Gordon, my predecessor, served on the Gillmore Commission. It is my privilege to appear before you and provide my perspective on the Department of 

Homeland Security first responder program. 

Since September 11, we have learned a great deal about our capabilities, our deficiencies, our needs and our goals as states, as regions, and as a country. This is an excellent time to pause and take 

stock of the first responder program, to reassess our goals and to 

make adjustments to the program where needed. Let me offer a 

few principles and observations. 

First, Congress must establish and fund clear national goals for 

the security of our homeland based on a comprehensive analysis of 

all safety and economic risks. The first responder program has 

served as an important jump-start for communities all across this 

country to take stock of their readiness and in a relatively short 

amount of time, make needed and measurable investments in their 

emergency preparedness. 

The original formula for funding was logical given what we knew 

at the time. Over time, however, the first responder program has 

changed measurably and our knowledge has improved considerably. Funding is now funneled through numerous silos without an 

effective analysis of whether that investment is needed or will 

make the country safer. Funding has become so diffuse that coordinated rational statewide and regional planning is severely hampered. 

The growth of the UASI program is a primary example. Without 

a more robust analysis of the real risk and threat underlying this 

funding, we are presumably saying that an attack on Indianapolis 

or Columbus is more likely, would cause more devastation, and is 

in greater need of additional resources than an intentional introduction of foot-and-mouth disease in our cattle herds or an attack 

on our cyber infrastructure. 

Many want to shift the entire first responder program to one 

based solely on threat-risk before that analysis has been completed. 

A threat-risk formula done today, absent a much more comprehensive threat assessment, is just another name for funneling more 

money to big cities because population density has become our 

shorthand for threat. 

Second, homeland security must be undertaken as a systems approach, with agriculture fully accounted for. In my opinion, the entire first responder program is geared towards preparing us for 

what happened in the past, and not for what could occur in the future. The program focuses on critical infrastructure, defined largely 

as things and a list of places to guard. So when we speak of agroterrorism, most federal policymakers think we want to spend 

money to guard places like food processing plants or animal feed 

lots. Instead, we need an analysis of the weaknesses in the farmto-fork continuum and the prevention of and preparation for a rapidly moving infectious disease in our animal population. 

With this focus on places so entrenched, there is little ability and 

little funding to prioritize coordination at the state level of the systems that are the foundation of our economy. For instance, if we 
72

were ever to have a presumptive positive test for foot-and-mouth 

disease on a hog leaving Iowa for slaughter in North Carolina, 

states and the USDA would quarantine those animals. Access to infected areas would be restricted. Entire communities would be affected. States would need to work in a seamless and coordinated 

fashion to close roads, inform the public and take other actions. So 

while one feedlot or soybean field surely does not and should not 

fit the definition of ‘‘critical infrastructure,’’ the hog or soybean industry surely would. 

The consequences of a deliberate and widespread catastrophe 

within the agriculture sector would be immense for Iowa and the 

resulting impact would be global in nature. Yet we have virtually 

ignored the risk for an agro-terrorism event in our first responder 

program. The Patriot Act makes no mention of agriculture and only 

passing reference to the need to protect the food supply. Few people 

are aware that Homeland Security officials were actually prohibited from spending first responder funding on agriculture until fiscal year 2004. 

As a result of this haphazard approach to agriculture, we simply 

do not have a clear analytical assessment of the vulnerabilities in 

our agriculture sector, nor can it be said that we have a national 

comprehensive plan in place for preventing or responding to widespread animal or plant emergencies. 

Not everything, of course, comes down to money, but watching 

how the money flows is a good indication of priorities. So it is instructive to note that since 9/11, Congress has appropriated approximately $10.8 billion to states and local governments for 

urban-focused critical infrastructure programs, but only $50 million, or less than 1/2 of 1 percent to help states detect, diagnose 

and respond to foreign animal disease outbreaks. I am positive that 

a thorough risk-threat analysis is likely to conclude that the relative risk is higher than 1/2 of 1 percent. 

Two years ago in Iowa, we began the Multistate Partnership for 

Security in Agriculture. The partnership is an 11-state consortium 

dedicated to addressing these critical issues in a systems approach 

to agriculture emergency response. The entire effort was funded 

from our own funds in Iowa. Then–Secretary Ridge understood the 

importance of this effort and granted the partnership $2 million in 

seed money to continue our work. With this funding, the partnership is in the process of coordinating response planning, training 

and exercises, as well as creating risk communication materials, 

developing interstate communication protocols, and addressing disease surveillance. We think this is the kind of collaborative interstate systems approach that is extremely useful and provides a 

model not only for agriculture states, but other economic sectors as 

well. 

Third, homeland security should not be an unfunded mandate. In 

Iowa, we have a particularly important responsibility to help protect the nation’s food supply and farm economy. At the same time, 

we face increasing mandates from the Department of Homeland Security such as compliance with the national incident management 

system, the national response plan, addressing issues of communications interoperability that require a base commitment in all 

states if our goal is truly a national plan. 
73

1What Does Homeland Security Spending Buy?, by Veronique de Rugy, American Enterprise 

Institute for Public Policy Research, Updated April 1, 2005, p. 26. 

Some have suggested Congress should cut funding to smaller 

states altogether so that we can concentrate our finite resources on 

our landmark cities, which leads us back to the issue of risk and 

threat, and the urgency we feel to restructure the first responder 

program so that it rests squarely on comprehensive analysis of our 

country’s vulnerabilities and response capacities. 

Thank you. 

[The statement of Mr. Miller follows:]

PREPARED STATEMENT OF DAVID MILLER

My name is David Miller and I am the Administrator of the Iowa Division of 

Homeland Security and Emergency Management. In Iowa, we have been involved 

in anti-terrorism activities since the first bombing of the World Trade Center and 

the bombing of the Murrah building in Oklahoma City. Ellen Gordon, my predecessor, served on the Gilmore Commission. After September 11th, our homeland security and emergency management responsibilities were joined together and—like 

my colleagues here today—I am now responsible for coordinating the statewide preparedness and response plans for any type of emergency within Iowa’s borders, 

whether it be a flood, infectious animal disease, hazardous materials spill, or terrorist attack on the Iowa State Fair or our cyber infrastructure. 

It is my great privilege to appear before you today to provide my perspective on 

the Department of Homeland Security’s First Responder program and to share with 

you a few observations about how the program might be improved. 

I would like to say from the outset that I think the Congress and the Department 

of Homeland Security (DHS) have done an exceptionally good job of responding to 

the events of September 11th by recognizing the deficiencies in our emergency preparedness capabilities and by organizing a nationwide effort to make sure that we 

are as prepared as we can possibly be to prevent an attack in the future and, were 

an emergency to occur, to move quickly to protect lives and our economic stability. 

Since September 11th, we have learned a great deal about our capabilities, our deficiencies, our needs, and our goals—as states, as regions, and as a country. This is 

an excellent time to pause and take stock of the First Responder program, to reassess our goals, and to make adjustments to the program where needed. 

Let me offer a few principles and observations:

b Congress must establish and fund clear, national goals for the security of 

our homeland based on a comprehensive analysis of all safety and economic risks.

The First Responder program has served as an important jumpstart for communities all across this country to take stock of their readiness and, in a relatively 

short amount of time, make needed and measurable investments in their emergency 

preparedness. Communities are better prepared for any emergency because of the 

investments that have been made, making this country safer for our citizens. 

The original formula was logical given what we knew at the time: the primary 

grant program, the State Homeland Security Grant Program (SHSGP) was distributed in two segments, one to all states equally and the rest based on population. 

Over time, however, the First Responder program has changed measurably and our 

knowledge has improved considerably. Funding has become so diffuse that coordinated, rational, statewide and regional planning is severely hampered. As is natural 

in any political process, funding is often distributed to those that cry the loudest, 

rather than those in greatest need. As a result, funding has been funneled through 

numerous silos directed at specific stakeholders—firefighters, police, ports, cities—

without an effective analysis of whether that investment is needed or will make the 

country safer. 

As an example, the American Enterprise Institute in their report, ‘‘What Does 

Homeland Security Spending Buy’’ documented the growth of the Urban Areas Security Initiative (UASI) program. What began as a $100 million grant to the seven 

highest profile, landmark cities grew in a matter of months to 30—and later, 80—

cities at a cost of, now, $1.2 billion.1 By this funding, we are presumably saying that 

an attack on Indianapolis or Columbus is more likely, would cause more devastation—and is in greater need of additional resources to prepare for—than an inten-
74

2Department of Homeland Security Appropriations Act, 2005 (Public Law 108–334) 

tional introduction of foot-and-mouth disease in our cattle herd or an attack on our 

cyber infrastructure. But is it true? 

Similarly, in FY05, Congress devoted $715 million to upgrading firefighter equipment and training, $30 million to Urban Search and Rescue, and $10 million for 

Intercity Bus Security Grants.2 Is this funding mix based on a complete assessment 

of our threats and risks? No. 

A careful and comprehensive analysis of threat and risks to all sectors, with 

meaningful input from industry and state and local responders, must be the guide 

for the resources we commit as a nation to homeland security. 

Let me just say that the level of input now allowed state and local responders 

is not adequate. Let me give you just one example. Last year’s Intelligence Reform 

bill required DHS to develop a national strategy for transportation, including setting 

risk-based priorities, cost-effective means for addressing them and realistic deadlines for action. State and local transportation officials have had no input into—or 

even knowledge of—this process even though all states are responsible for the highways within their borders and many own and operate transit systems and airports. 

Many want to shift the entire First Responder program to one based solely on 

threat/risk—before that analysis has been completed. A threat/risk formula done 

today, absent a much more comprehensive threat assessment, is just another name 

for funneling more money to the big cities because population density has become 

our short-hand for threat.

b Homeland Security must be undertaken as a systems approach.

Because the attack on September 11th was on two of our largest and most symbolic urban areas, it is natural for us to feel we must plan for a similar attack to 

occur again. However, in my opinion, the entire First Responder grant program is 

geared toward preparing us for what happened in the past, and not for what could 

occur in the future—and could be far more devastating to our nation. 

Currently program emphasis is structured around the protection of ‘‘critical infrastructure’’. But critical infrastructure is consistently and persistently defined as 

things, a list of places to guard. (And, frankly, many of them don’t seem that critical. In Iowa, the early list included a shopping mall that was yet to open and a 

water park that had closed.) So when we speak of agroterrorism, most federal policymakers think in terms of guarding places like food processing plants or animal 

feedlots. Instead we mean an analysis of the weaknesses in the ?farm to fork continuum? and the prevention of, and preparation for, a rapidly moving infectious disease in our animal population, for example, or an intentionally-introduced pathogen 

that devastates our crops. 

With this focus on places so entrenched, there is little ability—and little funding—

to prioritize the systems that are the foundation of our economy—cyber, energy, agriculture, transportation and others. And while there is growing, but relatively recent emphasis, on the regional or interstate cooperation needed to prevent or respond to an interruption or attack on these sectors, nearly no funding or guidance 

exists for those cooperative efforts. 

A large scale agricultural disease outbreak, for instance, would have far reaching 

emotional and economic effects on all aspects of our society, both emotional and economic. If we were ever to have a presumptive positive test for foot-and-mouth disease on a hog leaving Iowa for slaughter in North Carolina, for instance, state agriculture secretaries, together with the USDA and Governors of the transit and neighboring states, would quarantine those animals and any with which they may have 

come in contact. Access to infected areas would be restricted to control the spread 

of disease. Entire communities would be affected. So while one feedlot or soybean 

field surely does not—and should not—fit the definition of ‘‘critical infrastructure’’, 

the hog or soybean industry surely should. 

After all, it can be argued that if economic disruption and panic is what the foreign terrorists are after, an attack on our food supply, our power grid, or our computer or banking networks would be a far greater calamity. The attacks on the 

buildings in New York and Washington, D.C. affected us all. Think how much more 

we would be affected if one of the key systems under-girding our society were to 

fail.

b Agriculture must be fully integrated into our homeland security plans.

The agriculture sector is an important focus of our homeland security efforts in 

Iowa. This industry is crucial to the economy of our state and the welfare of its citizenry. Additionally, Iowa provides food to nations throughout the world. The con-
75

3GAO–04–259T Bioterrorism: A Threat to Agriculture and the Food Supply 

4The USA Patriot Act of 2001. (Public Law 107–56) 

5The Washington Post. Friday, December 3, 2004. (http://www.washingtonpost.com/wp–dyn/

articles/A31377–2004Dec3.html) 6Federal Funds Information for States. 

7 USDA awarded $43 million in grants to States from the FY2002 supplemental emergency 

bill, included in the Department of Defense Appropriations Act, 2002 (Public Law 107–117). An 

additional $7 million in USDA discretionary grants were awarded in FY2003. 

sequences of a deliberate and widespread catastrophe within the agriculture sector 

would be immense for Iowa and the resulting impact would be global in nature. The 

GAO has reported that the direct costs of an outbreak of foot-and-mouth disease 

similar to what occurred in the United Kingdom could be as high as $24 billion with 

the destruction of 13 million animals. They also reported a USDA calculation that 

a foot-and-mouth disease outbreak could spread to 25 states in as little as five 

days.3

Yet we have virtually ignored the risk of an agroterrorism event in our First Responder program. The Patriot Act makes no mention of agriculture and only passing 

reference to the need to protect the food supply.4 Few people are aware that homeland security officials were actually prohibited from spending First Responder funding on agriculture’s First Responders (state and private veterinarians and state agriculture departments) until Secretary Ridge stepped in to change that for the FY04 

grant guidance. 

Even with the availability of new funds, inclusion of agriculture initiatives in 

state emergency response plans is voluntary and the small sum of funding state agriculture departments were given after 9/11 is now gone. In addition, DHS’ national 

plans include only an appendix on agriculture—and, as an aside, only occurred because Iowa officials were present at a meeting in Washington, D.C where the state 

assessments were being discussed. Absent these state officials’ input, no assessment 

would have been undertaken of agriculture preparedness at the state level at all. 

As a result of this haphazard approach to agriculture, we simply do not have a 

clear, analytical assessment of the vulnerabilities in our agriculture sector nor can 

it be said that we have a national comprehensive plan in place for preventing or 

responding to a widespread animal or plant emergency. It is completely understandable to me that Secretary Thompson’s parting words were, ‘‘I, for the life of me, cannot understand why the terrorists have not. . .attacked our food supply because it 

is so easy to do.’’ 5

Not everything, of course, comes down to money. But watching how the money 

flows is a good indication of priorities. So it is instructive to note that since 9/11, 

Congress has appropriated approximately $10.8 billion to states and local governments for the urban-focused critical infrastructure programs,6 but only $50 million—or less than one-half of one percent—to help states detect, diagnose and respond to a foreign animal disease outbreak.7 I am positive that a thorough risk/

threat analysis is likely to conclude the relative risk is higher than one-half of one 

percent. 

Two years ago, the Secretary of Agriculture in Iowa, Patty Judge, and my predecessor, Ellen Gordon, began the Multi-State Partnership for Security in Agriculture. 

The Partnership is an eleven-state consortium dedicated to addressing these critical 

issues in a systems approach to agriculture emergency response. The entire effort 

was funded from our own funds in Iowa. Then-Secretary Ridge understood the importance of this effort and granted the Partnership $2 million in seed money to continue our work. With this funding the Partnership is in the process of coordinating 

response planning, training and exercises, as well as, creating risk communications 

materials, developing interstate communication protocols, and addressing disease 

surveillance. We think this kind of collaborative interstate, systems approach is extremely useful and provides a model not only for other agricultural states but other 

economic sectors as well.

b Homeland security should not be an unfunded mandate.

In Iowa, we have a particularly important responsibility to help protect the nation’s food supply and farm economy. But we also have a responsibility to the other 

critical systems of the national economy that are under our control or within our 

borders. One could argue, for instance, that it would be just as easy to mount an 

attack on our financial services sector from Iowa as it would be from Atlanta; just 

as easy to disrupt the power grid by attacking in the Midwest; and certainly just 

as easy to disrupt the food distribution system by introducing a foreign animal disease into a feedlot in Iowa rather than somewhere else. Yet our only source of fed-
76

8 In FY04, the State Homeland Security Grant Program (SHSGP) was funded at $1.7 billion. In FY05, that dropped to $1.1 billion. The President’s FY06 budget requested $1.02 billion, with 

20 percent set-aside for the activities of the Law Enforcement Terrorism Prevention Grants 

which is proposed for elimination. In contrast, the Urban Areas Security Initiative did not exist 

as a separate stream of funding in FY04. In FY05, it was funded at $1.2 billion, although only 

$885 million of that went directly to cities; the rest was for other related programs, such as 

Port Security. The FY06 budget request includes $1.02 billion for UASI. It also drops the base 

state grant from .75 percent to .25 percent, further disadvantaging lower population states. 

eral funding to address these threats and risks, the State Homeland Security Grant 

Program, has been cut to fund the increasing UASI program.8

Yet, at the same time, we face increasing mandates from DHS—such as compliance with National Incident Management System (NIMS), the National Response 

Plan (NRP) and communications interoperability protocols—that require a base 

commitment in all states if our goal is a truly national plan. 

Some have suggested Congress should cut funding to the smaller states altogether 

so we can concentrate our finite resources on our landmark cities. 

Which leads us back to the issue of risk and threat—and the urgency we feel to 

restructure the First Responder program so that it rests squarely on a comprehensive analysis of our country’s vulnerabilities and response capacities.

Mr. KING. Thank you, Mr. Miller. 

Mr. Chapman, you indicated in your testimony that you have at 

least some questions or concerns about some actions that were 

taken by your predecessor. Without even getting into the merits of 

that or whatever, do you feel there was any oversight from the Department of Homeland Security then or now as to how the money 

is being spent? For instance, if you feel that the money was spent 

improperly, I am not even suggesting illegality, I am just saying if 

it was spent improperly or not for a valid purpose, do you see any 

oversight at all coming from Washington? 

Mr. CHAPMAN. Let me qualify this by saying I have been in this 

position for 4 weeks. In my research prior to arriving and in the 

4 weeks, it is not clear to me that there is a lot of oversight. That 

is not to say there is not any. I am just not aware of a whole lot 

of oversight. 

Mr. KING. Mr. Beatty, you made a strong argument for making 

us all lions rather than sheep. Have you had a chance to look at 

Chairman Cox’s bill, the Cox–Thompson bill? Do you feel it does 

move us in that direction? 

Mr. BEATTY. I believe it can. When you reduce the guaranteed 

amount that goes to each state and then look at increasing the 

amount based on the threat formula, it can certainly be used to address the threats as they are seen. The question is, who is doing 

the analysis; what information are they using; and are they working together between federal, state and local governments to make 

sure we are accurately assessing what those threats and capabilities are. 

Mr. KING. You also discussed in your testimony about how North 

Carolina, the different localities within the state were cooperating 

with each other, in fact, regional cooperation within the state. Do 

you have any thoughts on regional cooperation outside the state, 

for instance with North Carolina and states surrounding it, and the 

appropriateness of submitting requests from that region, rather 

than just from the individual states, or in addition to the individual 

states? 

Mr. BEATTY. Our experience in North Carolina has been primarily with natural disasters, and we certainly have mutual aid 

agreements or the EMAC, Emergency Management Assistance 
77

Compact, where states cooperate and help each other through that 

compact. In the instance of homeland security in the Charlotte 

area, Charlotte–Mecklenberg, it is now a UASI city, and it has included two of the contiguous counties in South Carolina. Charlotte 

is on the border in North Carolina with South Carolina. It has included some counties within South Carolina. So where there are 

mutual interests, certainly regional cooperation without regard to 

state lines would be beneficial for all. 

Mr. KING. Mr. Miller, as a member of Congress who has absolutely no agriculture in my district at all, I must say that you made 

a very strong and convincing case today. Have you had an opportunity to look at the bill as proposed by Chairman Cox and the extent to which you feel it addresses the issue of agro-terrorism and 

the questions that it raises regarding the threat from agro-terrorism? 

Mr. MILLER. Mr. Chairman, I have had the opportunity to review 

the bill and I think it does have the full capability of addressing 

the threat and takes care of the threat vulnerability analysis. I 

think the question, as Mr. Beatty said, is a question of who conducts the threat, what tool is used to examine and do the assessment on agriculture. It clearly needs to involve a partnership between a variety of agriculture interests and the experts in agriculture. I think too often when we look at those assessments, they 

come down from folks who have little or no experience in the areas 

that they are trying to assess. It needs that full partnership. I believe the bill as I read it affords us that opportunity. 

Mr. KING. Who do you recommend make the assessment? 

Mr. MILLER. When I look at it, we look at of course the USDA. 

We look at the Secretaries of Agriculture. We look at producers. We 

look at food processors and the entire agricultural spectrum. When 

we look at the criteria that came out initially for critical infrastructure assessment, that came out from the Office of Domestic Preparedness, my question to my agriculture counterparts in the state 

was, is this the right criteria. You have to tell me, as agriculture 

experts, is this the right thing to look at. One of the things that 

we are concerned with is they tend to look at fixed assets, rather 

than looking at the system of agriculture and what the 

vulnerabilities were within that system. 

Mr. KING. In looking at the bill, the Cox–Thompson bill in section 1803 where it talks about critical infrastructure sectors, it says 

the Secretary specifically shall consider threats of terrorism 

against the following critical infrastructure sectors in all areas of 

the nation, urban and rural. Number one is agriculture. Then further on down, number seven is food. So you have both agriculture 

and food now listed in the criteria, with agriculture being number 

one. So I would just say that that seems at least to begin to address some of the significant issues that you have raised today. 

Mr. MILLER. Yes, sir. I would agree. Agriculture would be nice 

if it were number one. I thought maybe it was in alphabetical 

order, but we appreciate its placement in the list. 

Mr. KING. You are right. There is no order of priority, but it is 

there. The Secretary cannot miss it when he looks at it. Maybe 

later on you can suggest to the Secretary that it was put there intentionally for you. 
78

[Laughter.] 

But in any event, I want to thank you for your testimony. 

The Ranking Member, who also I believe has very little agriculture in his district. 

Mr. PASCRELL. Very little. 

You were all here for the first panel, correct? 

Mr. MILLER. Yes, sir. 

Mr. PASCRELL. Briefly, anything you would like to respond to 

with what was said by any of the three panelists, Mr. Berman, Dr. 

Jenkins or Dr. de Rugy? Anything struck you as not in your interests or you could agree with? 

Mr. MILLER. I guess I have a comment, sir, if I could. 

Mr. PASCRELL. Sure. 

Mr. MILLER. As I listened to the discussion, a couple of things 

struck me. I have been with our agency for the last 16 years so I 

have followed this through its infancy. Our relationship with the 

Office of Domestic Preparedness in the Department of Homeland 

Security has certainly improved over the last few years. They are 

doing a better job in their analysis. They are doing a better job in 

oversight. We are getting more guidance. The problem sometimes 

is how quickly that gets turned around and the speed of the process does not give time for careful analysis, often, of how we move 

through the program. 

The other thing that caught my interest was the testimony talking about the partnership between the federal, states and locals, 

and who should pay what proportionate share. It truly does need 

to be a partnership, and there needs to be investment there. I 

think locals and the states have investment, always maybe not so 

apparently, but there is investment there and it is how we use and 

leverage federal dollars that is of concern to me. 

I was chatting with the gentleman next to me, with Mr. Chapman before when there was discussion on communications interoperability. We know that that is a high priority in our state. Mr. 

Beatty has stated that it is high priority in his state. I also know 

that I chaired a communications task force in our state this last 

summer and we looked at communications interoperability as a 

huge issue, with Mr. Beatty’s price tag of $180-some million. Then we looked at a Nebraska study, a price of $220 million to 

do communications interoperability, just communications interoperability across the state. That is a huge investment by the federal 

government and requires an investment by states and locals. That 

is only one issue in the war on terrorism. It is only one small piece, 

and yet that is such a significant investment. It leaves me wondering, do we have the fortitude to invest that kind of money in 

that kind of infrastructure to make us all safer and better prepared. 

Mr. PASCRELL. Thank you. 

Would either of you gentlemen like to respond as well? 

Mr. BEATTY. I would like to respond to one concern I had with 

a statement that was made by Ms. de Rugy, I believe her name is. 

When she talked about the biggest bang for the buck, and saying 

that prevention obviously gives you the biggest bang for the buck. 

I certainly agree that prevention is the best way to address terrorism, but it is sort of like saying that if we had enough policemen 
79

we could stop all crime and on Friday and Saturday nights we 

could close the emergency rooms and send the doctors home. We 

know that no matter how many police officers you have out there, 

there still will be those who get themselves into trouble. 

We know that no matter what we do from the prevention standpoint, we will still have the potential for an attack and will still 

need the capability to respond. So certainly while we want to make 

sure we have funding there for prevention, and that is one of our 

priorities, we do not want to retrench from providing that funding 

for the first responders in case we were not successful in preventing. That was one of the things that stood out to me. 

Mr. PASCRELL. Thank you. 

I know that you have only been there a few weeks, but have had 

probably some impressions. 

Mr. CHAPMAN. I do. I would like to echo Mr. Miller’s comments 

about the balance of speed with the importance of having the time 

to do a review over how the money will actually be spent. I would 

much rather have more time to get spending plans in or strategies 

in and ensure that we were actually putting the money where it 

really belongs to get the greatest value for the federal investment. 

Mr. PASCRELL. Mr. Beatty, what level of involvement in your 

state, what is the level of involvement with our first responders in 

order to build the mechanism, build the defense, a response team? 

In your state of North Carolina, is this a top-down situation, in 

your estimation, or is there really a serious attempt to build a bottom-up defense in terms of homeland security? 

Mr. BEATTY. We would like to think it is a collaboration between 

state and local officials. We have a State Emergency Response 

Commission which is comprised of members of state agencies that 

are responsible for public health and safety, as well as representatives from local agencies, the sheriff’s association, police chiefs, fire 

chiefs, emergency medical, emergency management. We look at all 

the issues related to our preparedness and we worked together and 

we put together a state strategy and a state plan on homeland security. We try to work together. 

Again, our experience is primarily in the area of preparing for 

natural disasters. We have had plenty of experience with that, and 

we realize that the first response to any event is a local response. 

So we try to make sure that there is the capability at the local 

level so that they can respond initially, and then we come in from 

a regional standpoint as well as from the state, and then of course 

federal, particularly when we have major hurricanes. So it is building upon the local capacity is our philosophy. 

Mr. PASCRELL. Thank you, Mr. Chairman. 

Mr. KING. The gentleman from North Carolina. 

Mr. ETHERIDGE. Thank you, Mr. Chairman. 

Secretary BEATTY AND MR. Miller, both your states have substantial livestock investments. My question is, can you quantify the 

current risk to that industry? If so, how do you do it and what 

plans do you have that are currently in place to respond to that 

risk? And if not a plan, then what do we need to be doing to make 

sure? I know North Carolina did a trial run that, Mr. Secretary, 

you were involved in, as I was, a couple of years ago. Would you 

two care to comment on that? 
80

Mr. BEATTY. Representative Etheridge, you are very familiar 

with what we are doing in our state, but for those from other 

states, we did have a foot-and-mouth disease scare just before 9/

11. We realized at that time that we did not have the capabilities 

and response capabilities, lab capabilities that we need to be able 

to monitor, detect, certainly prevent if we could, but respond to 

contain an outbreak in North Carolina. That is the reason our Department of Agriculture has worked together with other state agencies, the private industry as well as federal agencies, to try to put 

together a model plan for being able to assess the vulnerabilities, 

mitigate against those, and respond and recover from all facets of 

our food production, right on from, as we say, from farm to fork. 

We have a plan to do that. We simply need a little funding to help 

carry that out, and we can serve as a national model. 

Mr. ETHERIDGE. Mr. Miller? 

Mr. MILLER. In Iowa, we have addressed things the same way. 

On the assessment side, I think one of the most difficult sides is 

to assess the clear threat. We have worked to assess the threat to 

agriculture overall, not just looking at the threat of terrorism, but 

understanding that a threat to agriculture, whether foot-and-mouth 

disease or a foreign animal disease was naturally introduced or 

was introduced by a terrorist. In many cases in how we respond, 

as you said earlier, Congressman Etheridge, is irrelevant, that it 

is the same response. 

We have been working with our Secretary of Agriculture and 

with the partner states around us to develop a plan about how we 

do agriculture and how we would address those issues. We, too, 

had a foreign animal disease exercise a couple of years ago. We 

found we were sorely equipped to address the issues and were 

quickly overwhelmed if we would have had a positive case of footand-mouth disease in the state. Since that time, we have been looking at those issues, how we would build our team. We are looking 

at establishing veterinary and rapid response teams in a partnership between state vets and private veterinarians. We are looking 

to improve the communication coordination with the county extension services. We have an active involvement between the agriculture folks and frankly the law enforcement and other emergency 

responders so each knows the role that they would play in an agriculture disaster. 

I am also very cognizant of the fact that while we were doing 

those things about an outbreak in the state and were looking at 

that agriculture plan and enhancing that, I am as concerned with 

an outbreak that should occur in another state and the impact it 

could have on our state and how we would appropriately respond 

to those issues. As far as I am concerned, we have not adequately 

addressed those yet, but it is the area that we are working on. 

Mr. ETHERIDGE. Mr. Chairman, while Secretary Beatty is still 

here, in the exercise we did in North Carolina, it was really put 

on by the federal government. It was a joint exercise of all the first 

responders in North Carolina. All of them were available. I think 

the frightening thing of that from agro-terrorism, whether it was 

an accident or it was intentional, it would have shut down the food 

chain in this country in less than 30 days, all across America, be-
81

cause of the movement of animals from one state, whether it be 

Missouri, Iowa or otherwise. That is a frightening thing. 

I think the fact that we have in this piece of legislation, that I 

happen to be an original cosponsor as well, it allows us the tools 

to respond to that. Hopefully, it will never happen, but the days 

of animal confinements on one small farm plot, even like we have 

in Europe, are gone. Animals move several times before they move 

to market. I think a lot of our friends in the city do not realize 

that. You think of piglets and operations for hogs or cows or whatever—. 

Mr. KING. Is there a particular reason why you are looking at me 

and Mr. Pascrell? 

[Laughter.] 

Mr. ETHERIDGE. I was really looking at Mr. Pascrell. 

[Laughter.] 

Seriously, Mr. Chairman, the truth is I think folks do not realize 

that our food and animals move so many times before they get to 

market, and the potential for contamination is much higher today 

than it was 10 or 15 years ago. I think it requires from us a joint 

effort, federal, state and local, of being able to address these issues 

in a way we have never had to address them before. 

I thank our panelists for being here and for their comments. 

Thank you, Mr. Chairman. I yield back. 

Mr. KING. Thank you, Mr. Etheridge. 

I just really have one final question, I guess about as philosophical as I can get, but an overview question. We are now 3 1/

2 years since September 11, with states considerably distant from 

New York and the Pentagon. Do you feel that the people living in 

your states still feel the threat or the importance of the war 

against terrorism? Do you feel that you will continue to get support 

within your states for this effort? Homeland Security can only do 

so much. Do you feel that you continue to get the cooperative effort 

from your local municipalities, for instance? Do they continue to 

appreciate it? 

Because even in New York, where I am from, people are starting 

to lose sight of how bad it was. I am just wondering in your states 

if that feeling was still there, and the willingness to cooperate with 

the federal government and also to work within your own states. 

Mr. BEATTY. Mr. Chairman, it is a delicate balance, obviously, we 

have to strike between making sure that people are properly prepared and aware and causing them to be overly anxious or panic. 

We try to strike that balance. I know certainly those who are responsible for public safety take this very seriously, and I know you 

are aware of that, and keeping citizens informed of the kinds of 

things they need to know to be prepared is the greatest challenge. 

We continue to try to work toward that. But as was said earlier, 

even though we are far away from New York City, we are only as 

strong as a nation as our weakest link, and right now we know 

from past experience that there are Al- Qa‘ida operatives looking 

for our weakest link. 

Mr. KING. Mr. Chapman? 

Mr. CHAPMAN. I would say in Missouri that the state agencies, 

local governments, take seriously the threat. I am confident that 

many of our citizens look at the issue as, well, we are not on one 
82

of the coasts, so what is the threat for us. In fact, I had a journalist 

use those words the other day with me. My point is very much 

along the lines of Mr. Beatty’s, which is that if you provide a soft 

target, that is where you will be attacked. I would like to create 

a hostile environment toward potential terrorist attacks in Missouri. If I was a terrorist and I was looking for a place to do some 

major destruction, I would look for a very soft target. 

Mr. KING. Mr. Miller? 

Mr. MILLER. I agree. It is a delicate balance. I go out often and 

speak to a lot of small groups in our state, local service clubs, citizens groups, and try to put terrorism in a perspective that they can 

understand. Clearly, the threat of an Al-Qa‘ida-type event in our 

state, I do not know if that threat is there. Everything I have seen 

and the data that has been shared with us is that we should not 

suspect a high incidence of occurrence of an Al-Qa‘ida attack. But 

at the same time, when I look at the attack on the Murrah Building and other things that have happened in the Midwest, it tends 

to put it in perspective for local folks and they understand that 

there is a threat there. 

When we also explain the kind of infrastructure that we have in 

the state that could be the subject of a foreign terrorism threat, the 

nuclear power plants that sit on each of our borders and one near 

Cedar Rapids, the interstate transportation of goods and services 

throughout the state, the transportation of goods and services on 

the Mississippi and the Missouri River, it begins to take another 

focus for them. Part of it is an education of what is within the 

state, what can happen within the state, what transpires and goes 

through the state, and also an examination of the local threat that 

we can get domestically. 

Mr. KING. Thank you. 

Bill, do you have anything further? 

Mr. PASCRELL. Mr. Chairman, thank you, a great job. I think 

that the last question that the Chairman asked is a very critical 

question. If you asked me the question, I would say what I have 

concluded in the past year is that we do not believe we are at war, 

and this has a lot to do with preparedness. This has a lot to do 

with how much ingenuity we are willing to spend and use in getting the job done to protect our citizenry. 

Yesterday, I was on a panel with former FBI Agent Paul Williams. I was kind of struck by what he said, and he knows what 

he is talking about, on the number of nuclear weapons that he 

thinks are already in this country in the hands of our enemy, in 

this country. 

So we are not talking about something farfetched. We are not 

talking about a sci-fi movie. We are not talking about reality TV. 

We are talking some serious business. And those folks on the 

frontlines, our first responders, need to know that we are supportive not only in terms of the money we can get down to the local 

level, but they must know that we sense the danger. We will not 

panic. We will be level-headed and we will make the right decisions 

to protect our kids and our grandchildren. 

This is serious business, and I thank you for being here today. 

Mr. KING. Let me join with Bill and thank all of you for your testimony. It was really very enlightening. I do believe it goes right 
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to the heart of the bill, that the money should be spent on a risk 

basis. Obviously, you have shown me the definite risk that certainly exists in your states. So I thank you. And not just in your 

states, but in the nation. You made that point very well. 

So I want to thank you for your testimony today. Thank you for 

your time, and also thank you for your patience. Thank you very 

much. 

[Whereupon, at 4:28 p.m., the subcommittee was adjourned.]

Æ