Emergency Preparedness: Federal Funds for First Responders
Published: 2004-05-13T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The terrorist attacks of September 11, 2001, highlighted the critical role first responders play at the state and local level when a disaster or emergency strikes. In fiscal years 2002 and 2003, Congress appropriated approximately $13.9 billion for domestic preparedness. A large portion of these funds were for the nation's first responders to enhance their ability to address future emergencies, including potential terrorist attacks. These funds are primarily to assist with planning, equipment purchases, training and exercises, and administrative costs. They are available to first responders mainly through the State Homeland Security Grant Programs and Urban Area Security Initiative grants. Both programs are administered through the Department of Homeland Security's Office for Domestic Preparedness. In this testimony, GAO addressed the need to balance expeditious distribution of first responder funds to states and localities with accountability for effective use of those funds and summarized major findings related to funding distribution delays and delays involving funds received by local governments, as presented in reports issued by the Department of Homeland Security Office of Inspector General and the House Select Committee on Homeland Security. The testimony incorporated supporting evidence on first-responder funding issues based on ongoing GAO work in selected states.
section_title: What GAO Found
paragraphs: The reports of the Department of Homeland Security Office of Inspector General (OIG) and the House Select Committee on Homeland Security examined the distribution of funds to states and localities. Both reports found that although there have been delays in getting federal first-responder funds to local governments and first-responder agencies, the grant management requirements, procedures, and processes of the Office for Domestic Preparedness (ODP) were not the principal cause. According to the OIG's report, in fiscal years 2002 and 2003, ODP reduced the time required to provide on-line grant application guidance to states, process grant applications, and make grant awards. For example, for fiscal year 2002 grants, it took 292 days, on average, from the time the grant legislation was enacted to the awarding of grants to states. For fiscal year 2003 grants, the total cycle was reduced to 77 days, on average. According to the reports, most states met deadlines for subgranting first-responder funds to local jurisdictions. The fiscal year 2003 State Homeland Security Grant Programs and Urban Area Security Initiative required states to transfer 80 percent of first-responder grant funds to local jurisdictions within 45 days of the funds being awarded by ODP. Most states met that deadline by counting funds as transferred when states agreed to allocate a specific amount of the grant to a local jurisdiction, the OIG's report found. The House Select Committee staff concurred. And in the three states GAO examined, states certified they had allocated funds to local jurisdictions within the 45-day period. Delays in allocating grant funds to first responder agencies are frequently due to local legal and procedural requirements, the OIG's report found. State and local governments sometimes delayed delivery of fiscal year 2002 grant funds, for example, because governing and political bodies within the states and local jurisdictions had to approve and accept the grant funds. GAO's work indicated a similar finding. In one state GAO reviewed, roughly four months elapsed from the date the city was notified that grant funds were available to the date when the city council voted to accept the funds. Both reports GAO reviewed found that state and local procurement processes have, in some cases, been affected by delays resulting from specific procurement requirements. While some states purchase first-responder equipment centrally for all jurisdictions, in some instances, those purchases are made locally and procurement may be delayed by competitive bidding rules, among other things. It is important to note that those who manage homeland security grants to states and local governments must balance two sometimes competing goals: (1) getting funds to states and localities expeditiously and (2) assuring that there is appropriate planning and accountability for the effective use of the funds.

section_title: Letter
paragraphs: I am pleased to be here today to discuss federal funding for first  responders. The events of September 11, 2001, spotlighted the critical role  that the nation’s first responders play in responding to and mitigating the  effects of a terrorist attack. In fiscal years 2002 and 2003, Congress  appropriated nearly $13.9 billion for domestic preparedness programs. The  largest sources of federal funds for first responders were the State  Homeland Security Grant Programs (in fiscal year 2002 called the State  Domestic Preparedness Program), distributed to states using a formula  that provides each state a base amount plus additional funds based on  population, and the Urban Area Security Initiative Grants, distributed to  selected urban areas based on such factors as population density, critical  infrastructure, and potential threats. These monies were generally  available for planning, equipment, exercises, training, and administrative  costs.
A brief discussion of some basic issues associated with using first  responder funds effectively.
The major findings reported recently by the Department of Homeland  Security (DHS) Office of Inspector General (OIG) and the House  Select Committee on Homeland Security (House Select Committee) on  the reasons for delays in distributing first responder funds to local  governments and delays in using those funds once received.
Some examples from our work in three states that support the findings  in these two reports. Our work to date has provided no information  that would contradict the major findings of these two reports.
subsections: section_title: Scope and Methodology
paragraphs: GAO is currently conducting several reviews related to first responder  grants. One of these reviews, to be published within the next few weeks,  addresses issues of coordinated planning and the use of federal grant  funds for first responders in the National Capitol Region, which  encompasses the District of Columbia and 11 surrounding jurisdictions.  Another effort is focused on intergovernmental efforts to manage fiscal  year 2002 and 2003 grants administered by the Office for Domestic  Preparedness (ODP) within the Department of Homeland Security (DHS).
Because much of our work in this area is ongoing and our findings remain  preliminary, my testimony today will focus principally on the major  findings of the reports on preparedness funding issued by the DHS OIG  and the House Select Committee, supplemented by some examples from  our work in four selected locations in three states. Our analysis focused on  three ODP grant programs: the State Domestic Preparedness Grant  Program of fiscal year 2002, with $315,440,000 in appropriations, and the  fiscal year 2003 State Homeland Security Grant Programs, Parts I and II,  with appropriations of $566,295,000 and $1,500,000,000, respectively. The  purpose of this work was to document the flow of selected fiscal year 2002  and 2003 grant monies from ODP to local governments and the time  required to complete each step in the process. In doing this work, we met  with state and local officials in each state and obtained and reviewed  federal, state, and local documentation. We did this work between  December 2003 and February 2004 in accordance with generally accepted  government auditing standards.
section_title: Background
paragraphs: In recent months, the Conference of Mayors, members of Congress, and  others have expressed understandable concerns about delays in the  process by which congressional appropriations for first responders reach  the local fire fighter, police officer, or other first responder. The reports by  DHS OIG and the House Select Committee examined the distribution of  homeland security grant funding to states and local governments to  understand what obstacles—if any—prevent the expeditious flow of grant  funding from the federal government to state and local governments.
In March 2003, ODP was moved from the Department of Justice to the  DHS. In fiscal years 2002 and 2003, ODP managed about $3.5 billion under  16 separate grant programs. Generally, states and local grant recipients  could use these funds for some combination of training, new equipment,  exercise planning and execution, general planning efforts, and  administration. The largest of these grants were the State Homeland  Security Grant Programs and the Urban Area Security Initiative grants.  In  both grant programs, states may retain 20 percent of total state grant  funding but must distribute the remaining 80 percent to local governments  within the state.
section_title: Issues Associated With Using First Responder Funds Effectively
paragraphs: Before discussing some of the issues that have been raised about the  distribution of federal grant funds to first responders, I would like briefly  to discuss some basic issues associated with using those funds effectively.
A key goal of first responder funding should be developing and  maintaining the capacity and ability of first responders to respond  effectively to and mitigate incidents that require the coordinated actions of  first responders. These incidents encompass a wide range of possibilities,  including daily auto accidents, truck spills, and fires; major natural  disasters such as floods, hurricanes, and earthquakes; or a terrorist attack  that involves thousands of injuries. Effectively responding to such  incidents requires well-planned, well-coordinated efforts by all  participants. Major events, such as natural disasters or terrorist attacks,  may require the coordinated response of first responders from multiple  jurisdictions within a region, throughout a state or among states. Thus, it  follows that developing a coordinated plan for such events should  generally involve participants from the multiple jurisdictions that would be  involved in responding to the event. However, a major challenge in  administering first responder grants is balancing two goals: (1) minimizing  the time it takes to distribute grant funds to state and local first  responders and (2) ensuring appropriate planning and accountability for  effective use of the funds.
In fiscal years 2002 and 2003, at least 16 federal grants were available for  first responders, each with somewhat different requirements. Previously,  we have noted that substantial problems occur when state and local  governments attempt to identify, obtain, and use the fragmented grants-in- aid system to meet their needs. Such a proliferation of programs leads to  administrative complexities that can confuse state and local grant  recipients. Congress is aware of the challenges facing grantees and is  considering several bills that would restructure first responder grants.
section_title: Basic Steps in Distributing State Homeland Security Grant Funds
paragraphs: Much of the concern about delays in distributing federal grant funds to  local first responders has involved the State Homeland Security grants  which are distributed to states on the basis of a formula. Each state  received 0.75 percent of the total grant appropriation, with the remaining  funds distributed according to state population.
There are a number of sequential steps common to the distribution of ODP  State Homeland Security Grants from ODP to the states and from the  states to local governments. They include the following:  1.  Congress appropriates funds.  2.  ODP issues grant guidance to states.  3.  State submits application, including spending plans, to ODP.  4.  ODP makes award to states noting any special conditions that must  be cleared before the funds can be used.  5.  State meets and ODP lifts special conditions, if applicable.  6.  State subgrants at least 80 percent of its funds to local  governments.  7.  Local governments purchase equipment directly or through the  state.  8.  Local governments submit receipts to the state for reimbursement.  9.  State draws down grant funds to reimburse local governments.
The total time required to complete these steps is dependent upon ODP  requirements and state and local laws, requirements, regulations, and  procedures. Generally, the DHS OIG report and the report of the House  Select Committee on Homeland Security found similar causes of delays in  getting funds to local governments and first responder agencies. These  included delays in completing state and local planning requirements and  budgets; legal requirements for the procedures to be used by local  governments in accepting state grant allocations; the need to establish  procedures for the use of the funds, such as authority to buy equipment  and receive reimbursement later; and procurement requirements, such as  bidding procedures. Generally, neither the IG report nor the House Select  Committee report found that the delays were principally due to ODP’s  grant management procedures and processes.
section_title: ODP Grant Awards to the States
paragraphs: Both the DHS OIG report and the House Select Committee report found  that ODP’s grant applicant process was not a major factor in delaying the  distribution of funds to states. The DHS OIG found that in fiscal years 2002  and 2003, ODP reduced the time it took to make on-line grant application  guidance and applications available to states, process grant applications,  and award the grants to states after applications were submitted. The DHS  OIG found that the total number of days from grant legislation enacted to  award of grants to states declined from on average 292 days for fiscal year  2002 grants to on average 77 days for fiscal year 2003 grants. For the three  states we examined, we found that the time between the enactment of the  appropriation and ODP’s award of the grant to these states declined from 8  months in fiscal year 2002 to 3 months for fiscal year 2003 State Homeland  Security Grant Program, Part I, and 2 months for fiscal year 2003 State  Homeland Security Grant Program, Part II.
One factor that did delay the states’ ability to use ODP grant funds was the  imposition of special conditions. In fiscal years 2002 and 2003, ODP  imposed special conditions for the state homeland security formula grants  if the state had failed to adequately complete one of the requirements of  the grant application. For example, in fiscal years 2002 and 2003, to  receive funding states had to submit detailed budget worksheets to  identify how grant funds would be used for equipment, training, and  exercises. To accelerate the grant distribution process, ODP would award  funds to states that had not completed the budget detail worksheets, with  the special condition that states and locals would be essentially unable to  use the funds until the required budgets were submitted and approved.  Thus, the time it took to lift the special conditions was largely dependent  upon the time it took state and local governments to submit the required  documentation. States could not begin to draw down on the grant funds  until the special conditions were met. In one state we reviewed, ODP  notified the state of the special conditions on May 28, 2003, and the  conditions were removed on August 6, 2003, after the state had met those  conditions. In another state, ODP notified the state of the special  conditions on September 13, 2002, and the conditions were removed on  March 18, 2003.
ODP imposed special conditions on both the fiscal year 2002 State  Domestic Preparedness Grant Program and the fiscal year 2003 State  Homeland Security Grant Program, Part I, but not on the State Homeland  Security Grant Program, Part II.
section_title: State Awards to Local Governments
paragraphs: After ODP makes its initial award, the state must subgrant at least 80  percent of its grant award to local units of government. In fiscal year 2003,  the states had to certify to ODP within 45 days that they had made these  subgrants. The subgrant entities and procedures can vary with each state,  making it hard to generalize about this phase of the distribution process.  In our work, we found that some states subgranted the funds to the county  level, while another subgranted to regional task forces composed of  several counties. Subgrantees also varied in their procedures to distribute  funds to local governments.  Some subgrantees managed the grant process  themselves, while others chose to pass funds further down, to a county or  city within the jurisdictional area.
subsections: section_title: Most States Met Deadline for Subgranting Funds But Some Local Jurisdictions Were Not Prepared to Spend Funds
paragraphs: As reported by the DHS OIG, Congress adopted appropriation language for  the fiscal year 2003 State Homeland Security Grant, Part II, that required  states to transfer 80 percent of first responder grant funds to local  jurisdictions within 45 days of the funds being awarded by ODP. This  requirement was included in the appropriation bill to ensure that states  pass funds down to local jurisdictions quickly, and ODP incorporated this  requirement into its grant application guidance. However, according to the  DHS OIG report, this action had a limited effect because most states met  the 45-day deadline by counting funds as transferred when the states  agreed to allocate a specific amount of the grant to a local jurisdiction,  even if the state had not determined how the funds would be spent or  when contracts for goods and services would be let.  Additionally, many  states and local jurisdictions delayed spending of prior year grant funds in  order to meet the fiscal year 2003 requirement. The House Select  Committee staff also reported that nearly all states met this 45-day  requirement with respect to 2003 funding as of February 2004, but noted  that this may not reflect the actual availability of funds for expenditures by  local jurisdictions. The committee report cited the example of Seattle,  Washington. While it had been awarded $30 million in May 2003, Seattle  received authorization to spend these funds only shortly before the April  2004 release of the committee’s report. In the three states we examined,  we also found that states had certified they had allocated funds to local  jurisdictions within the required 45-day period.
section_title: Various Local Legal and Procedural Requirements Took Time
paragraphs: According to the DHS OIG, state and local governments were sometimes  responsible for delaying the delivery of fiscal year 2002 grant funds to first  responders because various governing and political bodies within the  states and local jurisdictions had to approve and accept the grant funds.  Six out of the 10 states included in the DHS OIG’s sample reported that  their own state’s review and approval process was one of the top three  reasons that the funds had not been spent by the time the report was  published. For example, one of three states for which data were available  took 22 days to accept ODP’s award and 51 days to award a subgrant to  one of its local jurisdictions; the local jurisdiction did not accept the grant  for another 92 days. Another state took 25 days to accept ODP’s grant  award and up to 161 days to award the funds to its local jurisdictions.  Local jurisdictions then took up to 50 days to accept the awards.
Our work showed similar results. One city was notified on July 17, 2003  that grant funds were available for use, but the city council did not vote to  accept the funds until November 7, 2003.
The House Select Committee reported that, in over half of the states they  reviewed, local jurisdictions had not submitted detailed spending plans to  the states prior to the time the states had transferred grant funds to them.  Specifically, they found that often times, even though a reasonable  estimate of the available award amount was available months earlier,  many local jurisdictions waited to initiate their planning efforts until they  were officially notified of their grant awards. Because ODP imposed  special conditions in some grant years, these local jurisdictions, therefore,  could not begin to draw down funds until they provided the detailed  budget documentation, outlining how the funds would be spent, as  required by ODP.
For the fiscal year 2002 statewide homeland security grants, local  jurisdictions and state agencies were required to prepare, submit, and  receive approval of detailed budget work sheets that specifically  accounted for all grant funds provided. This specific detailing of items  included not only individual equipment items traditionally accounted for  as long-term capital equipment, but also all other items ordinarily recorded  in accounting records as consumable items, such as disposable plastic  gloves, that usually need not be accounted for individually. Preparing this  detailed budget information took time on the part of local jurisdictions to  prepare and for the states and ODP to review and approve.
Since the first round of fiscal year 2003 state homeland security grants,  ODP has not linked the submission and approval of detailed budget  information to the release of grant funds. ODP required the submission  and approval of the same detailed budget worksheets for the fiscal year  2003 statewide grants, but did not condition the release of funds on their  submission and approval. For the fiscal year 2004 grants, ODP still  requires the submission of detailed budget work sheets by local  jurisdictions to the state, but not to ODP, for its approval.
The DHS OIG also found that there were numerous reasons for delays in  spending grant funds. Some were unavoidable and others they found to be  remediable. In general, the DHS OIG found identifying the highest priority  for spending grant funds to be a difficult task. Most states the DHS OIG  visited were not satisfied with the needs analysis that they had done prior  to September 11, 2001. Some states took the time to update their homeland  security strategies, and one state delayed fiscal year 2002 grant spending  until it had completed a new strategy using ODP’s fiscal year 2003 needs  assessment tool. The DHS OIG also found little consistency in how the  states manage the grant process. The states used various methods for  identifying and prioritizing needs and allocating grant funds.  States may  rely on the work of regional task forces, statewide committees, county  governments, mutual aid groups, or local fire and police organizations to  identify and prioritize grant spending.
Both the DHS OIG report and House Select Committee report noted that  state and local procurements have, in some cases, been affected by delays  resulting from specific procurement requirements. Some states purchase  equipment centrally for all jurisdictions, while others sub-grant funds to  local jurisdictions that make their own purchases. In these latter instances,  local procurement regulations can affect the issuance of equipment  purchase orders. The House Select Committee report discussed how state  and local procurement processes and regulations could slow the  expenditure of grant funds. For example, in Kentucky, an effort was taken  to organize bidding processes for localities and to provide them with pre- approved equipment and services lists. However, state and local laws  require competitive bidding for any purchases above $20,000, a  requirement that can delay actual procurements. Moreover, if bids had  been requested for a proposal and those bid specifications were not met,  then the bidding process must start over again.  As Kentucky’s Emergency  Managing Director explained, “There is a process and procedure that must  be gone through before localities can actually spend the funds, and the  state has not identified funds that are exempt from these local rules of  procedure that are in place.”
In one of the jurisdictions for which we obtained documentation, we also  found that procurement regulations may require that funds be available  prior to the issuance of equipment purchase orders.  This requirement  took from June 18, 2003 to September 4, 2003 before purchase orders  could be issued. In the individual jurisdictions in the three states for which  we obtained documentation we also found that some apparent delays in  obligating grant funds resulted from the time normally required by local  jurisdictions to purchase and contract for items, to prepare requests for  proposals, evaluate them once received, and have purchase orders  approved by legal departments and governing councils and boards. In one  case, the time between the city controller’s release of funds to the  issuance of the first purchase order was about 3 months, from September  4, 2003, to December 15, 2003.
section_title: Conclusion
paragraphs: The reports by the DHS OIG and by the Select Committee, as well as the  preliminary work we have undertaken, support the conclusion that local  first responders may not have anticipated the natural delays that should  have been expected in the complex process of distributing dramatically  increased funding through multiple governmental levels while maintaining  procedures to ensure proper standards of accountability at each level. The  evidence available suggests that the process is becoming more efficient  and that all levels of government are discovering and institutionalizing  ways to streamline the grant distribution system. These increased  efficiencies, however, will not continue to occur unless federal, state, and  local government each continue to examine their processes for ways to  expedite funding for the equipment and training needed by the nation’s  first responders. At the same time, it is important that the quest for speed  in distributing funds does not hamper the planning and accountability  needed to ensure that the funds are spent on the basis of a comprehensive,  well-coordinated plan to provide first responders with the equipment,  skills, and training needed to be able to respond quickly and effectively to  a range of emergencies, including, where appropriate, major natural  disasters and terrorist attacks.
Mr. Chairman, this concludes my statement. I would be pleased to answer  any questions that you or other members of the subcommittee may have.
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