CHARLESTON, W.Va. — Who loses when agencies like FEMA aren’t able to keep a careful eye on grant money as it flows to state and local governments?
To state the obvious, the taxpayer.
The federal Office of Inspector General has cited billions of dollars in questioned costs over the years, regularly saying the Federal Emergency Management Agency should provide more vigorous oversight.
“Without adequate documentation, FEMA has no assurance that costs are valid and eligible, thereby resulting in questioned costs,” the Office of Inspector General wrote in a Sept. 5 report.
West Virginia legislators are gathering for a 10 a.m. Tuesday meeting to discuss the state’s response to disaster relief, particularly its handling of federal dollars.
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That issue was pushed to the forefront in West Virginia in recent weeks with the revelation that this state is under greater FEMA grant restrictions than any other state, aside from Puerto Rico.
“The federal action is the result of several years of DHSEM’s inability to comply with grant requirements and failure to remedy identified issues,” wrote the state’s Performance Evaluation and Research Division.
In a letter dated Nov. 12, 2015, FEMA notified then-Emergency Management Director Jimmy Gianato that the federal agency was placing West Virginia’s emergency management agency on manual reimbursement.
That meant additional requirements as West Virginia drew down federal dollars and passed the money to sub-recipients, which are usually local governments or school systems.
“It is an unusual enforcement step the agency has in its toolbox to help applicants become compliant with our requirements,” FEMA Region III Administrator MaryAnn Tierney said in a telephone interview.
The penalty affected the hazard mitigation grants program, public assistance grants, the community assistance program, cooperating technical partners and emergency management performance grants.
Extra layers of documentation are required before FEMA signs off on reimbursement.
“We felt the documentation collection and review process was inadequate, and it was a material weakness that created risk and the potential for deobligations in the future,” Tierney said.
Deobligation is when those who are initially approved for grant money have to give it up.
“We felt that was a risk not worth taking,” Tierney said. “To protect West Virginia and the applicants, we imposed this process to create more rigor in the system.”
The state Legislative Auditor concluded, with guidance from other state officials, that the manual reimbursement may add up to 90 days of additional time for any reimbursement request exceeding $100,000.
In an interview this month, FEMA officials disputed that the lag is quite that long.
“In our manual reimbursement procedure, we have up to 30 days to process a request,” Tierney said. “We are doing it even faster than our protocol says we have time to.”
The Office of Inspector General has repeatedly scolded FEMA for not doing enough to oversee federal grant money as it trickles from the federal government to grant recipients and then to subrecipients.
That’s exactly the process where West Virginia has been found wanting.
“Our reports clearly point to ongoing failures by subrecipients to comply with federal procurement requirements,” the federal Office of Inspector General wrote in a report from December, 2017.
“We also noted that grant recipients failed to provide subrecipients with adequate guidance and grant management.”
During fiscal years 2015 through 2017, the Office of Inspector General questioned more than $256 million in ineligible contract costs because subrecipients did not follow federal procurement regulations.
Moreover, the Office of Inspector General identified more than $191 million in ineligible costs that subrecipients may have incurred had the problems not been identified prior to the grants being obligated.
The Office of Inspector General concluded FEMA needs to do a better job of being sure grant recipients like West Virginia and subrecipients are fully aware of all federal procurement requirements.
“These failures can result in high-risk contracts that, in turn, may lead to excessive and ineligible costs,” the office wrote.
A separate report from the Office of Inspector General, released Dec. 20, 2017, was titled “FEMA faces significant challenges ensuring recipients properly manage disaster funds.”
That report notes that from fiscal 2009 through 2017, the office provided more than 1,400 recommendations to disallow unsupported and ineligible costs, put funds to better use and improve grant management oversight.
“We concluded these issues continue, in part, because FEMA does not adequately manage disaster funds or hold grant recipients accountable for properly managing disaster funds,” wrote the Office of Inspector General.
FEMA does not have effective policies, procedures and controls in place, according to the Office of Inspector General.
“This finding shows that FEMA was aware of its grant management issues and did not take effective actions to strengthen its internal controls,” wrote the Office Inspector General.
Over a 9-year period, the Office of Inspector General recommended that FEMA disallow $3.92 billion out of $14.31 billion that the office audited because it was considered ineligible or unsupported by documentation.
That’s about a quarter of the sample size.
“Our reports often attributed subrecipients’ noncompliance with federal regulations to the recipient’s lack of management and monitoring of subrecipients’ grant activities,” wrote the Office of Inspector General.
At the local level, the mayor of Clendenin also has issued repeated warnings that West Virginia doesn’t do enough to make sure grant subrecipients like her town are properly handling documentation.
“The state should be the oversight of all these municipalities to ensure there is no clawback at the end,” Mayor Shana Clendenin said last week.
“The state should be verifying that all FEMA protocols are followed to prevent de-obligation in the future.”
West Virginia has been improving, officials with FEMA Region III recently said.
Of the original heightened requirements handed down in 2015, West Virginia has been whittling away.
FEMA set up on-site visits in the past year to subrecipients such as the Division of Highways, to Logan, to Raleigh County and to the state School Building Authority.
“We got to a point where we had a monitoring plan, where we identified who they were going to go visit,” said Regeane Frederique, grants division director for FEMA Region III.
By the end of October, FEMA had received documentation from West Virginia, which has been in the review process.
“There are improvements,” Frederique said. “They’ve hired more staff around the areas of grant management. They are very open with discussions, holding bi-weekly meetings. I can say I see improvement.”
Tierney said she feels good about West Virginia’s progress.
FEMA just wants to be sure grant money is going where it should be, she said, toward eligible work that can be properly documented.
“This is not something we’re interested in keeping in perpetuity,” Tierney said.