Politics and Promises

Rhetoric meets the reality of a slowdown in homeland security funding.

onald Plusquellic has been the mayor of Akron, Ohio, for nearly two decades. He knows what the city’s vulnerabilities are, what it needs to do to prepare itself for disasters — natural or manmade — and how much that preparation is going to cost. What he does not know is where he’s going to find the money to pay for it.

Grants from the federal government will help, but the rules require cities to spend their own money first and then wait for reimbursement checks from the U.S. Treasury. And even in Akron, which Plusquellic acknowledges has weathered recent tough economic times better than many cities its size, fronting the money for multimillion-dollar equipment can be difficult.

”Our finance administrator has to certify that there is cash on hand before we can purchase anything,” Plusquellic explains. “We need an 800 MHz radio system that costs $15 million. How are we supposed to do this?”

Akron, population 217,000 and growing, has its share of potential terrorist targets. The city, once known as the “Rubber Capital of the World,” is still home to the Goodyear Tire & Rubber Co. and its fleet of world-famous blimps. The city now touts its leading role in polymer research, centered at the University of Akron’s Polymer Science Institute. It also boasts a minor league baseball park, the 8,500 seat Canal Park Stadium.

Plusquellic, who was elected president of the U.S. Conference of Mayors in June, says he doesn’t think terrorists would stage a 9/11-style assault in Akron. His worries tend to less-conspicuous but equally devastating plots, such as chemical or biological attacks in public places. He is more worried about the water-treatment plant, which serves 220,000 people in Akron plus about 150,000 in the surrounding area, than about terrorists downing the city’s trademark Goodyear blimp.

The mayor says that, nearly three years after the 9/11 terrorist attacks propelled local preparedness to the top of the national agenda, the process of obtaining federal funding to purchase new equipment or train public safety workers is frustratingly slow. Ohio officials and their federal counterparts spent months approving Akron’s plan for the new $15 million radio system, even though it was developed quickly and with the cooperation of surrounding jurisdictions. “In places where there may be legitimate problems with coordination and planning,” Plusquellic notes, “they’re going to be way down the line in terms of getting their funding.”

Indeed, city officials across the nation have been complaining loudly and often that federal homeland security dollars are not reaching them. A June 2004 report from the Conference of Mayors, for example, found that more than half of the 215 cities surveyed have not received funding from the $1.5 billion fiscal 2003 Federal First Responder/ Critical Infrastructure program. And nearly a quarter of those surveyed said they have not received any money from the $556 million fiscal 2003 State Domestic Preparedness program.

Since the 9/11 attacks, the Bush administration and Congress have set aside roughly $6.3 billion in terrorism preparedness grants for state and local governments. Another $3.5 billion is on tap for fiscal 2005. But a review earlier this year by the House Select Committee on Homeland Security, chaired by U.S. Representative Christopher Cox of California, found as much as $5.2 billion of that money is stuck in the funding pipeline — caught up in the bureaucracies of the Department of Homeland Security and state governments.

”Cities are being pinched, states are being squeezed and add to that calls from the FBI about threats that mean overtime for police, which is not reimbursable unless the administration raises the threat level,” Plusquellic says. “The federal government has to have a role in providing the levels of security that federal officials are recommending.”

Several recent studies, including a review by Cox’s committee, trace the funding delays to all levels of government. Despite the rhetoric of blame emanating from Capitol Hill, state houses and city halls, the real question is not who is at fault but whether the wheels of government can turn quickly enough to get the money flowing to where it’s needed most — before terrorists can strike again.

AN OUTDATED SYSTEM

A task force on state and local homeland security funding, created by Homeland Security Secretary Tom Ridge last March, couldn’t put its finger on who was to blame for the funding delays. But Massachusetts Governor Mitt Romney, who co-chaired the task force with Plusquellic, lays out the problem plainly. “The standard grant process and purchasing procedures that exist in our country at all levels of government don’t work terribly well if your objective is speed,” he says. They were set up to avoid fraud and waste and abuse. Which means, Romney points out, that “they have inherent within them a slow, methodical process.”

The task force also noted that, in addition to the reimbursement requirements, which are set out in the federal Cash Management Improvement Act of 1990, state and local government rules also hamper officials’ ability to quickly purchase homeland security-related equipment. And the lengthy process of developing federally mandated state homeland security strategies and long-term operational plans at times conflicts with urgent security needs such as overtime reimbursement.

The basic problem, says Gerard Murphy, director of the National Governors Association’s homeland security and technology division, is two-fold. First, the grant programs, some of which were in place before the 9/11 terrorist attacks, were not designed with immediacy in mind. Approvals are required by legislative bodies at the local and, sometimes, at the state levels before money can be spent. Then there are time-consuming procurement procedures that must be followed. And often, orders back up at equipment suppliers because so many states and localities are relying on a limited number of vendors.

In addition, state and local officials often misunderstood how the federal grant programs worked. “Some government officials thought they were going to get a check, that the money was going to show up in their bank account and they could simply draw on it, but that’s not the way it works,” Murphy says. “It’s a reimbursement program.”

FEUDING FORMULAS

The speed at which the money to fight terrorism is moving from the U.S. Treasury to local governments is taking a back seat right now to a broader debate: Is the money going where it is needed most? Politicians from rural states argue that their low-population states deserve at least a modicum of funding to prepare for all kinds of disasters — that agricultural operations are as likely targets for terrorists as skyscrapers. Opponents argue that the existing funding formula, in which each state and U.S. territory receives a base amount of funding, with the balance distributed based mainly on population, is an inefficient use of scarce resources that deprives areas considered to be at the highest risk of terrorist attacks of the funding they need to protect themselves.

The Cox committee report concluded in part that the existing system “has provided small counties across the country with relatively large awards of terrorism-preparedness money, while major cities such as New York, Los Angeles, Washington and Chicago struggle to address their needs in a near-constant heightened alert environment.” One rural Wyoming county with a population of 11,500, for instance, was awarded $546,000 in grants in 2003, while Jefferson County, Kentucky, which surrounds the city of Louisville, has a population of nearly 700,000 and has been designated by DHS as a high-threat urban area, received $783,000.

The Homeland Security Department has attempted to address that problem through the Urban Area Security Initiative, which is slated to send about $720 million in grants directly to the nation’s 50 largest cities and to public transportation systems in those cities in fiscal 2005.

Criticism of the base-funding approach for other grant programs remains, however. New York City Mayor Michael Bloomberg, for example, calls the present funding system “irrational,” “tragically misguided” and “creating grave hazards not just for New Yorkers but for all Americans.” In response to Bloomberg’s complaints and others like them, several legislators have proposed basing the distribution of funds on the terrorist threat faced by a particular locality. Cox is leading that effort in the House. His Faster and Smarter Funding for First Responders Act (HR 3266), introduced in October 2003, would base grants to state and local governments primarily on risk. “Terrorists are not arbitrary in their selection of targets,” Cox says, “and we shouldn’t be arbitrary in how we prepare to deal with them.”

TIME LIMITS

Cox’s bill also attempts to address the issue of how quickly funding reaches local governments by reinforcing an existing 45-day limit for states or regions to pass grant money on to local entities. The legislation would impose financial penalties on states that fail to meet that deadline, and it would allow DHS in some cases to bypass state and regional government agencies and award money directly to local governments.

In the Senate, Susan Collins of Maine, who chairs the Governmental Affairs Committee, is also concerned about the rate at which grant money is flowing to the local level. Her bill, the Homeland Security Grant Enhancement Act (S. 1245) would require DHS to provide 10 percent of its grants directly to local governments, by-passing state bureaucracies. Like the Cox legislation, Collins’ bill also would keep in place a requirement that states pass on 80 percent of their grant funds to local governments and distribute the funds to localities within 45 days of receiving their grant awards. Her committee approved Collins’ bill unanimously in June 2003, but the Senate leadership still had not brought the legislation up for a vote by the full Senate.

Congress has imposed time requirements in earlier legislation, including the fiscal 2003 homeland security appropriations bill, but with only limited effect. While nearly every state met the statutory 45-day deadline for passing through funding to local governments, the statistic “can be misleading with respect to the actual availability of funds for expenditure by localities,” Cox notes. The Ridge task force reached a similar conclusion, finding that “while statutory deadlines for ’obligating’ or making these funds available for use by county, municipal and tribal governments were met, it is important to understand that ’obligation’ is not synonymous with ’expenditure.’ Significant obstacles stood in the way of these funds being quickly spent and therefore ’drawn down’ from the federal treasury by state, county, municipal and/or tribal entities.”

Those obstacles included administrative and procurement policies at the state and local level, lack of personnel to administer the grants, the reimbursement provisions of the 1990 Cash Management Improvement Act and the absence of up-to-date and accurate data about the status of grant performance at all levels of government. In addition, the task force found that the “extraordinarily complex” grant-distribution system “was not designed to coordinate and monitor the huge amount of funding that was now being made available to every state and territory as well as thousands of local governments in the nation.”

Plusquellic says there is not a lot local governments can do on their end to fix that problem. “The federal government has to change the rules that were in place prior to September 11,” he says. “The Cash Management Act is a strategy the federal government uses to hold on to its money, to keep the interest flowing into the federal treasury.” In effect, it forces cities to spend their own money first — and sometimes they don’t have it to spend. Both Cleveland and Pittsburgh, for instance, recently announced layoffs in their police and fire departments. “So at a time when cities are laying off first responders, they’re being forced to spend their own money on homeland security upfront,” Plusquellic says.

Josh Filler, director of the DHS’s Office of State and Local Government Coordination, says the federal government is taking steps to alleviate some of the upfront burdens state and local governments are being asked to carry. For instance, the rules say that states can draw money directly from the Treasury, without waiting for a reimbursement, only if they spend it within three to five days. Because state and local governments often are required to have cash on hand before even beginning a procurement, the three- to five-day limit doesn’t provide enough time for the often-lengthy purchasing processes.

The Ridge task force recommended that Congress allow funds to be provided to state and municipal entities in advance of expenditure for up to 120 days. That, Filler says, should give them enough time to carry out a procurement.

Language in the House version of the fiscal 2005 Homeland Security Appropriations bill would extend the expenditure window. The Senate version of the bill does not have similar language, but Filler says senators are aware of the House language and understand the need to include the provision in the conference bill.

But state and local officials can’t rely solely on the federal government to remove the blockages in the funding pipeline. “Local officials should look closely at their own processes when they’re considering how to improve the system,” Filler says. “Those rules and regulations have a significant impact on the speed at which the money moves.”

The March 2004 inspector general’s report also found the process slowed down by state and local jurisdictions that had delayed spending funds pending the completion of state-wide risk assessments and homeland security strategies and the development of detailed spending plans. “Spending the funds wisely,” the report said, “was more important than spending them immediately.”

That’s good news to NGA’s Murphy, who served on the staff of the Ridge task force. “The silver lining is that the deliberate process allows states and regions to engage in planning across levels of government and disciplines, and to guard against frivolous or inappropriate expenditures,” he says.

CHECKS AND BALANCES

Adding to the speed-of-funding difficulty is that the grants in question are for homeland security, a policy area that did not exist until 9/11. A significant percentage of the grant programs apply to a number of different agencies: law enforcement, emergency management and public health. That means there are a lot of officials in the planning process, including agencies that do not have a strong history of working well together.

While that makes simple or quick solutions difficult to come by, progress is being made. The task force report found that DHS’s Office for Domestic Preparedness, now part of the OSLGC, has streamlined its processes so that it requires less upfront paperwork from state, local and tribal governments. That should expedite the distribution and expenditure of grant funds.

The paperwork involved filling out detailed budget worksheets explaining exactly how the grant money was going to be spent. Lifting the requirement gives states greater responsibility to oversee how the money is being spent at the local level while Homeland Security retains after-the-fact audit capability.

The department’s program guidance for fiscal 2004 also required states to work with federal, county, municipal and tribal governments to develop strategies to guide the use of DHS funds. States also are taking steps to improve their systems and cooperative efforts. Nebraska’s Emergency Management Agency, for example, launched an “awareness, education and training” program so that state, city and county officials fully understand the grant process.

In South Carolina, a Counter-Terrorism Coordinating Council was created in 2003 to improve cooperation and coordination among governmental and private entities. The council also formed a grants committee to make recommendations for funding priorities based on the state’s homeland security strategy.

In an effort to streamline the flow of money or equipment down to the local level, several states have reorganized their procurement systems, in some cases by developing statewide contracts that allow local governments to purchase equipment and services at pre-negotiated rates. In Kansas, for example, state officials set up a password-controlled Web site that allows municipal officials to view their grant-allocation balances and place orders for equipment until the allocation is exhausted. In effect, the state retains the funds and the locality receives the equipment. And in Louisiana, state officials also are establishing a statewide procurement contract, modeled after the federal General Services Administration’s list.

The overall effect, according to William O. Jenkins, director of homeland security and justice issues at the Government Accountability Office, is that “the process is becoming more efficient and all levels of government are discovering and institutionalizing ways to streamline the grant distribution system.” But Jenkins told the House Subcommittee on Economic Development, Public Building and Emergency Management in May that “These increased efficiencies... will not continue to occur unless federal, state and local governments each continue to examine their processes for ways to expedite funding for the equipment and training needed by the nation’s first responders.”

While the push for reform is gaining momentum, mayors like Plusquellic say time is not on their side. “There needs to be a balance between the urgency that we feel and the careful planning that the state and federal officials want,” he says, noting that the arrest in June of Nuradin Abdi, a 32-year-old Somali accused of plotting to blow up a Columbus, Ohio, shopping mall, is a case in point. “Even in middle America, there are potential targets,” he says. “We have places where people come to be entertained, to see events, and we can put extra police there. But we just don’t have the manpower to protect everything.”

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