oversight

Homeland Security: Reforming Federal Grants to Better Meet Outstanding Needs

Published by the Government Accountability Office on 2003-09-03.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                               United States General Accounting Office

GAO                            Testimony
                               Before the Subcommittee on Terrorism, Technology and
                               Homeland Security, Committee on the Judiciary,
                               U.S. Senate


For Release on Delivery
Expected at 2:15 p.m., EDT
Wednesday, September 3, 2003
                               HOMELAND SECURITY
                               Reforming Federal Grants
                               to Better Meet Outstanding
                               Needs
                               Statement of Paul L. Posner, Managing Director
                               Federal Budget Issues and Intergovernmental Relations,
                               Strategic Issues




GAO-03-1146T
                               A
                                                September 3, 2003


                                                HOMELAND SECURITY

                                                Reforming Federal Grants to Better Meet
Highlights of GAO-03-1146T, a report to         Outstanding Needs
Subcommittee on Terrorism, Technology
and Homeland Security, Committee on the
Judiciary, U.S. Senate




The challenges posed in                         The federal grant system for first responders is highly fragmented, which can
strengthening homeland security                 complicate coordination and integration of services and planning at state
exceed the capacity and authority               and local levels. In light of the events of September 11, 2001 and the
of any one level of government.                                                                                   th
                                                establishment of the Department of Homeland Security, the 108 Congress
Protecting the nation calls for a               faces the challenge of redesigning the homeland security grant system. In so
truly integrated approach bringing
together the resources of all levels
                                                doing, Congress must balance the needs of our state and local partners in
of government. The Council on                   their call for both additional resources and more flexibility with the nation’s
Foreign Relations study—                        goals of attaining the highest levels of preparedness. Given scarce federal
Emergency Responders:                           resources, appropriate accountability and targeting features need to be
Drastically Underfunded,                        designed into grants to ensure that the funds provided have the best chance
Dangerously Unprepared—states                   of enhancing preparedness.
that in the aftermath of the
September 11 attacks, the United                Addressing the underlying fragmentation of grant programs remains a
States must prepare based on the                challenge for our federal system in the homeland security area. Several
assumption that terrorists will                 alternatives might be employed to overcome problems fostered by
strike again. Although it                       fragmentation in the federal aid structure, including consolidating grant
acknowledges the nation’s
preparedness has improved, the
                                                programs through block grants, establishing performance partnerships, and
Council’s report highlights gaps in             streamlining planning and administrative requirements. Grant programs
preparedness including shortfalls               might be consolidated using a block grant approach, in which state and local
in personnel, equipment,                        officials bear the primary responsibility for monitoring and overseeing the
communications, and other critical              planning, management, and implementation of activities financed with
capabilities. Given the many needs              federal grant funds. While block grants devolve authority for decisions, they
and high stakes, it is critical that            can be designed to facilitate accountability for national goals and objectives.
the design of federal grants be
geared to fund the highest priority             Congress could also choose to take a more hybrid approach that would
projects with the greatest potential
                                                consolidate a number of narrowly focused categorical programs while
impact for improving homeland
security. This testimony discusses              retaining strong standards and accountability for discrete federal
possible ways in which the grant                performance goals. One example of this model involves establishing
system for first responders might               performance partnerships, exemplified by the initiative of the Environmental
be reformed.                                    Protection Agency in which states may voluntarily enter into performance
                                                agreements with the agency’s regional offices covering the major federal
                                                environmental grant programs. Another option would be to simplify and
                                                streamline planning and administrative requirements for the grant programs.
We do not make recommendations
                                                Whatever approach is chosen, it is important that grants be designed to
in this testimony; however, if
Congress chooses to reform the                  target funds to states and localities with the greatest need, discourage the
grant system we have provide                    replacement of state and local funds with federal funds, and strike the
options including consolidating                 appropriate balance between accountability and flexibility.
grant programs through block
grants, establishing performance
partnerships, and streamlining
planning and administrative
requirements.
www.gao.gov/cgi-bin/getrpt?GAO-03-1146T.

To view the full product, including the scope
and methodology, click on the link above.
For more information, contact Paul L. Posner
at (202) 512-9573 or posnerp@gao.gov.
Mr. Chairman and Members of the Subcommittee:

I appreciate the opportunity to be here today to discuss issues critical to
successful federal leadership of, assistance to, and partnership with state
and local governments to enhance homeland security. As you know, the
challenges posed in strengthening homeland security exceed the capacity
and authority of any one level of government. Protecting the nation against
these unique threats calls for a truly integrated approach, bringing together
the resources of all levels of government.

There is a great deal of room for improvement in how the federal
government provides assistance to state and local governments to enhance
their levels of preparedness for terrorist acts. We testified earlier this year
that the federal grant system for first responders is highly fragmented and
that the fragmented delivery of federal assistance can complicate
coordination and integration of services and planning at state and local
levels.1

The Council on Foreign Relations report rightly points out that in the
aftermath of the September 11 attacks, the United States must plan and
prepare on the assumption that terrorists will strike again.2 Given the many
needs and high stakes involved, it is all the more important that the
structure and design of federal grants be geared to fund the highest priority
projects with the greatest potential impact for improving homeland
security. Sustaining support for the necessary funding over the longer term
will ultimately depend on rationalizing our grant system to streamline and
simplify overlapping programs, promote appropriate targeting, and ensure
accountability for the results achieved with scarce federal resources.
Accountability needs to be built in on the front end, not after the funds are
expended. Now is the time for policymakers to step back and rationalize
the structure and design of first responder grant programs to improve their
potential effectiveness.

Today, I would like to start by providing a perspective on the Council’s
report on the preparedness of first responders throughout the nation. I will


1
  U.S. General Accounting Office, Federal Assistance: Grant System Continues to Be
Highly Fragmented , GAO-03-718T (Washington, D.C.: Apr. 29, 2003).
2
  Report of an Independent Task Force Sponsored by the Council on Foreign Relations,
Emergency Responders: Drastically Underfunded, Dangerously Unprepared (New York,
NY: 2003).




Page 1                                                                   GAO-03-1146T
             then focus on the system of homeland security grants and explain how the
             system continues to be highly fragmented, potentially resulting in
             duplication and overlap among federal programs. Finally, I would like to
             focus on grants design options to improve targeting, fiscal accountability,
             and results through the intergovernmental homeland security partnership.

             This testimony draws upon our wide-ranging ongoing and completed work
             on federal grants management issues, grant reform efforts, homeland
             security, and performance management initiatives. We conducted our work
             in accordance with generally accepted government auditing standards.



Background   The Council on Foreign Relations study sets the stage for rethinking the
             federal role in assisting communities prepare for homeland security.
             Although acknowledging that the nation’s preparedness has improved, the
             Council’s report highlights some of the significant gaps in preparedness
             including shortfalls in personnel, equipment, communications, and other
             critical capabilities in local services.

             The Council’s report attempts to fill a void by estimating unmet needs for
             emergency responders. The Council’s 5-year estimate of approximately
             $98 billion across all levels of government was developed in concert with
             The Concord Coalition and the Center for Strategic and Budgetary
             Assessments. It was based on data made available by professional
             associations and others in the areas of fire service, urban search and
             rescue, hospital preparedness, public health, emergency 911 systems,
             interoperable communications, emergency operations centers,
             animal/agricultural emergency response, emergency medical services
             systems, emergency management planning and coordination, and
             emergency response regional exercises. However, the report clearly states
             that it does not include estimates for certain costs such as overtime for
             training and other estimated needs in several critical mission areas, such as
             the needs of police forces, because national police organizations were
             unable to provide the information.

             The total estimate is characterized in the report as being very preliminary
             and imprecise given the absence of comprehensive national preparedness
             standards. As the report itself acknowledges, the analysis is intended to
             foster national debate by focusing on the baseline of preparedness and
             steps needed to promote higher levels of readiness.




             Page 2                                                           GAO-03-1146T
The report performs a service in beginning an important dialogue on
defining standards to assess readiness and recommends the development
of a better framework and procedures to develop more precise estimates of
national requirements and needs. The report concludes that the basis for
funding decisions would be improved by agreement on a more detailed and
systematic methodology to determine national requirements grounded in
national standards defining emergency preparedness.

We at GAO have not evaluated the methodology used in the Council’s
report. However, we have issued a report evaluating needs assessments
performed by other agencies in the area of public infrastructure. That
report highlights best practices that may prove useful if used by the
Department of Homeland Security or other public or private entities in
analyzing homeland security preparedness needs in the future.3 The
practices used by these agencies to estimate funding needs varied widely,
but we were able to benchmark their assessments against best practices
used by leading public and private organizations. They also reflect
requirements that the Congress and the Office of Management and Budget
have placed on federal agencies that are aimed at improving capital
decisionmaking practices.

Among these best practices for infrastructure, there are several that might
be considered useful and relevant when conducting homeland security
capability assessments. For example, some agencies’ assessments focus
on resources needed to meet the underlying missions and performance
goals. This type of results-oriented assessment is based on the actions
needed to attain specific outcomes, rather than being simply a compilation
of all unmet needs regardless of their contribution to underlying outcomes
and goals. Assessments might also consider alternative approaches to
meeting needs for cost effectiveness such as reengineering existing
processes and improving collaboration with other governments and the
private sector. Best-practice agencies use cost-benefit analysis to include
only those needs for which benefits exceed costs; in cases where benefits
are difficult to quantify, assessments could include an analysis that
compares alternatives and recommends the most cost-effective (least-cost)
option for achieving the goal. Some agencies also rank projects based on
established criteria such as cost-effectiveness, relative risk, and potential
contribution to program goals. Finally, we found that best-practice


3
  U.S. General Accounting Office, U.S. Infrastructure: Agencies’ Approaches to Developing
Investment Estimates Vary, GAO-01-835 (Washington, D.C.: July 20, 2001).




Page 3                                                                     GAO-03-1146T
                    agencies have a process to independently review the quality of data used to
                    derive estimates.



Fragmentation in    GAO’s work over the years has repeatedly shown that mission
                    fragmentation and program overlap are widespread in the federal
Homeland Security   government and that crosscutting program efforts are not well
Grants for First    coordinated. As far back as 1975, GAO reported that many of the
                    fundamental problems in managing federal grants were the direct result of
Responders          the proliferation of federal assistance programs and the fragmentation of
                    responsibility among different federal departments and agencies.4 While
                    we noted that the large number and variety of programs tended to ensure
                    that a program is available to meet a defined need, we found 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. Like GAO,
                    Congress is aware of the challenges facing grantees in the world of federal
                    grants management. In 1999, it passed the Federal Financial Assistance
                    Management Improvement Act (P.L. 106-107), with the goal of improving
                    the effectiveness and performance of federal financial assistance
                    programs, simplify federal financial assistance application and reporting
                    requirements, and improve the delivery of services to the public.

                    The 108th Congress faces the challenge to redesign the nation’s homeland
                    security grant programs in light of the events of September 11, 2001 and the
                    establishment of the Department of Homeland Security (DHS). In so doing,
                    Congress must balance the needs of our state and local partners in their
                    call for both additional resources and more flexibility with the nation’s
                    goals of attaining the highest levels of preparedness. At the same time, we
                    need to design and build in appropriate accountability and targeting
                    features to ensure that the funds provided have the best chance of
                    enhancing preparedness.




                    4
                      U.S. General Accounting Office, Fundamental Changes Are Needed in Federal Assistance
                    to State and Local Governments, GAO/GGD-75-75 (Washington, D.C.: Aug. 19, 1975).




                    Page 4                                                                  GAO-03-1146T
Funding increases for combating terrorism have been dramatic and reflect
the high priority that the administration and Congress place on this
mission. As the Council’s report observes, continuing gaps in preparedness
may prompt additional funds to be provided. The critical national goals
underlying these funding increases bring a responsibility to ensure that this
large investment of taxpayer dollars is wisely applied. We recently
reported on some of the management challenges that could stem from
increased funding and noted that these challenges—including grants
management—could impede the implementation of national strategies if
not effectively addressed.5

GAO has testified before on the development of counter-terrorism
programs for state and local governments that were similar and potentially
duplicative.6 Table 1 shows many of the different grant programs that can
be used by first responders to address the nation’s homeland security.7 To
illustrate the level of fragmentation across homeland security programs,
we have shown in table 1 the significant features for selected major
assistance programs targeted to first responders. As the table shows,
substantial differences exist in the types of recipients and the allocation
methods for grants addressing similar purposes. For example, some grants
go directly to local first responders such as firefighters while at least one
goes to state emergency management agencies and another directly to state
fire marshals. The allocation methods differ as well—some are formula
grants while the others involve discretionary decisions by federal agency
officials on a project basis. Grant requirements differ as well—DHS’
Assistance to Firefighters Grant has a maintenance of effort requirement
(MOE) while the State Fire Training Systems Grant has no similar
requirement.




5
  U.S. General Accounting Office, Combating Terrorism: Funding Data Reported to
Congress Should Be Improved, GAO-03-170 (Washington, D.C.: Nov. 26, 2002).
6
  U.S. General Accounting Office, Combating Terrorism: Intergovernmental Partnership
in a National Strategy to Enhance State and Local Preparedness, GAO-02-547T
(Washington, D.C.: Mar. 22, 2002).
7
  While the selected grant programs listed in table 1 could be placed into the categories used
in the Council’s report, we have not reviewed the methodology used by the Council to make
its budgetary estimates.




Page 5                                                                         GAO-03-1146T
Table 1: Characteristics of Selected Homeland Security Grant Programs

                                                                                       Funding Formulas And Cost Sharing
Grant                        Federal Agency     Grantee                    MATCH   MOE Provisions
State Homeland Security      ODP/ DHS           State and local units of                FY2003 allocations determined by using
Grant Program                                   government                              a base amount of .75 percent of the total
                                                                                        allocation to the states (including D.C.
                                                                                        and Puerto Rico) and .25 percent of the
                                                                                        total allocation for the territories, with the
                                                                                        balance of funds being distributed on a
                                                                                        population-share basis.
Emergency Management         FEMA/DHS           State and local units of   ✔            For each state, a target allocation is
Performance Grants                              government                              derived by calculating the same
                                                                                        proportion of available funds as the state
                                                                                        received the prior year.

                                                                                        A matching requirement is calculated for
                                                                                        each state. Each recipient's cost share
                                                                                        percentage will increase by 1 percent
                                                                                        over the prior year until the 50/50 level is
                                                                                        reached.
Urban Areas Security         ODP/DHS            Selected cities and                     Funds distributed according to formula—
Initiative                                      states chosen by the                    a combination of current threat estimates,
                                                Secretary of DHS                        critical assets within the urban area,
                                                                                        population and population density—that
                                                                                        is a weighted combination of each factor,
                                                                                        the results for which are ranked and used
                                                                                        to calculate the proportional allocation of
                                                                                        resources.
Urban Areas Security         ODP/DHS            Selected mass transit                   Non-supplanting certification required.
Initiative -Transit System                      systems chosen by the
Security Grant Program                          Secretary of DHS
Urban Areas Security         ODP/DHS            State and local                         Non-supplanting certification required.
Initiative – Port Security                      government entities and
Grant Program                                   commercial companies
                                                to enhance security at
                                                selected ports
First Responder Counter-     FEMA/DHS           Fire and emergency                      None
Terrorism Assistance                            first responders; law
                                                enforcement personnel
                                                with operational and/or
                                                incident management
                                                responsibilities
State Fire Training          FEMA/DHS           Representatives from                    None
Systems Grants (National                        the 50 State Fire
Fire Academy Training                           Training Systems
Grants)




                                              Page 6                                                                    GAO-03-1146T
(Continued From Previous Page)
                                                                                            Funding Formulas And Cost Sharing
Grant                        Federal Agency        Grantee                    MATCH   MOE   Provisions
Hazardous Materials          FEMA/DHS              States, locals, tribes,                  None
Assistance Program                                 territories, State
                                                   Emergency Response
                                                   Committees, and Local
                                                   Emergency Planning
                                                   Commissions
Hazardous Material           FEMA/DHS              Tribal government          ✔             Matching requirement of 20 percent can
Training Program                                                                            be satisfied with cash or third party in-
                                                                                            kind contribution.
Assistance to Firefighters   FEMA/DHS              Fire departments in the ✔          ✔     Applicants who protect a population of
Grant                                              states. An Emergency                     50,000 or less must provide a nonfederal
                                                   Management Services                      cost-share of not less than 10 percent of
                                                   unit can apply if the unit               the total award. Applicants who protect a
                                                   is under the auspices of                 population of 50,000 or more must
                                                   a fire department.                       provide a nonfederal cost-share of not
                                                                                            less than 30 percent of the total award.

                                                                                            This program also has a maintenance-of-
                                                                                            effort requirement.
Edward Byrne Memorial        Bureau of Justice     State and local units of   ✔       ✔     Each participant state receives a base
State and Local Law          Assistance in the     government                               amount of $500,000 or .25 percent of the
Enforcement Assistance       Office of Justice                                              amount available for the program,
(Byrne Formula Grant         Programs,                                                      whichever is greater, with the remaining
Program)                     Department of                                                  funds allocated to each state on the basis
                             Justice (DOJ)                                                  of the state's relative share of total U.S.
                                                                                            population.

                                                                                            Match for the formula grant programs will
                                                                                            be provided for on a project-by-project
                                                                                            basis, statewide basis, unit-of-
                                                                                            government basis, or a combination of
                                                                                            the above.

                                                                                            The Act restricts the use of funds for
                                                                                            supplanting state and local funds and
                                                                                            land acquisition.
Local Law Enforcement        Bureau of Justice     State and local units of   ✔       ✔     The federal funds may not exceed 90
Block Grants Program         Assistance in the     government                               percent of the total costs of a program.
                             Office of Justice
                             Programs, DOJ                                                  Federal funds may not be used to
                                                                                            supplant state and local funds.
Public Safety Partnership    Office of             State and local units of   ✔             Some grants, such as for hiring and the
and Community Policing       Community             government                               Schools Grant Program, require no local
Grants (COPS)                Oriented Policing                                              percentage match. Other awards
                             Services, DOJ                                                  generally are made for 75 percent of
                                                                                            allowable project costs.




                                                 Page 7                                                                  GAO-03-1146T
(Continued From Previous Page)
                                                                                                                       Funding Formulas And Cost Sharing
Grant                                   Federal Agency                Grantee                            MATCH   MOE   Provisions
Law Enforcement                         FBI/DOJ                       All authorized                                   None
Assistance – FBI Field                                                municipal, county, local
Police Training                                                       and state criminal
                                                                      justice personnel
State and Local Anti-                   Bureau of Justice             State and local law                              None
Terrorism Training                      Assistance in the             enforcement and
                                        Office of Justice             prosecution authorities
                                        Programs, DOJ
Emergency Management                    FEMA/DHS                      Individuals who need                             None
Institute -- Resident                                                 emergency
Educational Program                                                   management training
                                                                      and are assigned to an
                                                                      emergency
                                                                      management position in
                                                                      State, local, or tribal
                                                                      government
Emergency Operations                    FEMA/DHS                      States, D.C. and                   ✔             Funds awarded in two phases. In Phase
Centers                                                               territories. Local                               1, each state will be allocated $50,000
                                                                      governments may                                  with no matching for an initial assessment
                                                                      receive assistance as                            of hazards, vulnerabilities and risk. Phase
                                                                      subgrantees to the                               2 grants used to address the most
                                                                      state                                            immediate deficiencies including
                                                                                                                       modification, new construction and
                                                                                                                       retrofitting facilities has a 50 percent
                                                                                                                       nonfederal matching.
CDC - Investigations &                  CDC/HHS                       States, political                                None
Technical Assistance                                                  subdivisions of states,
                                                                      local health authorities,
                                                                      and organizations with
                                                                      specialized health
                                                                      interests may apply
Public Health and Social                Health Resources   Federal agencies, state                                     None
Services Emergency                      and Services       and local governments,
Fund—Bioterrorism                       Administration/HHS and other service
Hospital Preparedness                                      providers in areas
Program                                                    impacted
Interoperable                           Emergency                     Local governments                  ✔             Grant awards required a 25 percent
Communications                          Preparedness and              nominated by state or                            nonfederal matching. The match does
Equipment                               Response                      territory government.                            not need to be a cash match.
                                        Directorate/DHS
Community Emergency                     FEMA/DHS                      States, D.C. and                                 States (including D.C. and Puerto Rico)
Response Teams (CERT)                                                 territories. Local                               and territories will be allocated a base
                                                                      governments may                                  amount of .75 percent and .25 percent
                                                                      receive assistance as                            respectively of the total amount available.
                                                                      subgrantees to the                               The remaining funds will be allocated
                                                                      state.                                           according to population and added to the
                                                                                                                       base
Source: Catalogue of Federal Domestic Assistance, August 2003; Congressional Research Service reports.




                                                                  Page 8                                                                             GAO-03-1146T
Table 2 shows that considerable potential overlap exists in the activities
that these programs support—for example, funding for training is provided
by most grants in the table and several provide for all four types of needs.



Table 2: Overlap and Duplication in Selected Homeland Security Grant Programs

Grant                                  Equipment   Training   Exercises    Planning
State Homeland Security Grant          •           •          •            •
Program (SHSGP)
Emergency Management                               •          •            •
Performance Grants (EMPG)
Urban Areas Security Initiative        •           •          •            •
Urban Areas Security Initiative –      •           •          •            •
Transit System
Urban Areas Security Initiative –      •           •          •
Port Security Grant Program
First Responder Counter-Terrorism                  •
Assistance
State Fire Training Systems Grants                 •
(National Fire Academy Training
Grants)
Hazardous Materials Assistance                     •          •            •
Program
Hazardous Material Training                        •
Program
Assistance to Firefighters Grant       •           •          •            •
Edward Byrne Memorial State and        •           •          •            •
Local Law Enforcement Assistance
(Byrne Formula Grant Program)
Local Law Enforcement Block            •           •                       •
Grants Program (LLEBG)
Public Safety Partnership and                      •
Community Policing Grants (COPS)
Law Enforcement Assistance – FBI                   •
Field Police Training
State and Local Anti-Terrorism                     •
Training
Emergency Management Institute                     •
Resident Educational Program
Emergency Operations Centers
(Facilities grant to encourage
development/retrofitting of centers)




Page 9                                                                    GAO-03-1146T
(Continued From Previous Page)
Grant                                                Equipment           Training         Exercises       Planning
Centers for Disease Control –                                                                             •
Investigations & Technical
Assistance
Public Health and Social Services                    •                   •                •               •
Emergency Fund—Bioterrorism
Hospital Preparedness Program
Interoperable Communications                         •
Equipment
Community Emergency Response                         •                   •
Teams (CERT)
Source: Catalogue of Federal Domestic Assistance, August 2003; Congressional Research Service reports.


The fragmented delivery of federal assistance can complicate coordination
and integration of services and planning at state and local levels. Homeland
security is a complex mission requiring the coordinated participation of
many federal, state, and local government entities as well as the private
sector. As the national strategy issued by the administration last summer
recognizes, preparing the nation to address the new threats from terrorism
calls for partnerships of many disparate actors at many levels in our
system.8 Within local areas, for example, the failure of local emergency
communications systems to operate on an interoperable basis across
neighboring jurisdictions reflects coordination problems within local
regions. Local governments are starting to assess how to restructure
relationships along contiguous local entities to take advantage of
economies of scale, promote resource sharing, and improve coordination
on a regional basis. Our previous work suggests that the complex web of
federal grants used to allocate federal aid to different players at the state
and local level may continue to reinforce state and local fragmentation.

Some have observed that federal grant restrictions constrain the flexibility
state and local officials need to tailor multiple grants to address state and
local needs and priorities. For example, some local officials have testified
that rigid federal funding rules constrain their flexibility and cannot be
used to fund activities that meet their needs. We have reported that overlap
and fragmentation among homeland assistance programs fosters
inefficiencies and concerns in first responder communities. State and local
officials have repeatedly voiced frustration and confusion about the


8
 The White House, Office of Homeland Security, National Strategy for Homeland Security
(Washington, D.C.: July 16, 2002).




Page 10                                                                                                  GAO-03-1146T
                          burdensome and inconsistent application processes among programs. We
                          concluded that improved coordination at both federal and state and local
                          levels would be promoted by consolidating some of these first responder
                          assistance programs.9



Rationalizing the First   Using grants as a policy tool, the federal government can engage and
                          involve other levels of government and the private sector in enhancing
Responder Grant           homeland security while still having a say in recipients’ performance and
System                    accountability. The structure and design of these grants will play a vital
                          role in determining success and ensuring that scarce federal dollars are
                          used to achieve critical national goals.



Consolidating Grants      Addressing the underlying fragmentation of grant programs remains a
                          challenge for our federal system in the homeland security area. Several
                          alternatives have been pursued in the past to overcome problems fostered
                          by fragmentation in the federal aid structure. I will discuss three briefly
                          here – block grants, performance partnerships, and streamlining planning
                          and administrative requirements.

                          Block grants are one way Congress has chosen to consolidate related
                          programs. Block grants currently are used to deliver assistance in such
                          areas as welfare reform, community development, social services, law
                          enforcement, public health, and education. While such initiatives often
                          involved the consolidation of categorical grants, block grants also typically
                          devolve substantial authority for setting priorities to state or local
                          governments. Under block grants, state and local officials bear the primary
                          responsibility for monitoring and overseeing the planning, management,
                          and implementation of activities financed with federal grant funds.
                          Accordingly, block grant proposals generally call for Congress to make a
                          fundamental decision about where power and authority to make decisions
                          should rest in our federal system for a particular program area.




                          9
                            U.S. General Accounting Office, Combating Terrorism: Selected Challenges and Related
                          Recommendations, GAO-01-822 (Washington, D.C., Sept. 20, 2001).




                          Page 11                                                                   GAO-03-1146T
While block grants devolve authority for decisions, they can and have been
designed to facilitate some accountability for national goals and objectives.
Since federal funds are at stake, Congress typically wants to know how
federal funds are spent and what state and local governments have
accomplished. Indeed, the history of block grants suggests that the absence
of national accountability and reporting for results can either undermine
continued congressional support or prompt more prescriptive controls to
ensure that national objectives are being achieved.10

Given the compelling national concerns and goals for homeland security,
Congress may conclude that the traditional devolution of responsibility
found in a pure block grant may not be the most appropriate approach.
Congress might instead choose a hybrid approach—what we might call a
“consolidated categorical” grant which would consolidate a number of
narrower categorical programs while retaining strong standards and
accountability for discrete federal performance goals. State and local
governments can be provided greater flexibility in using federal funds in
exchange for more rigorous accountability for results.

One example of this model involves what became known as “performance
partnerships,” exemplified by the initiative of the Environmental
Protection Agency (EPA). Under this initiative, states may voluntarily
enter Performance Partnership Agreements with EPA regional offices
covering the major federal environmental grant programs. States can
propose to use grants more flexibly by shifting federal funds across
programs but they are held accountable for discrete or negotiated
measures of performance addressing EPA’s national performance goals.
This approach has allowed states to use federal funds more flexibly and
support innovative projects while increasing the focus on results and
effectiveness. However, in 1999 we reported that the initiative had been
hampered by an absence of baseline data against which environmental
improvements could be measured and the inherent difficulty in quantifying
certain results and linking them to program activities.11




10
  U.S. General Accounting Office, Block Grants: Increases in Set-Asides and Cost Ceilings
Since 1982, GAO/HRD-92-58FS (Washington, D.C.: July 27, 1992).
11
  U.S. General Accounting Office, Environmental Protection: Collaborative EPA-State
Effort Needed to Improve New Performance Partnership System, GAO/RCED-99-171
(Washington, D.C.: June 21, 1999).




Page 12                                                                    GAO-03-1146T
The challenge for developing performance partnerships for homeland
security grants will be daunting because the administration has yet to
develop clearly defined federal and national performance goals and
measures. We have reported that the initiatives outlined in the National
Strategy for Homeland Security often do not provide performance goals
and measures to assess and improve preparedness at the federal or
national levels. The strategy generally describes overarching objectives
and priorities but not measurable outcomes. The absence of such
measures and outcomes at the national level will undermine any effort to
establish performance based grant agreements with states. The Council on
Foreign Relations report recommends establishing clearly defined national
standards and guidelines in consultation with first responders and other
state and local officials.

Another alternative to overcome grant fragmentation is the simplification
and streamlining of administrative and planning requirements. In June
2003, the Senate Governmental Affairs Committee passed a bill (S. 1245,
The Homeland Security Grant Enhancement Act of 2003) intended to better
coordinate and simplify homeland security grants. The bill would establish
an interagency committee to coordinate and streamline homeland security
grant programs by advising the Secretary of DHS on the multiple programs
administered by federal agencies. The interagency committee would
identify all redundant and duplicative requirements to the appropriate
committees of Congress and the agencies represented in the interagency
committee. The bill also establishes a clearinghouse function within the
Office for State and Local Government Coordination for grant information
that would gather and disseminate information regarding successful state
and local homeland security programs and practices. The bill seeks to
streamline the application process for federal assistance and to rationalize
and better coordinate the state and local planning requirements. The bill
provides for a comprehensive state plan to address the broad range of
emergency preparedness functions currently funded from separate
programs with their own separate planning requirements.

A statewide plan can be used as a tool to promote coordination among
federal first responder programs that continue to exist as separate funding
streams. One option could be to require recipients of federal grants for
homeland security within each state to obtain review and comment by the
central state homeland security agency to attest to consistency with the
statewide plan.




Page 13                                                         GAO-03-1146T
            Whatever approach is chosen, it is important that grants be designed to
            (1) target the funds to states and localities with the greatest need,
            (2) discourage the replacement of state and local funds with federal funds,
            commonly referred to as “supplantation,” with a maintenance-of-effort
            requirement that recipients maintain their level of previous funding, and
            (3) strike a balance between accountability and flexibility. 12



Targeting   As Congress goes forward to consider how to design a grant system to
            promote a stronger federal, state, local and regional partnership to improve
            homeland security, it faces some of the traditional dilemmas in federal
            grant design. One is targeting. How do you concentrate funds in the places
            with the highest risks? A proclivity to spread money around, unfortunately,
            may provide less additional net protection while actually placing additional
            burdens on state and local governments. Given the significant needs and
            limited federal resources, it will be important to target to areas of greatest
            need. The formula for the distribution of any new grant could be based on
            several considerations, including relative threats and vulnerabilities faced
            by states and communities as well as the state or local government’s
            capacity to respond to a disaster. The Council on Foreign Relations report
            recommends that Congress establish a system for allocating scarce
            resources based on addressing identified threats and vulnerabilities. The
            report goes on to say that the federal government should consider factors
            such as population and population density, vulnerability assessments, and
            the presence of critical infrastructure within each state as the basis for
            fund distribution.

            By comparing three of the grants listed in table 2, one can see differences in
            the way funds have been allocated thus far. For example, under the State
            Homeland Security Grant Program allocations are determined by using a
            base amount of .75 percent of the total allocation to each state (including
            the District of Columbia and Puerto Rico) and .25 percent of the total to the
            territories. The balance of the funds goes to recipients on a population-
            share basis. In contrast, the Urban Area Security Initiative funds are
            distributed according to a formula from the Department of Homeland
            Security as being a combination of weighted factors including current
            threat estimates, critical assets within the urban area, population and


            12
              The Rockefeller Institute of Government, The Role of “Home” in Homeland Security: The
            Federalism Challenge—The Challenge for State and Local Governments, Symposium
            Series Number 2 (Albany, New York: March 24, 2003).




            Page 14                                                                  GAO-03-1146T
                    population density—the results of which are ranked and used to calculate
                    the proportional allocation of resources. For Byrne Grants, each
                    participant state receives a base amount of $500,000 or .25 percent of the
                    amount available for the program, whichever is greater, with the remaining
                    funds allocated to each state based on the state’s relative share of the total
                    U.S. population.



Supplantation and   A second dilemma in federal grant design involves preventing fiscal
Sustainability      substitution or supplantation. In earlier work, we found that substitution is
                    to be expected in any grant and, on average, every additional federal grant
                    dollar results in about 60 cents of supplantion.13 We found that
                    supplantation is particularly likely for block grants supporting areas with
                    prior state and local involvement. However, our work on the Temporary
                    Assistance to Needy Families block grant found that a strong maintenance
                    of effort provision can limit states’ ability to supplant14 since recipients can
                    be penalized for not meeting a maintenance of effort requirement.

                    It seems obvious to say that grant recipients should maintain the effort they
                    were making prior to receiving the grant and use the grant to add to, rather
                    than replace, their own contribution. However, since September 11, 2001,
                    many local jurisdictions have taken it upon themselves to take the initiative
                    to dramatically increase their own-source funding in an effort to enhance
                    security. Should the federal grant system now penalize them by locking in
                    their increased spending levels and at the same time reward state and local
                    governments that have taken a “wait and see” attitude concerning
                    enhancing security? This is one of the design dilemmas that Congress will
                    need to address to ensure that scarce federal resources in fact are used to
                    promote increased capability.

                    A third challenge is sustainability. Local governments think of
                    sustainability as keeping the federal spigot permanently turned on. They
                    may argue that the urgent needs they face will drive out the important
                    needs of enhanced homeland security without continued federal aid.
                    However, from a broader, national perspective there is an expectation that


                    13
                      U.S. General Accounting Office, Federal Grants: Design Improvements Could Help
                    Federal Resources Go Further, GAO-AIMD-97-7 (Washington, D.C.: Dec. 18, 1996).
                    14
                      U.S. General Accounting Office, Welfare Reform: Challenges in Maintaining a Federal-
                    State Fiscal Partnership, GAO-01-828 (Washington, D.C.: Aug. 10, 2001).




                    Page 15                                                                  GAO-03-1146T
                     the responsibility for sustaining homeland security responsibility would at
                     least be shared by all levels of government since state, local, and regional
                     governments receive benefits from these grants in addition to the national
                     benefit of improving homeland security.

                     Several options can be considered to further shared fiscal responsibility. A
                     state and local match could be considered to reflect both the benefits
                     received by state and local taxpayers from preparedness as well as to
                     encourage the kind of discipline and responsibility that can be elicited
                     when a government’s own funds are at stake. An additional option—the
                     “seed money” approach—could be to lower the federal match over time to
                     encourage ownership, support, and long term sustainability at the state and
                     local level for funded activities. However, at their best grants can stimulate
                     state and local governments to enhance their preparedness to address the
                     unique threats posed by terrorism. Ideally, grants should stimulate higher
                     levels of preparedness and avoid simply subsidizing local functions that are
                     traditionally state or local responsibilities. The literature on
                     intergovernmental management suggests that federal money can succeed
                     in institutionalizing a commitment to aided goals and purposes over time
                     within states and communities, as professional administrators and clients
                     of these programs take root and gain influence within local political
                     circles.15



Accountability and   Ultimately, the sustainability of government funding can be promoted by
Flexibility          accountability provisions that provide clear and transparent information on
                     results achieved from the intergovernmental partnership. At the federal
                     level, experience with block grants shows that grant programs are
                     sustainable if they are accompanied by sufficient performance and
                     accountability information on national outcomes to enable them to
                     compete for funding in the congressional appropriations process.
                     Accountability can be performance and results oriented to provide focus
                     on national goals across state and local governments while providing for
                     greater flexibility for those governments in deciding how best to meet
                     those goals.

                     Last summer, the Administration released a national strategy for homeland
                     security that placed emphasis on security as a shared national

                     15
                        See Paul Peterson, Barry Rabe, and Kenneth Wong, When Federalism Works (Washington,
                     D.C., Brookings Institution, 1985).




                     Page 16                                                                 GAO-03-1146T
responsibility involving close cooperation among all levels of government.
We noted at the time that the national strategy’s initiatives often did not
provide a baseline set of performance goals and measures for homeland
security.16 Then and now—over a year later—the nation does not have a
comprehensive set of performance goals and measures against which to
assess and upon which to improve prevention efforts, vulnerability
reduction, and responsiveness to damage and recovery needs at all levels
of government. We still hold that given the need for a highly integrated
approach to the homeland security challenge, national performance goals
and measures for strategy initiatives that involve both federal and
nonfederal actors may best be developed in a collaborative way involving
all levels of government and the private sector. At this point, there are few
national or federal performance standards that can be defined, given the
differences among states and lack of understanding of what levels of
preparedness are appropriate given a jurisdiction’s risk factors. The
Council on Foreign Relations recommended that national standards be
established by federal agencies in such areas as training, communications,
and response equipment, in consultation with intergovernmental partners.

Communications is an example of an area for which standards have not yet
been developed, but various emergency managers and other first
responders have highlighted that standards are needed. State and local
government officials often report that there are deficiencies in their
communications capabilities, including the lack of interoperable systems.
The national strategy recognizes that it is crucial for response personnel to
have and use equipment, systems, and procedures that allow them to
communicate. Therefore, the strategy calls for a national communication
plan to establish protocols (who needs to talk to whom), processes, and
national standards for technology acquisition.




16
 U.S. General Accounting Office, Homeland Security: Effective Intergovernmental
Coordination is Key to Success, GAO-02-1013T (Washington, D.C.: Aug. 23, 2002).




Page 17                                                                 GAO-03-1146T
Need for Integrated         Just as the federal government needs to rationalize its grant system for first
Approaches from State and   responders, state and local governments are also challenged to streamline
                            and better coordinate their efforts. As pointed out in the recent report
Local Partners              from the Century Foundation,17 ultimately the nation’s homeland defense
                            will be critically dependent on the ability of state and local governments to
                            act to overcome barriers to coordination and integration. The scale of
                            homeland security threat spills over conventional boundaries of political
                            jurisdictions and agencies. Effective response calls on local governments
                            to reach across boundaries to obtain support and cooperation throughout
                            an entire region or state.

                            Promoting partnerships among key players within each state and even
                            across states is vital to addressing the challenge. States and local
                            governments need to work together to reduce and eliminate barriers to
                            achieving this coordination and regional integration. The federal
                            government is, of course, a key player in promoting effective preparedness
                            and can offer state and local governments assistance beyond grant funds in
                            such areas as risk management and intelligence sharing. The Office for
                            State and Local Government Coordination has been established within
                            DHS to facilitate close coordination with state and local first responders,
                            emergency services and governments. In turn, state and local governments
                            have much to offer in terms of knowledge of local vulnerabilities and
                            resources, such as local law enforcement personnel, available to respond
                            to threats in their communities.

                            Local officials emphasized the importance of regional coordination.
                            Regional resources, such as equipment and expertise, are essential because
                            of proximity, which allows for quick deployment, and experience in
                            working within the region. Large-scale or labor-intensive incidents quickly
                            deplete a given locality’s supply of trained responders. Some cities have
                            spread training and equipment to neighboring municipal areas so that their
                            mutual aid partners can help. We found in our work last year that to
                            facilitate emergency planning and coordination among cities in
                            metropolitan areas officials have joined together to create task forces,
                            terrorism working groups, advisory committees and Mayors’ caucuses.
                            Cities and counties have used mutual aid agreements to share emergency
                            resources in their metropolitan areas. These agreements may include fire,

                            17
                              Kettl, Donald F., The States and Homeland Security: Building the Missing Link, The
                            Century Foundation’s Homeland Security Project Working Group on Federalism Challenges,
                            (New York, New York: 2003).




                            Page 18                                                                 GAO-03-1146T
             police, emergency medical services, and hospitals and may be formal or
             informal. These partnerships afford economies of scale across a region. In
             events that require a quick response, such as a chemical attack, regional
             agreements take on greater importance because many local officials do not
             think that federal and state resources can arrive in sufficient time to help.

             Forging regional arrangements for coordination is not an easy process at
             the local level. The federal government may be able to provide incentives
             through the grant system to encourage regional planning and coordination
             for homeland security. Transportation planning offers one potential model
             for federal influence that could be considered. Under federal law,
             Metropolitan Planning Organizations are established to develop regionally
             based transportation plans from which, generally, projects that are to be
             federally funded must be selected.



Conclusion   Improving the partnership among federal and nonfederal officials is vital to
             achieving important national goals. The task facing the nation is daunting
             and federal grants will be a central vehicle to improve and sustain
             preparedness in communities throughout the nation. While funding
             increases for combating terrorism have been dramatic, the Council’s report
             reflects concerns that many have about the adequacy of current grant
             programs to address the homeland security needs.

             Ultimately, the “bottom line” question is: What impact will the grant system
             have in protecting the nation and its communities against terrorism? At
             this time, it is difficult to know since we do not have clearly defined
             national standards or criteria defining existing or desired levels of
             preparedness across the country. Our grant structure is not well suited to
             provide assurance that scarce federal funds are in fact enhancing the
             nation’s preparedness in the places most at risk. There is a fundamental
             need to rethink the structure and design of assistance programs, to
             streamline and simplify programs, improve targeting, and enhance
             accountability for results. Federal, state, and local governments alike have
             a stake in improving the grant system to reduce burden and tensions and
             promote the level of security that can only be achieved through effective
             partnerships. The sustainability and continued support for homeland
             security initiatives will rest in no small part on our ability to demonstrate to
             the public that scarce public funds are in fact improving security in the
             most effective and efficient manner.




             Page 19                                                            GAO-03-1146T
           This concludes my prepared statement. I would be pleased to answer any
           questions you or the members of the subcommittee may have at this time.




(450255)   Page 20                                                     GAO-03-1146T
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