[StBernard] FEMA money for governments takes rocky road

[Westley Annis]

Auditor's review finds inefficiencies 
 
BATON ROUGE -- The state office responsible for distributing FEMA public
assistance grants to local governments is fraught with inefficiencies and
ripe for misappropriations and fraud, according to a review by a third-party
auditor. 
 
The Deloitte & Touche report, released Thursday, echoes some complaints
offered by New Orleans Mayor Ray Nagin and other southeast Louisiana leaders
whose parishes and municipalities await funding for billions of dollars in
reimbursements and advances to rebuild decimated public properties, from
utility systems and sewer plants to courthouses and jails. 
 
 
Officials in the Governor's Office of Homeland Security and Emergency
Preparedness did not refute the report's bottom line during testimony
Thursday before the Louisiana Recovery Authority's Audit Subcommittee. But
the office did compile a point-by-point list of actions taken in response to
the problems. 
 
Appearing alongside Deloitte & Touche representatives, Fred Palmer, deputy
director of the homeland security staff, also told the LRA panel that his
office wants to retain the consulting firm to help implement more
significant recommended changes. 
 
That follow-up contract is awaiting final approval by FEMA and the state,
according to Palmer and George Scott, a Deloitte & Touche executive. 
 
"All I can tell you is we're working on it, and we want Deloitte & Touche to
help us become a better organization," Palmer said. 
 
Public assistance grants 
 
The homeland security office, which answers to Gov. Kathleen Blanco, is
responsible for distributing the $5 billion-plus in FEMA public assistance
grants Congress has earmarked for Louisiana since the 2005 storms. That pool
of money constitutes one of the state's largest single recovery programs,
perhaps exceeded only by the $9 billion residential rebuilding effort, the
Road Home program, which is also shackled with troubles. 
 
Under the FEMA public assistance plan, public entities submit grant
applications called project worksheets. The worksheets are then reviewed at
multiple points in FEMA and, in Louisiana's case, the homeland security
office. 
 
Nagin and many of his counterparts have fingered the state as the primary
hold-up in getting the money. 
 
According to Deloitte & Touche, the state has not: 
 
-- performed a formal financial risk assessment or adopted waste and
anti-fraud controls.
 
-- hired enough grant managers or effectively trained those already on
staff. A Deloitte & Touche report summary stated: "A number of applicants
expressed concern with the responsiveness, effectiveness, continuity of
support and workload of the grant managers." 
 
-- established uniform policies and procedures available to employees
running the grant program and to local officials applying for the money. 
 
-- provided adequate assistance to applicants, helping them first with
damage assessments then making sure they understand the application process.

 
-- always followed FEMA's competitive bidding rules. 
 
The review also found multiple inefficiencies and shortfalls related to the
program's Web site, louisianapa.com, which public entities use to apply for
assistance. And Deloitte & Touche cited FEMA and the state for applicants'
confusion about how insurance payments are deducted when figuring
reimbursements. The deductions are FEMA's responsibility, but the state, as
the actual administrator of the grants, is typically the go-between. 
 
'No small feat' 
 
The state hired Deloitte & Touche his summer under a 60-day contract to
conduct a performance review. The work did not include a financial audit and
the findings do not suggest any fraud or financial malfeasance. 
 
George Schmidt, internal auditor for the homeland security office, defended
the administration's handling of federal dollars. "We've put $2 billion on
the street in the last two years, and that's no small feat," he said. 
 
Palmer said many of the efficiency problems stem from an under-trained,
overwhelmed staff that included 35 full-time state employees before the
storms, with about 170 contract employees having joined the team since. Most
of those workers, Palmer said, have little or no experience navigating
federal grant guidelines. 
 
"We're bringing people in and training them," Palmer said. "We know we have
to hire more people." 
 
Advances now allowed 
 
Andy Kopplin, executive director of the Louisiana Recovery Authority, touted
the success of another major policy shift for the public assistance program:
allowing advances for up to 10 percent of a rebuilding project's total
value, provided the money pays only for pre-construction costs, such as
architectural and design fees, on contracts that have already been let. FEMA
payments typically cover specific invoices for work already completed or at
least under way. 
 
Kopplin did say that some localities still run into trouble when costs
exceed their original estimates, thus rendering an advance insufficient. New
Orleans has its own barrier: a local requirement that the city have money on
hand before letting such a contract. 
 
The Blanco administration did not release financial details of the Deloitte
& Touche agreement when it was announced. Administration officials said in
December that they extended the deal for two 30-day periods. Efforts to
obtain cost figures for the original contract, extensions and the proposed
new deal with the firm were not successful. 
 
Louisiana law makes any contracts with or payments to Deloitte & Touche
public records. 
. . . . . . . 
Bill Barrow can be reached at bbarrow at timespicayune.com or (225) 342-5590.