Summary of Report 05-020

January 2005

Report Number 05-020

The Texas Engineering Extension Service (TEEX) should strengthen its management of the State Homeland Security Grant Program (Grant) to ensure that funds are (1) used for their intended purpose of enhancing local jurisdictions' capabilities to respond to potential terrorist threats and (2) adequately protected from violations, abuse, and fraud. We identified significant weaknesses in TEEX's processes for managing the $111 million in Grant funds (for the 1999 through 2003 supplemental grant years) allocated to local jurisdictions.

TEEX and the councils of governments (COGs) are allowed to retain a portion of the funds to oversee the Grant. These retained funds (for TEEX and the three COGs we visited) were generally used as intended. In addition, TEEX' internal accounting system contains generally accurate information.

Most of the expenditures we tested at 10 local jurisdictions were for items included on the federal government's list of allowable equipment. However, TEEX does not have adequate processes for ensuring that local jurisdictions' purchases address their actual needs or that jurisdictions maximize their Grant funds.

In addition, TEEX's agreements with COGs and local jurisdictions do not contain requirements or details, such as performance measures, that would allow TEEX to hold these entities contractually accountable. Furthermore, as of the time of our fieldwork (July 2004), TEEX had not conducted any site visits at local jurisdictions for Grant funds it awarded in 2002 and 2003. At 4 of the 10 local jurisdictions we visited, we identified abuse or misuse related to equipment purchased with Grant funds. For example, one jurisdiction assigned a command vehicle purchased with Grant funds to an executive, which violates Grant provisions (see pages 14 and 15 of the report for additional information). Nine of the 10 jurisdictions did not have all of the equipment they had purchased with Grant funds arranged or located in a way that would allow them to access it quickly when responding to potential acts of terrorism. In addition, 14 jurisdictions did not submit a basic emergency operations plan, which jurisdictions are required to submit in order to be eligible for Grant funds (see page 16 of the report for additional information).

To begin improving its monitoring process, TEEX has hired two grant monitors and is developing and piloting a monitoring plan.

For the 1999 through 2003 supplemental grants, TEEX administered $136 million in Grant funds, the majority of which were federal funds that TEEX passed to COGs and local jurisdictions. TEEX retained approximately $4 million to manage the Grant. TEEX's infrastructure, processes, and procedures have not kept up with the increase in its responsibility. Specifically, the number of local jurisdictions participating in the Grant grew from 95 in 2001 to 753 in 2003.

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In addition to our audit report, we compiled detailed information as of June 30, 2004, regarding :

• The amounts of State Homeland Security Grant Program funds that individual local jurisdictions in Texas were awarded and expended from the 1999 through 2003 supplemental grant years.

• The amounts of exercise funds from the State Homeland Security Grant Program budgeted and expended from the 2002 through 2003 supplemental grant years.

• The amounts of planning funds from the State Homeland Security Grant Program that councils of governments in Texas were awarded and expended from the 2002 and 2003 grant years.

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