Testimony – Homeland Security Grants: Supporting a National Preparedness and Response System

Chairman Price, Ranking Member Rogers, and members of the Subcommittee, my name is Ray Scheppach and I am the Executive Director of the National Governors Association. On behalf of the nation’s governors I would like to thank you for the invitation to testify today regarding the federal-state partnership in promoting homeland security.

States continue to face unprecedented responsibilities and challenges to provide for the security of their citizens. Strategic intergovernmental preparedness and interagency cooperation at all levels of government are essential to ensuring the safety of our citizens and preventing damage to our property and economy. Governors are committed to promoting comprehensive state-based strategies to detect, mitigate, prepare for, prevent, respond to and recover from terrorist attacks and catastrophic events within and across their borders. This commitment includes establishing intrastate and interstate working groups, made up of state and local governments and emergency responders, to thoughtfully and efficiently identify capabilities and address critical needs. Governors repeatedly have submitted detailed homeland security strategies to the federal government to ensure adequate levels of preparedness and provide strategic guidance for the use of federal investments.

The Need for Federal Resources

To secure the homeland and provide for the safety of their citizens, governors urge Congress and the Administration to provide sufficient, predictable and sustainable federal funding consistent with the following principles:

  • Federal funding for state and local governments must increase as federal requirements increase through initiatives such as the National Preparedness Goals, the National Incident Management System and the National Response Plan.
  • Each state and territory should receive a base allocation to ensure all jurisdictions attain and maintain a base level of capacity in accordance with state homeland security plans, the National Preparedness Goal, the National Response Plan and the National Incident Management System.
  • Federal Homeland security-related funding should be distributed based on a comprehensive assessment of risk (threat, vulnerability and consequence), which should be developed in close coordination with states. Risk assessments must be fully disclosed to governors and their designated representatives and should be updated regularly based on an accurate assessment of all threats within and across state borders, including ports, borders, food production and supply, water supply, fuel and computer systems.
  • All federal homeland security funding, including funds earmarked for local or regional jurisdictions, should be distributed through states and territories to enhance regional response capabilities, advance the comprehensive homeland security strategy of each state and territory and avoid duplication or gaps in coverage.
  • The distribution of and grant guidance for homeland security grants from multiple federal agencies should be coordinated to ensure proper leverage by states to increase the return on the investment.
  • States should have maximum flexibility in how these homeland security funds are spent as long as funds are used to mitigate risks or enhance the level of preparedness. Allowable uses should include activities such as planning, training, exercising and other homeland security-related activities by state and local officials or agents; purchasing equipment and interoperable communications systems; enhancing facilities to serve as operations centers; and gathering intelligence and sharing information.

Homeland security is a joint responsibility of all levels of government. The process begins with each state submitting its strategy to the Department of Homeland Security (DHS). This document is a living instrument subject to change as the threat environment and preparedness needs evolve.

State and local governments have long been and remain responsible for a substantial amount of the cost for homeland security through their spending for first responders such as police and firefighters. The federal government also must play a role, however, as it increases its authority to set spending priorities and mandate actions through various initiatives.

One of the primary sources of funds to offset federal mandates is through the State Homeland Security Grant Program (SHSGP). Unfortunately, funding for this program has decreased from its original level of $1.1 billion in fiscal year (FY) 2005 to $550 million in FY 2006 and$525 million in FY 2007. The President asked for only $250 million for the program in FY 2008 before Congress increased funding to $950 million. Of that amount, however, 25 percent is set aside for the Law Enforcement Terrorism Prevention Program, and Operation Stonegarden will receive $60 million, leaving only about $650 million for SHSGP. The Administration’s FY 2009 budget again calls for a mere $200 million for SHSGP.

The decreases in requested and appropriated funds for SHSGP since FY 2005 stand in stark contrast to the marked increase in the number of federal requirements imposed on state and local governments over the same period. Specifically, states have relied on SHSGP funds to meet DHS priorities, such as the development of fusion centers to analyze information and assess threats and build out interoperable communications. Unfortunately as DHS priorities increase, funding for SHSGP has not kept pace. To meet the ever-increasing demands placed on states, governors call on Congress to restore SHSGP funding to its FY 2005 level of $1.1 billion.

Another example of federal security mandates pressuring state resources is REAL ID, the statute which sets national standards for state drivers’ licenses and identification cards. The Office of Management and Budget estimates that for states to comply with recently released REAL ID regulations, they will need to spend nearly $4 billion. To help offset these costs DHS Secretary Chertoff authorized states to use up to 20 percent of their SHSGP funds. This authority is of little consequence, because states must distribute 80 percent of all SHSGP funds to local governments. Use of 20 percent of state SHSGP funds for REAL ID would prevent spending on other state homeland security priorities.

Additional federal funding also is limited. To date Congress has appropriated only $90 million for REAL ID. Likewise, the Administration did not request any funds for REAL ID in FY 2008. Its FY 2009 budget does propose a $110 million competitive grant program for states in part to assist with REAL ID, and $50 million for DHS to develop verification capabilities. While appreciated, these amounts are wholly insufficient to make REAL ID work.

Governors call on the Administration and Congress to demonstrate the priority they place on REAL ID by fully funding the program. Specifically, Congress should provide $1 billion to cover the up-front cost of REAL ID this year and additional funds to cover the year-to-year cost of meeting this federal mandate. If the federal government is going to dictate state security practices over traditional state functions such as driver’s licenses and identification cards, then the federal government should pay the state cost of compliance.

The “Pipeline” Question

A common justification for curtailing state homeland security grants is that there are funds available in the “pipeline” and states do not need more funds. DHS Secretary Chertoff testified last month that “Including Congressional approval of the FY 2009 request, a total of $13 billion would be in the pipeline for state and local homeland security needs.”

Governors challenge this assertion. States are meeting the statutory deadlines for obligation and expenditure of homeland security grant funds. These funds are provided on a reimbursement basis to cover investments made during a two- to three-year performance period. This performance period provides states with time to plan, properly assess their weaknesses and capabilities, and devise training and exercise strategies to improve the overall readiness of their first responders. Some of the funding in the so-called pipeline is FY 2007 funds that were only recently released for states to obligate. In addition, the amount cited includes all state and local funding – Urban Area Security Initiative (UASI) grants, ports, and other funding –much of which states do not control.

One issue underscoring the “pipeline” problem is the difference between obligated funds and expended funds. The obligation of funds and the expenditure of funds must be viewed according to the state plan and procurement procedures, especially when equipment purchases are involved. For example, some states use a central process to procure equipment; in other words, they purchase items from vendors in bulk to save money. In this instance, the state looks at all needs of local and state government, develops overall specifications, and receives bids from various vendors. Funds for this equipment are not “drawn down” from the federal government, but instead are obligated for the equipment until it is delivered.

Similarly, states must ensure that all sub-grantees adhere to state and federal guidelines and regulations and maintain accountability throughout the program. Procurement and investment policies and procedures may delay the time between the obligation of funds and the actual expenditure of those funds. It would be impractical, and in most cases unwise, to require state and local jurisdictions to draw down their entire award of homeland security grants without adequate planning or following longstanding procurement practices. A consequence of these practices is that money can appear to languish, unexpended, in federal accounts when in fact it has been dedicated for a specific homeland security program or purpose.

Rather than focusing on the amount of money in the so-called pipeline, Congress would be better served by providing and maintaining funding to create greater certainty and sustainability in the funding of first responder programs. Such stability is critical to foster long-term planning and the development of robust response systems. The year-to-year uncertainty in funding is disruptive to planning and makes it exceptionally difficult to expand capacity to consistently deal with federal requirements and exercises. In other words, the issue is not a matter of how much is in the pipeline now, but of keeping sufficient amounts in the pipeline to meet ongoing and future homeland security needs.

State and Local Homeland Security Needs

An annual survey conducted in the fall of 2007 by the National Governors Association Center for Best Practices (NGA Center) revealed that states’ priority issues in the area of homeland security have remained relatively stable over the course of the past several years. The NGA Center survey was conducted with the Governors Homeland Security Advisors Council (GHSAC), a group formed by governors to advise NGA on homeland security issues. The group is made up of state homeland security directors and emergency managers, the state experts in addressing state and regional security issues and the ones charged with administering federal security initiatives.

In general, state homeland security directors emphasized the need for an “all-hazards” approach to planning and using federal grant funds. In fact, they criticized the existing SHSGP program because it “does not strike an adequate balance among preparedness, prevention, response and recovery activities.” The directors recognize that states must plan and provide for each of these functions and, therefore, federal funding must be flexible enough to do the same.

More specifically, public safety interoperable communications topped GHSAC’s list of priorities. States continue to work to ensure that first responders from various agencies, jurisdictions and levels of government can speak to each other during emergencies or at the scene of a disaster. While governors appreciate that Congress has dedicated funding through the U.S. Department of Commerce National Telecommunications and Information Administration, in cooperation with DHS, for a Public Safety Interoperable Communications (PSIC) grants program, this issue will require more time and additional investment before we reach our goals as a nation.

Other priority activities cited by the GHSAC included: coordinating state and local efforts; protecting critical infrastructure; developing state fusion centers; and strengthening citizen preparedness. In each instance, federal funds are crucial for establishing different state and regional solutions.


Governors are committed to leading and coordinating the efforts of state and local governments and the private sector to secure our citizens and protect our communities. The unique nature and national security implications of terrorism, however, require the support and expertise of the federal government to accomplish our common objectives. Governors ask that as this committee examines the future funding needs for securing this country, your spending priorities continue to reflect the shared responsibility we all have for protecting our citizens.