2009-10-27 National Governors Association

Testimony – Homeland Security Grants

The National Governors Association (NGA) wishes to thank Chairman Cuellar, Ranking Member Rogers, and other distinguished members of the Subcommittee for holding this hearing and allowing governors the opportunity to participate in this important discussion regarding homeland security funding.

The following statement will focus on three areas of importance to governors and their homeland security advisors: 1) the importance of measuring homeland security capabilities; 2) the state role in managing and administering grant funds, including measuring, assessing and reporting statewide capabilities; and 3) the importance of ensuring that capabilities are not only built and developed, but also maintained over time.

Measuring Capabilities

Governors believe federal funding provided to states should focus on developing or enhancing common core capabilities and support efforts to measure the effectiveness of grant funds in building and maintaining preparedness and response capabilities (see appendix A, NGA homeland security policy). As states and urban areas face varying threats and vulnerabilities and utilize different approaches to allocate homeland security resources, federal leadership in providing tools and a common methodology to assess baseline capabilities is critical.

To help address this issue, the Grant Programs Directorate (GPD) at the Federal Emergency Management Agency (FEMA) has recently conducted pilot programs in several states and urban areas to test the Cost-to-Capability (C2C) initiative. C2C attempts to measure the effectiveness of the State Homeland Security Grant Program (SHSGP) and the Urban Areas Security Initiative (UASI) grant program by asking grantees to utilize the National Planning Scenarios and the Target Capabilities List (TCL) to categorize projects. Grantees are then asked to assign capability gains and sustainment percentages to the associated grant-funded projects. As envisioned and tested by GPD, C2C would be used to make recommendations for the award and use of grant funds in future years.

C2C has the potential to reduce the evaluation and reporting burden placed on states. Currently, FEMA’s National Preparedness Directorate (NPD) and GPD require states to submit the same information using different processes to produce the same outcome. For instance, NPD requires states to report on capabilities and investments through the State Preparedness Report. Similarly, GPD requires states and urban areas to submit detailed investment justifications, including information regarding capability development and resource needs, as part of the peer review process used to assess the effectiveness of grant applications. C2C or a similar initiative could be very helpful if it were used to bridge the gap between NPD and GPD by utilizing a single process to collect the necessary information to assess the effectiveness of grant programs.
While C2C is well-intentioned, it will require significant modification and greater coordination among FEMA divisions in order to produce meaningful assessments. The following summarizes some of the feedback received from participants in the first of two pilot projects:

  • C2C’s reliance upon documents that are under ongoing revision will make it difficult to assess capability development over time. C2C relies on the TCL and National Planning Scenarios; however, both of these documents are currently being revised by FEMA. C2C would require states to assess the percentage of capability gain and sustainment against the existing TCLs to form a baseline for future measurement. Any changes to the TCL and the Scenarios would affect the baseline, making it difficult if not impossible to demonstrate progress over time.
  • C2C does not provide sufficient guidance to grantees to assign value to projects. The initiative requires grantees to assign percents of capability gain and sustainment to both the development of entire capabilities and to individual projects. Without the use of common benchmarks or metrics, which are not defined clearly in the current TCL, assessments would be entirely subjective making their use inappropriate to determine the allocation of future grant funds. Assessing statewide capability gains/sustainment at the local project level is particularly challenging and may not be the best methodology.
  • C2C would be more effective if it incorporated consideration of specific threats facing states and urban areas and the resulting regional risk. In its current form, C2C relies upon the National Planning Scenarios that do not apply to all grantees in all areas and, therefore, have not been used by many grantees in their planning processes. One alternative would be to use existing state and urban area homeland security strategies that have been used for years to guide the grants process. These strategies have long been important in identifying priorities for enhancing local, regional, and state capabilities to prevent, protect against, respond to, and recover from terrorist attacks, natural disasters and other man-made events. Utilizing existing strategic plans of grantees would make C2C more practical and effective for all users.
  • C2C should be adjusted to allow for risk-based local allocations. C2C assumes that all states allocate the 80 percent local share of grant funds based on a competitive process; however, there are several states that utilize a risk-based methodology to allocate the local share of the funds. In order to be fully utilized by all states, C2C must be adjusted to allow for the use of risk-based local allocations.
  • C2C does not differentiate between the state share (20 percent) of funds and the local share (80 percent) in producing investment options. For instance, the optimal investment portfolio recommended by C2C may propose local projects for only 50 percent of the grant funds, which is not currently permissible under law.
  • C2C is not intuitive or user-friendly. The current C2C prototype employs a complicated methodology with limited transparency on critical elements. For example, the prioritization of the Target Capabilities is done by ranking the National Planning Scenarios but the linkage between the two is not entirely clear. FEMA should work with state and local stakeholders to ensure the system is both intuitive and transparent.

State Role in Managing Grant Funds

Federal funds provide critical support to state and local efforts to prevent, prepare for, and respond to terrorist attacks, natural disasters, and man-made events. States play an important role in building, coordinating, managing and assessing the use of such funds to support homeland security capabilities throughout the state.

As discussed above, states establish homeland security strategies and plans that are updated on an ongoing basis. These strategies guide the use of federal, state and local funds to build and sustain critical capabilities such as interoperable emergency communications, hazardous materials response (HAZMAT), and critical infrastructure protection. The planning, administration and oversight of federal funds is an extremely important and labor intensive effort, given the numerous grant programs, open contracts, and significant amount of funds (federal and state) currently being administered by states.

Since the establishment of the Department of Homeland Security, federal reporting requirements have increased. For instance, states are required to complete an annual State Preparedness Report in which they must self-assess current capability levels.  This report is time-consuming to put together, and it must assess funding received from all preparedness grants. Participation in working groups and pilot programs such as C2C are also important but time-consuming.

As these requirements have increased over time, the amount of grant funding states may use for management and administrative (M&A) purposes has been reduced from five percent to three percent for many of the major grant programs. Prior to Fiscal Year 2008, states were permitted to use up to five percent of grant funds for M&A purposes. The Implementing Recommendations of the 9/11 Commission Act of 2007 (P.L. 110-53) limited M&A to only three percent of the grant award, which has put a strain on the ability of states to fulfill their management and oversight responsibilities and meet the increasing reporting requirements of the grant programs. The often short deadlines associated with the grant programs further exacerbate the challenges facing State Administrative Agencies and highlight the need for additional resources.

Given the increased emphasis on accountability and to ensure the effective use of grant funding, allowing five cents of every dollar to support the planning, management and oversight of the funds is a wise investment. Additionally, greater flexibility to “pool” M&A funds across different FEMA preparedness grant programs would improve the effectiveness and efficiency of state oversight activities.  Currently, M&A from different grants must be discretely accounted for. This is onerous and puts personnel managing multiple grants in a difficult position trying to figure out how much time is spent on what grant and what grant year.  This is even more challenging at the local, county and municipal level where fewer people manage more grants.

As the federal government and Congress consider changes to the grant programs and their affiliated requirements, governors urge consideration for greater flexibility in the use of grant funds to meet such requirements. Restoring the ability to use up to five percent of funds for M&A will help ensure that grants are used as effectively as possible by providing proper oversight and coordination. It will also support critical planning and assessment activities (such as state participation in C2C or similar initiatives) that provide the basis for the ongoing development, revision, and implementation of national homeland security priorities.

Sustainment of Homeland Security Capabilities

An additional concern to governors is the ability to not only build homeland security capabilities but also to sustain them over time. Many capabilities, such as interoperable communications, intelligence and information sharing through fusion centers, and HAZMAT response, have been built using a combination of federal, state and local funds. While building these capabilities requires an infusion of funds, more moderate but consistent levels of funding are required to maintain necessary systems and equipment and ensure personnel receive proper training. Without sufficient flexibility in the homeland security grant programs to allow for the sustainment of capabilities, preparedness and response capabilities that have been identified as national priorities will be severely weakened or lost entirely.

FEMA recently informed states that they may only use grant funds to pay for maintenance agreements, user fees, and other sustainment costs as long as the equipment was purchased with FEMA preparedness grant funding and the costs fall within the performance period of the grant that was used to purchase the equipment. This policy is inconsistent with past practice and will have a severe adverse effect on many states.

As discussed in a letter sent by NGA to Homeland Security Secretary Napolitano (appendix B), this policy is inconsistent with the stated goal of the Homeland Security Grant Program and will have the unintended consequence of reducing capabilities and wasting scarce resources. Without greater flexibility to use grant funds for sustainment purposes, many projects may be cancelled and equipment may need to be replaced well before its serviceable lifetime would otherwise end. For example, information technology projects that support interoperable communications systems or intelligence fusion centers are dependent upon the maintenance of software agreements, technology upgrades and user fees throughout the life of the system. If grant funds from current and future years cannot be used to support these costs, it will have an immediate negative effect on these national homeland security priorities. As another example, level A HAZMAT response teams must maintain the ability to operate in hazardous environments. To do so requires that annual recalibration and preventative maintenance be performed on equipment monitoring and hazard prediction systems.

Together, governments at all levels have invested billions of dollars over the past several years to build capabilities to prepare for and respond to acts of terrorism, natural disasters and other man-made events. Governors urge the federal government and Congress to revise the current FEMA policy on sustainment funding to ensure that the partnership among states and the federal government to build, support, and maintain homeland security and emergency management capabilities continues and that taxpayer dollars are used in the most cost effective manner.


On behalf of the nation’s governors, thank you for the opportunity to provide comments on the important issue of homeland security funding. Homeland security is a joint responsibility involving state and local governments and their federal partners. Intergovernmental cooperation and coordination is essential to protect the safety and security of the country. Thank you for your consideration of the state role in this partnership and the challenges and opportunities it creates.