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State audit blasts Department of Public Safety’s handling of Hurricane Florence disaster recovery funds

Hurricane Florence caused $22 billion in property damage and killed 30 people in North Carolina. Afterward, the state legislature appropriated recovery funds to the NC Department of Public Safety. A recent state auditor’s report found the department failed to adequately monitor how that money was used. (Map: National Weather Service)

The Department of Public Safety failed to adequately monitor a half billion dollars in disaster recovery funds, according to a state auditor’s report, and distributed another $783 million without a method to determine if the projects were successful.

Mike Sprayberry, a holdover from the Gov. Pat McCrory administration, served as director of the State Emergency Management. Sprayberry was also executive director of NCORR, which Gov. Roy Cooper established in late 2018, until retiring in April 2021.

In October 2018, the legislature appropriated $942.4 million to “provide necessary and appropriate relief and assistance” from the effects of Hurricane Florence. The storm made landfall near Wrightsville Beach on Sept. 14, 2018, and killed 30 people, while causing $22 billion in property damage.

The state auditor’s office found that because DPS conducted limited monitoring of the funds, there was an “increased risk that recipients could have misused funds without the misuse being detected and corrected,” the report reads.

“Additionally DPS was limited in its ability to know whether funds were achieving legislatively intended results to take timely corrective action, if necessary.”

These actions were apparently not an oversight. The report said, “specifically DPS did not plan to verify external recipient spending by comparing supporting documents, such as invoices, receipts and payroll records, to expenditures” reported by those receiving the money.

Nor did DPS require funding recipients to submit supporting documentation to verify expenditures.

Additionally DPS management stated it did not independently verify external recipient spending at all for nearly 18 months. From Aug. 1, 2019, through Jan. 31, 2021, $186 million of external recipient spending was not independently verified.

DPS countered that the legislation didn’t require the results from all recipients to be measured. However, the legislation did require DPS to administer the fund, and that responsibility comes with its own best practices, such as internal controls. The auditor rebuffed those claims, noting that DPS monitored spending for roughly nine months, from Nov. 1, 2018, to July 31, 2019 — but then stopped.

The legislation did mandate that DPS issue quarterly recovery fund reports. But in a review of these reports, 8% of programs totaling $108 million didn’t state their objectives for how they would use the funds. Another third of the programs totaling $262 million didn’t measure their progress.

The auditor’s office detailed other uncertainties. DPS has no way to know whether these following expenditures achieved the legislatively intended results:
• $147 million (83%) of the $177 million disbursed to seven recipients were providing aid for the repair and renovation of facilities at public schools, universities and community colleges, counties and local governments, and volunteer fire departments.

• $11 million (100%) of the $11 million disbursed to the Department of Public Safety were providing disaster housing recovery support
programs for homeowners to assist with repair, acquisition, and reconstruction of homes, purchase of properties in areas at risk for future
flood damage, or to provide gap payments for homeowners.

$5 million (100%) of the $5 million disbursed to the Department of Health and Human Services helped to prevent homelessness and
create stability and long-term self-sufficiency for individuals displaced by Hurricane Florence.

• $8 million (100%) of the $8 million disbursed to the UNC System and the state Community College System provided grants to assist students from disaster-declared counties with paying for tuition, fees, and emergency expenses.

The audit did not track federal disaster recovery money or other funding sources outside of the legislative allotment.

In response, DPS Secretary Eddie Buffaloe, Jr., agreed with the auditor’s office that future legislation contain measurable goals and objectives. DPS now uses a Scope of Work document “in which recipients explain a plan to expend funds, along with a projected budget. Recipients also must provide quarterly progress reports,” Buffaloe wrote. Nevertheless, he added, “the department’s authority is limited in withholding any funds or providing oversight on grants.”

This story has been updated to state that the Department of Public Safety, not the NC Office of Recovery and Resiliency was responsible for the oversight. NCORR was in charge only of compiling reports.

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