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Backgrounder #1652 on Department of Homeland Security

May 6, 2003

Adding Flexibility and Purpose to Domestic Preparedness Grant Programs

By

State and local first response agencies are at the forefront of the nation's ability to respond to terrorist acts. In fact, these local agencies will nearly always be the first to respond to an incident and will be the determining factor in mitigating the consequences of an attack. As a result, the federal government has maintained programs to improve preparedness among the nation's first responders1 since the passage of the Nunn-Lugar-Domenici amendment in 1996.

However, the realities of the post-September 11 security environment require that the grant formula be modified to account for risk assessments based on intelligence data, vulnerability assessments, public gatherings, dangerous materials, and inter-community cooperation efforts. The multiple overlapping grant programs should be consolidated into one annual grant program, relocated to the Office of State and Local Government Coordination (OSLGC), and focused more on domestic preparedness. In addition, these reforms should be implemented before Congress considers raising the overall level of funding.

Since September 11, 2001, funding for first responder grant programs has been increased dramatically, and many overlapping programs have been transferred to the new Department of Homeland Security (DHS); but even after these reforms, Congress and the DHS should take additional steps to maximize the effectiveness of the federal assistance program. Specifically, they should:

  • Develop
    a new formula for prioritizing the distribution of domestic preparedness grants that takes into account population, threat assessments, vulnerability assessments, an inventory of important sites, and the percentage of cities and counties participating in mutual assistance agreements.
  • Assess
    which first responder needs should be provided by non-federal sources to provide better strategic focus for federal grant programs.
  • Transfer
    the administration of domestic preparedness grants from the Border and Transportation Security Directorate to the Office of State and Local Government Coordination and fully consolidate existing grants into a single program distributed annually.
  • Establish
    reporting requirements for the Department of Homeland Security and a congressional review process for periodic reevaluation of funding levels.

Such reforms should be initiated before any non-emergency increase in the amount of federal grant funding provided to state and local agencies through a domestic preparedness grant program. How funds are distributed and with what purpose are as important as the amount distributed. The first step should be restructuring the grant program to improve efficiency. Then the effect of the program should be analyzed in detail to determine whether the funding level should be adjusted.

An Ineffective Grant Formula

At present, most grant funds, including those distributed by the Office of Domestic Preparedness (ODP), are distributed to the states, which then pass a minimum of 80 percent of the award on to local offices, with the remainder dedicated to state programs and administrative costs. This process should continue, as it promotes greater coordination and interoperability between state and local authorities.

However, the federal government typically determines the amount of a state's award based on population, with every state guaranteed a minimum percent of the overall grant: currently 0.05 percent.2 A population-based formula creates a number of problems.

First, it does not respond to known or suspected information on terrorist targets collected by the intelligence and law enforcement community, which can provide insight into where terrorists might strike. While this information has been applied to changes in the Homeland Security Advisory Level, it has not been factored into response preparedness efforts, even if it indicates that a given area is a preferred target.

However, this factor alone is not a reliable determinant of priorities. Relying entirely on threat assessments would leave many areas unprepared, thereby creating new tempting targets. In addition, intelligence information is frequently incomplete: Terrorists may be planning attacks against more locations than suspected. Using threat assessment alone also risks politicizing the issue of grant dispersal.3

Second, it does not take into account a state's actual needs or vulnerabilities. No two states have exactly the same needs. Different areas have different infrastructures, physical conditions, and degrees of pre-existing investment in preparedness that make their needs unique. Places where large numbers of people gather and facilities that produce or store hazardous materials that could harm the surrounding population will likely require additional assistance to meet the additional challenges presented by such facilities and locations.

Third, it does not promote policy objectives or reward best practices. Although the details of state and local plans should be left up to local agencies that are familiar with their own needs, challenges, and resources, certain policies such as mutual assistance agreements that allow for asset pooling and interoperability measures can benefit any jurisdiction and promote more efficient expenditure of tax dollars. While other steps in the grant review program can and do encourage such efforts, a population-based formula does nothing to promote these goals.

Finally, the 0.05 percent rule skews funding levels because, although highly populated states receive a larger gross award, they typically receive less per capita than more sparsely populated states.4

Unlike a population-based formula, a more rational grant formula would account for possible threats and the potential consequences of an attack in addition to population size.

Recognizing some of these shortcomings, Secretary of Homeland Security Tom Ridge recently instituted the Urban Area Security Initiative, which will provide $100 million to seven cities that the Department of Homeland Security has deemed most at risk .5 According to the DHS, the seven cities selected for the program were chosen based on "a combination of factors including population density, critical infrastructure and threat/vulnerability assessments."6

While the inclusion of threat and vulnerability assessments is a positive step, $100 million is a small fraction of the $2 billion appropriated to the DHS for first responder assistance in fiscal year (FY) 2003. In addition, the precise formula used for determining the nation's seven most at-risk cities is unclear, and mayors of major cities left off the list, including Boston and Detroit, are beginning to complain.

Congress recently followed Secretary Ridge's lead by allocating an additional $600 million for "protection or preparedness of high-threat urban areas, as determined by the Secretary of Homeland Security" as part of the Emergency Wartime Supplemental Appropriations Act, 2003.7 On April 9, 2003, Secretary Ridge also told the Senate Commerce, Science and Transportation Committee that he would like to overhaul the entire grant process to include such a threat assessment.8

A Confusing and Cumbersome Process

Providing federal assistance for domestic preparedness is intended to improve national capabilities by better preparing states and communities. However, first responders and policy experts have long identified the convoluted nature of the grant programs operated by the ODP, the Federal Emergency Management Agency (FEMA), and other federal agencies as a major obstacle to improving preparedness. In fact, this was one of the main findings of the Gilmore Commission in its December 2001 report to Congress.9

Establishing the Department of Homeland Security was supposed to rectify this problem by consolidating all domestic preparedness grants into the Office of Domestic Preparedness, which was transferred to the DHS from the Department of Justice as part of the Homeland Security Act of 2002.10 This consolidation, however, has yet to occur. The ODP continues to operate numerous grant programs that make funds available to the states in a piecemeal fashion rather than as a single, integrated program.

For example, in the past two months, ODP has announced two grants: the previously mentioned Urban Area Security Initiative for $100 million and an earlier general grant of $566 million.11 This leaves ODP with $1,334 million in non-emergency funds to distribute during FY 2003, plus $1.9 billion12 in emergency funds included in the recently passed supplemental, for a total of approximately $3.2 billion that has yet to be opened for applications. This process can create as much confusion among state and local response offices as the previous diversified programs and waste time by requiring the states to go through multiple application processes.

Furthermore, when the Office of Domestic Preparedness was transferred to the DHS, it was placed in the Border and Transportation Security Directorate in order to placate law enforcement lobbyists who feared that locating it elsewhere would lead to an undervaluing of the contribution of local law enforcement. While measures are necessary to ensure that law enforcement receives the attention it deserves, the ODP's mission does not match the Directorate's. First responder assistance should be managed by the Office of State and Local Government Coordination, the element of the DHS that interacts the most with state and local preparedness agencies.

A New Formula for Distribution of Funds

While Secretary Ridge and Congress's allocation of funds to the highest risk urban areas recognizes the basic problem of relying entirely on a population-based formula, more needs to be done. These two recent programs together account for only 17 percent of the total allocated for first responder assistance this year. The remainder will be distributed according to the population-based formula prescribed in the USA PATRIOT Act.

To remove both the deficiencies of a population-based formula for domestic preparedness grants and the political uncertainty of the formula used under the Urban Area Security Initiative, Congress should provide a new formula for distributing funds through the Office of Domestic Preparedness. This formula should include six factors:

  • Population;
  • Known or suspected threats to the state, based on intelligence assessments;
  • A vulnerability assessment of the state's critical infrastructure;
  • The areas where large numbers of people congregate (such as stadiums);
  • The number of facilities where large quantities of hazardous materials are stored or produced (e.g., nuclear power plants); and
  • The statewide percentage of counties and cities (or equivalent local government bodies) participating in mutual assistance agreements.

Including these six criteria in a new formula for domestic preparedness grant giving would strike a balance among a number of interests. Population must still be considered because highly populated areas are more likely to need larger first responder organizations to provide for their greater numbers. With a new, more in-depth formula, the 0.05 percent minimum award requirement should be removed to allow for a more accurate distribution of grant money according to need.

A threat assessment will ensure that appropriate resources are provided to those areas that are most likely to be attacked. A vulnerability assessment and an inventory of public gathering spots and hazardous materials storage and production facilities will provide a backstop to the inherent weakness of threat assessments (i.e., gaps in information and intelligence) by identifying areas that are particularly susceptible to an attack and therefore tempting targets.

When incorporating the number of public gathering spots and hazardous materials storage sites into the formula, Congress should resist politicizing these criteria and focus on potential consequences that make specific facilities unique. For example, grocery stores that may hold a couple of hundred people at any given time should not be counted, but a sporting arena that can hold 90,000 should be included. Likewise, pool supply stores that sell chlorine should not be considered hazardous materials storage facilities, but a plant that produces chlorine for distribution should.

In addition, since threat and vulnerability assessments are more subjective than the other criteria, their inclusion risks slowing the grant giving process without strict deadlines, close congressional oversight, and additional reforms. To reduce the likelihood of delay, Congress should require the DHS's Information Analysis and Infrastructure Protection Directorate to rank the 50 states by risk and vulnerability and deliver the rankings to the ODP by a set date before the ODP would begin accepting grant applications. To ensure compliance and external oversight of the Information Analysis and Infrastructure Protection Directorate's assessments, the Directorate should also be required to deliver the rankings to Congress in a classified briefing.

If the ODP is transferred to the OSLGC, which reports directly to Secretary Ridge, the Information Analysis and Infrastructure Protection Directorate will have two powerful clients (the Secretary of Homeland Security and Congress) with an interest in ensuring that this deadline is met. With strict deadlines in place, the ODP can then strike the right balance between broadening the criteria set to include subjective analysis of threat and vulnerability and promptly distributing the funds to the local level.

Finally, making funding levels partly contingent on the use of mutual assistance agreements among communities provides a powerful incentive for communities to cooperate, improving the effectiveness of local responses and encouraging more efficient expenditure of funds. However, before counting a locality's mutual assistance agreement, Congress should require that ODP evaluate the agreement in order to ensure that it is active (not merely a signed piece of paper) and is sufficient to meet the terrorist threat in addition to natural disasters.

Proving Clarity of Purpose

Recently, states, counties, cities, and first responder organizations have been calling for additional funding for basic equipment (such as fire trucks and police cruisers), new personnel, and overtime associated with the current heightened state of alert as well as training, planning, and equipment related to countering terrorism. While all of these concerns affect a locality's level of readiness, not all needs should be funded through domestic preparedness grants (or even by the federal government).

Federal funds from FEMA and the Office of Domestic Preparedness are distributed to state and local offices in support of efforts for domestic preparedness. These funds have been used primarily for anti-terrorism planning, training, and purchasing equipment.

Many states have contracted with private companies to develop anti-terrorism planning, needs assessments, and threat assessments, as well as to revise and update existing plans and conduct training exercises. State and local offices have also used federal funds to purchase personal protection gear for their first responder teams, including level C suits, bomb disposal suits, decontamination trailers and equipment, mass casualty equipment, radiation detection equipment, antigen detection systems, radios, respirators, cellular interface, cameras, and computers.

For example, the state of Indiana used its 2002 FEMA grant of $385,824 to pay for a privately developed anti-terrorism plan.13 However, the largest portion of the grant money was used to purchase specialized equipment and personal protection equipment for the first responder teams. ODP funds for Indiana in 2002 totaled $6,400,000.14

Domestic preparedness grants should continue to be used for such specialized equipment, training, and planning. Local governments should be responsible for establishing first response organizations to meet their communities' needs and for providing sufficient funding to meet their day-to-day staffing and equipment needs: Basic needs should continue to be funded out of local budgets, not through federal grants. Likewise, overtime pay and other such costs associated with a heightened state of alert should be paid by local authorities.

All levels of government have a responsibility for providing homeland security for their citizens; therefore, state and local authorities will have to plan for such times of greater risk despite tight state and local budgets. The only possible exception would be during an extended period of heightened or severe alert (Orange or Red on the Homeland Security Advisory System). During such times, the federal government may need to provide assistance to state and local agencies to ensure continuity of operations. However, in such cases, that need should be met through a supplemental budget request and an ad hoc temporary program, not through the standing funds designed for pre-event preparedness training, planning, and acquisitions.

Fully Consolidate Existing Grants

As previously noted, the ODP has already begun a piecemeal allocation of appropriated funds to state and local areas. This has created confusion and bureaucratic gridlock among state and local officials who must submit numerous applications.

All federal domestic preparedness grants should be consolidated into a single, flexible program in the Department of Homeland Security, which is now the lead agency for the federal response to any incident. While this was the intent behind transferring many pre-existing grant programs to the ODP, the ODP continues to operate numerous grant programs instead of one flexible program to meet the diverse needs of the nation, states, and communities. To achieve this vision, Congress will have to refrain from earmarking parts of the domestic preparedness budget for specific purposes, as was done in the FY 2003 Consolidated Appropriations Resolution15 and the Emergency Wartime Supplemental Appropriations Act, 2003.16

ODP should also reform how it provides funding under the consolidated domestic preparedness grant program. The program should operate on an annual basis, and Congress should set one date on which ODP will begin accepting applications from the states, another after which applications will no longer be accepted for that year, and a final date on which funds will be distributed.

In addition, all funds should continue to be distributed to the states with the requirement that a minimum of 80 percent of the funds be distributed to the local level within 60 days. State offices would then be responsible for distributing funds according to its response plans.17

Funds should not be distributed directly to the local level, as in the Urban Area Security Initiative, because this does not promote interoperability and cooperation among neighboring communities--cooperation that proved vital on September 11 and in the immediate aftermath. Furthermore, ODP should develop an application format that requires the states to explain how they will spend the funds in certain categories of activities, such as planning, training, and exercises; specialized domestic preparedness equipment; and interoperability and mutual assistance programs for counterterrorism.

Finally, Secretary Ridge should manage this consolidated grant program through the Office of State and Local Government Coordination, which will have the most direct interaction with local governments. Under the reorganization authority granted to the Secretary of Homeland Security in the Homeland Security Act of 2002, either Congress or Secretary Ridge can propose such a transfer. In fact, Senator Susan Collins (R-ME) recently introduced S. 796 to transfer the ODP to the OSLGC. Other specialized domestic preparedness grants, whether under DHS or other federal agencies, should be eliminated.

Accountability Through Oversight

The U.S. General Accounting Office has found it generally difficult to evaluate the effectiveness of federal funds supplied to state and local officials for broad purposes because the money is typically mixed with state and local funds and its impact cannot be separated when evaluating the program.18 In evaluating the effectiveness of ODP's domestic preparedness grant program, the DHS and Congress will have to look at the overall increase in preparedness of first responders around the country while recognizing that other factors will influence preparedness, including state funds, local budget allocations, and state and local bureaucracies.

Specific earmarks should be avoided because they would reduce a state's or community's flexibility in developing response plans tailored to local needs. While an ODP grant should not be an open cash machine for state and local agencies, neither should it specifically dictate their actions.

To ensure accountability, Congress should require ODP to report annually on the status of local preparedness, how much money was distributed to each state, how each state spent the funds, the percentage of each state's domestic preparedness budget that was federally funded, and whether the distributed money has already been spent by local authorities. In addition, Congress should provide funds for the DHS Emergency Preparedness and Response Directorate, which is responsible for the federal response to an attack, to hire every two years an independent auditor to assess the level of preparedness in the first responder community and evaluate the impact of ODP grants during the previous two years. A second study, independent of ODP, can provide a rough benchmark for evaluating the effectiveness of the program. The results of both the governmental and private evaluations should be made public, in their entirety, at the same time they are provided to Congress to ensure accountability and review by the public.

A new prioritization formula, clarity of purpose, and further consolidation will create a more effective grant program. However, the amount of money that should be committed to such programs is likely to remain a matter for hotly contested debate. At this point, Congress lacks an appropriate benchmark by which to evaluate the current spending level because most of the increase was passed after September 11 and grant reform has proceeded slowly.

To ensure that funding levels are sufficient and that money is being spent wisely, Congress should direct the Office of State and Local Government Coordination to evaluate the current $3.9 billion19 spending level six months after all domestic preparedness grants are consolidated into one program and report to Congress on whether or not the needs of America's states and communities are being adequately met and, if they are not being met, where deficiencies exist. Since meeting the needs of first responders will require an ongoing commitment, the DHS should repeat this process every year thereafter.

Conclusion

The ability of state and local agencies to respond to terrorist attacks, particularly attacks involving weapons of mass destruction, will continue to be a fundamental pillar of the nation's homeland security policy. The current structure and formula for grant distribution to local first responders, however, is insufficient to meet this need.

Grant money should be allocated to the states through a more comprehensive formula that takes into account risk, vulnerability, areas of public gathering, storage or production of hazardous materials, participation in mutual assistance agreements, and population. Furthermore, the ODP grants should be consolidated into a single grant, and the ODP should be relocated to the OSLGC. The ODP should also clearly define appropriate uses of grant money.

These reforms would establish a flexible grant program, prioritized through a comprehensive analysis of states' needs. Furthermore, it will be one that does not overly burden the first responders it intends to assist.

Michael Scardaville is Policy Analyst for Homeland Security in the Kathryn and Shelby Cullom Davis Institute for International Studies at The Heritage Foundation.


1. First responders include police, fire, medical, public works, bomb disposal, and hazardous materials (HAZMAT) teams.

2. Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT Act) of 2001, Public Law 107-56, Section 1005.

3. To see the risk associated with relying entirely on threat, one only need look at the concerns of Massachusetts Governor Mitt Romney and Boston Mayor Thomas Menino over being left out of ODP's new $100 million Urban Area Security Initiative designed to provide additional funding to the nation's seven most at-risk cities.

4. Jason White, "Security Funding Formula Under Attack," Stateline.org, April 4, 2003.

5. The seven cities receiving funds under the Urban Area Security Initiative are New York City, Los Angeles, Seattle, Chicago, San Francisco, Houston, and Washington, D.C.

6. Department of Homeland Security, Office of the Press Secretary, "Securing the Homeland: Protecting Our States and Cities," April 8, 2003.

7. H.R. 1559, 108th Cong., 1st. Sess.

8. "CQ Midday Update," Congressional Quarterly, April 9, 2003.

9. Advisory Panel to Assess Domestic Response Capabilities for Terrorism Involving Weapons of Mass Destruction, The Third Annual Report to the President and Congress of the Advisory Panel to Assess Domestic Response Capabilities for Terrorism Involving Weapons of Mass Destruction, December 15, 2001, pp. 9-10.

10. Public Law 107-296, Section 430.

11. Department of Homeland Security, "Department of Homeland Security Announces Funding for First Responders," at www.dhs.gov/dhspublic/display?theme=43&content=500.

12. Congress appropriated $2.2 billion for ODP in the emergency supplemental, but $300 million was earmarked for critical infrastructure protection efforts, not for domestic preparedness.

13. Telephone conversation with Indiana State Emergency Management Agency, April 2003.

14. Ibid.

15. Public Law 108-7.

16. Michael Scardaville, "Emphasize How, Not How Much, in Domestic Preparedness Spending," Heritage Foundation Backgrounder No. 1628, February 27, 2003.

17. Ideally, such plans should be developed with bottom-up input from local authorities; however, the exact manner in which states draft their plans will vary.

18. U.S. General Accounting Office, Grant Programs: Design Features Shape Flexibility, Accountability, and Performance Information, GAO/GGD-98-137, June 1998, pp. 20-21.

19. The $3.9 billion includes $1 billion in funds provided to ODP for broad purposes and an additional $1 billion earmarked for specific purposes in the consolidated appropriations bill and $1.9 billion in the Emergency Wartime Supplemental Appropriations Act. It excludes funding for the Community Oriented Policing Services (COPS) program and the Byrne Grant program in the omnibus and the $300 million allocated to ODP in the supplemental for critical infrastructure protection. These three programs fund issues other than domestic preparedness.

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