State Audit: Homeland Security Money Spent Well, But Hurdles Slow Spending

North Carolina is the first state to reveal details about homeland security and bioterrorism spending. The state received high marks in the

audit released Tuesday

by State Auditor Ralph Campell.

The report found only a 3 percent error rate with only minor violations in the 189 expenditures that were audited.

But the report also found that much of the money is not being spent because of hurdles to get funds. Spending has been slowed, auditors said, by the massive coordination required to develop plans for its use, with up to 10 different local agencies required to sign off on some projects.

"The difficult process has made agencies to spend some of the federal funds," said Janet Hayes, of the state auditor's office. "Obviously that process impacts the spending; it also impacts the level of readiness in the state."

The report said that $217 million is not being spent fast enough. Halfway through 2004, 70 percent of the money had not been spent and auditors found $148 million worth of unmet needs across the state.

Ten percent of local governments had refused the funds.

State officials ``have improved security for all of our citizens,'' Campbell said at a news conference. ``We are, in many ways, a much safer state now than we were three years ago.''

But, Les Merritt, Campbell's Republican challenger in the Nov. 2 election, questioned the timing of the report's release and why it took so long for the review to be performed.

``This audit should have been completed a long time ago. Instead, homeland security fell victim to election-year politics,'' Merritt said in a news release.

The audit determined that the federal government awarded $199.5 million in homeland security and bioterrorism grants to North Carolina over the five years that ended June 30, while the state appropriated $17.9 million.

The grants are supposed to go for emergency response efforts, such as gas masks and suits to help workers contain viral outbreaks or chemical spills, mobile units to respond to mass-casualty events or formulation of plans to identify security risks.

The state departments of Crime Control and Public Safety, Health and Human Services have administered most of the grant money.

A domestic preparedness strategy that was being developed before the 2001 terror attacks on New York and Washington, D.C., put North Carolina ahead of other states in assessing its needs, the audit found.

Officials, however, still need to create preparedness standards that will allow state and local governments to determine what they still need to do to be prepared, according to the review.

Grant money isn't being tapped because application processes are confusing, because grant periods overlap and because state and local governments, slimmed by budget crunches, have lacked employees to fill out paperwork and coordinate grant applications, Campbell's office said.

The audit recommends that local governments could benefit from coordinating multi-county grant requests, seeking funding to underwrite grant proposals and asking for deadline extensions.

The review found that the state has $148 million in unmet homeland security needs and $17.7 million in annual ongoing costs. Local agencies have an undetermined amount of unmet needs. Auditors sampling reimbursement requests found about a 3 percent error rate. The errors were minor and didn't exhibit deliberate wrongdoing, Campbell said.

However, some local governments purchased sport utility vehicles for regional response teams based in health departments that already owned vehicles for those teams.

Some expenditures ``may not have been the most efficient use of those funds,'' Campbell said.

State agencies singled out in audit recommendations largely agreed with the findings and said they're making improvements.

Campbell said the audit will provide a baseline for future reports.

``Homeland security is an issue that obviously is going to be with us for awhile,'' he said.