The North Carolina agency responsible for distributing Hurricane Florence disaster relief handed out tens of millions in funding with limited oversight on how recipients spent the money.
The North Carolina Department of Public Safety, or DPS, did not independently verify how state agencies, the university and community college systems, and nonprofit Golden LEAF Foundation, spent $502 million in disaster recovery funds, according to a newly released report from the North Carolina Office of State Auditor.
That office also concluded that DPS, which distributed the funds, did not make sure recipients of $783 million had a way to track how the money was being spent and whether those entities were meeting their recovery goals.
“As a result, there was an increased risk that recipients could have misused funds without the misuse being detected and corrected timely,” according to the April audit. “Additionally, DPS was limited in its ability to know whether funds were achieving legislatively intended results and to take timely corrective action, if necessary.”
The funds — $942.4 million — were a result of the legislative-approved October 2018 Hurricane Florence Emergency Response Act.
This legislation led to the creation of the North Carolina Office of Recovery and Resiliency, a DPS program responsible for providing general disaster recovery coordination and public information, outreach and application case management for residents, program and construction management services, audit, finance, compliance, and reporting on disaster recovery funds, and reporting the use, oversight and results achieved by those funds.
As of Jan. 31, 2021, DPS had distributed $783 million from the disaster recovery fund, money that was used to reimburse the costs of recovery efforts of state agencies, higher education institutions and a non-profit foundation.
Recipients of the funds were required to submit reports that included a summary of program activities and how much was spent to date to DPS on a quarterly basis.
An audit of quarterly reports from 14 recipients that administered 51 programs through January 2021 found that only 8%, four of the 51 programs, did not report what they would do with the funds for all programs, according to the report.
Sixteen of 51 programs totaling $262 million did not measure their progress on meeting their objectives.
DPS does not know whether $147 million disbursed to seven recipients used the money for repairs and renovations at public schools, universities and community colleges, counties and local governments, and volunteer fire departments. Or, whether $8 million allocated to higher education institutions was used to cover grants to assist students from disaster-declared counties pay for tuition, fees and emergency expenses.
Audit tests also show that it is unknown whether $11 million funneled to DPS was used to provide disaster housing recovery support programs for homeowners.
In his March 29 response to State Auditor Beth Wood, DPS Secretary Eddie Buffaloe Jr. wrote that the department is limited in withholding funds or providing oversight on grants.
“It is certainly our intention to comply with subrecipient monitoring standards and maintain proper program accountability within our legal authority,” he wrote.
The audit concludes, “This is not true,” saying that DPS did verify spending of recipients who turned in supporting documents between Nov. 1, 2018, through July 31, 2019.
The audit states that Hurricane Florence legislation required DPS to administer funds, which are defined as “to manage or supervise the execution, use, or conduct of.”
“Without monitoring, it would be difficult to ensure that the funds were used for authorized purposes or that the provisions and legislative intent of the Hurricane Florence Recovery legislation were carried out,” according to the audit. “The Governor, Legislators and the citizens of North Carolina should consider this clarification when evaluating DPS’s response to the audit finding.”
The state auditor recommends DPS do the following:
- Monitor recipients’ spending to ensure funds are being spent in accordance with the law.
- Develop policies and procedures to ensure each recipient identifies objectives for what they will do with the funds and track whether they’re meeting those objectives.
The audit also recommends that the General Assembly consider instituting monitoring requirements in the future for Hurricane Florence recovery funds or other emergency relief funds.