Federal Emergency Management Agency
Crisis Counseling Grants Awarded to the State of New York after the September 11 Terrorist Attacks Gao ID: GAO-05-514 May 31, 2005To help alleviate the psychological distress caused by the September 11, 2001, attacks the Federal Emergency Management Agency (FEMA) awarded the state of New York two grants totaling $154.9 million to provide crisis counseling and public education. Because of questions about whether the program, called Project Liberty, had spent all the funds it received from the federal government, GAO was asked to determine (1) the extent to which the program expended the funds awarded from the federal government, (2) whether the federal government had an effective process in place to determine the amount of funds to provide the program, (3) whether the federal government had adequate financial oversight of the program, and (4) steps taken by the federal government and New York State to assess the program's effectiveness.
For the period September 11, 2001, through September 30, 2004, Project Liberty reported that it had expended approximately $121 million, or three-quarters of the $154.9 million in grants awarded by FEMA, leaving a remaining balance of $33.9 million. The majority of the remaining balance, approximately $32 million, related to unresolved issues involving the adequacy of supporting documentation for the New York City Department of Education's (NYC DOEd) expense claims. As of March 31, 2005, city and state officials told GAO they had accepted alternative forms of supporting evidence related to $5.2 million in NYC DOEd expenses; however, this alternative evidence provides only limited assurance of the propriety of the claimed amounts. It is unclear whether similar alternative sources of evidence will be accepted for the remaining $26.8 million in NYC DOEd expense claims. FEMA assisted state officials in developing estimated funding needs for Project Liberty immediately after the terrorist attacks. By necessity, these initial budgets were developed using estimates established during the initial stages of the disaster. However, FEMA never required Project Liberty to prepare adjusted budgets to reflect new information or subsequent changes to the program. As a result, FEMA did not have realistic budget information to assess how city and state officials were planning to spend Project Liberty grant funds. FEMA assigned primary responsibility for oversight and monitoring to the Substance Abuse and Mental Health Services Administration (SAMHSA) through an interagency agreement. Although SAMHSA had procedures in place to monitor Project Liberty's delivery of services, it performed only limited monitoring of financial information reported by Project Liberty about the cost of those services. For example, while SAMHSA received periodic financial reports from Project Liberty, it did not perform basic analyses of expenditures in order to obtain a specific understanding of how the grant funds were being used and, as noted above, did not have updated budget information to gauge how actual spending compared to budgets. As a result, SAMHSA was not in a position to exercise a reasonable level of oversight to ensure that funds were being used efficiently and effectively in addressing the needs of those affected by the September 11 attacks. Both the state of New York and the federal government have taken steps to assess how Project Liberty delivered services. These assessments were ongoing as of March 2005. FEMA plans to consider lessons learned from Project Liberty when conducting its own internal review of the crisis counseling program.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-05-514, Federal Emergency Management Agency: Crisis Counseling Grants Awarded to the State of New York after the September 11 Terrorist Attacks
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Report to Congressional Requesters:
May 2005:
Federal Emergency Management Agency:
Crisis Counseling Grants Awarded to the State of New York after the
September 11 Terrorist Attacks:
GAO-05-514:
GAO Highlights:
Highlights of GAO-05-514, a report to congressional requesters:
Why GAO Did This Study:
To help alleviate the psychological distress caused by the
September 11, 2001, attacks the Federal Emergency Management Agency
(FEMA) awarded the state of New York two grants totaling $154.9 million
to provide crisis counseling and public education. Because of questions
about whether the program, called Project Liberty, had spent all the
funds it received from the federal government, GAO was asked to
determine (1) the extent to which the program expended the funds
awarded from the federal government, (2) whether the federal government
had an effective process in place to determine the amount of funds to
provide the program, (3) whether the federal government had adequate
financial oversight of the program, and (4) steps taken by the federal
government and New York State to assess the program‘s effectiveness.
What GAO Found:
For the period September 11, 2001, through September 30, 2004, Project
Liberty reported that it had expended approximately $121 million, or
three-quarters of the $154.9 million in grants awarded by FEMA, leaving
a remaining balance of $33.9 million. The majority of the remaining
balance, approximately $32 million, related to unresolved issues
involving the adequacy of supporting documentation for the New York
City Department of Education‘s (NYC DOEd) expense claims. As of March
31, 2005, city and state officials told GAO they had accepted
alternative forms of supporting evidence related to $5.2 million in NYC
DOEd expenses; however, this alternative evidence provides only limited
assurance of the propriety of the claimed amounts. It is unclear
whether similar alternative sources of evidence will be accepted for
the remaining $26.8 million in NYC DOEd expense claims.
FEMA assisted state officials in developing estimated funding needs for
Project Liberty immediately after the terrorist attacks. By necessity,
these initial budgets were developed using estimates established during
the initial stages of the disaster. However, FEMA never required
Project Liberty to prepare adjusted budgets to reflect new information
or subsequent changes to the program. As a result, FEMA did not have
realistic budget information to assess how city and state officials
were planning to spend Project Liberty grant funds.
FEMA assigned primary responsibility for oversight and monitoring to
the Substance Abuse and Mental Health Services Administration (SAMHSA)
through an interagency agreement. Although SAMHSA had procedures in
place to monitor Project Liberty‘s delivery of services, it performed
only limited monitoring of financial information reported by Project
Liberty about the cost of those services. For example, while SAMHSA
received periodic financial reports from Project Liberty, it did not
perform basic analyses of expenditures in order to obtain a specific
understanding of how the grant funds were being used and, as noted
above, did not have updated budget information to gauge how actual
spending compared to budgets. As a result, SAMHSA was not in a position
to exercise a reasonable level of oversight to ensure that funds were
being used efficiently and effectively in addressing the needs of those
affected by the September 11 attacks.
Both the state of New York and the federal government have taken steps
to assess how Project Liberty delivered services. These assessments
were ongoing as of March 2005. FEMA plans to consider lessons learned
from Project Liberty when conducting its own internal review of the
crisis counseling program.
What GAO Recommends:
GAO makes eight recommendations to (1) help ensure proper and timely
expenditure of the remaining grant funds, (2) strengthen federal
financial oversight of future crisis counseling program grants, and
(3) help ensure that lessons learned from Project Liberty will be used
to help improve future crisis counseling programs. FEMA and SAMHSA
generally concurred with GAO‘s recommendations, but took issue with our
characterization of SAMHSA‘s oversight.
www.gao.gov/cgi-bin/getrpt?GAO-05-514.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Linda Calbom at (202) 512-
8341 or calboml@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Remaining Grant Funds Primarily Relate to Unresolved Issues at NYC
DOEd:
Improvements Needed in the Process for Determining Federal Funding:
Federal Oversight of Project Liberty's Financial Information Was
Limited:
Assessments of Project Liberty Ongoing:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Objectives, Scope, and Methodology:
Organizations Contacted:
Appendix II: Comments from the Department of Homeland Security:
Appendix III: Comments from the Substance Abuse and Mental Health
Services Administration:
Appendix IV: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Reported CCP Grant Activity for Project Liberty from September
11, 2001, through September 30, 2004:
Table 2: Comparison of Project Liberty's RSP Reported Expenditures to
Budget from June 14, 2002, through September 30, 2004:
Figures:
Figure 1: New York Areas Serviced by Project Liberty:
Figure 2: Organizational Structure of Project Liberty:
Figure 3: Key Milestones for Project Liberty:
Figure 4: Flow of Funds for Project Liberty:
Figure 5: Claim Review and Approval Process for Project Liberty:
Figure 6: Project Liberty's Total CCP Grant Awards and Reported
Expenditures for the Period September 11, 2001, through September 30,
2004:
Figure 7: ISP and RSP Application Processes for Project Liberty:
Abbreviations:
CCP: Crisis Counseling Assistance and Training Program:
CMHS: Center for Mental Health Services:
DHS: Department of Homeland Security:
FEMA: Federal Emergency Management Agency:
HHS: Department of Health and Human Services:
ISP: Immediate Services Program:
NCPTSD: National Center for Post-Traumatic Stress Disorder:
NYAM: New York Academy of Medicine:
NYC DOEd: New York City Department of Education:
NYC DOHMH: New York City Department of Health and Mental Hygiene:
NYS OMH: New York State Office of Mental Health:
RFMH: Research Foundation for Mental Hygiene, Inc.
RSP: Regular Services Program:
SAMHSA: Substance Abuse and Mental Health Services Administration:
Letter May 31, 2005:
The Honorable Christopher Shays:
Chairman, Subcommittee on National Security, Emerging Threats and
International Relations:
Committee on Government Reform:
House of Representatives:
The Honorable Carolyn B. Maloney:
House of Representatives:
To help alleviate the psychological distress in the New York City area
caused by terrorist attacks on September 11, 2001, the Federal
Emergency Management Agency (FEMA)[Footnote 1] awarded the state of New
York two grants totaling $154.9 million to provide crisis counseling
and public education services.[Footnote 2] Specifically, FEMA awarded
the state of New York $22.7 million for an Immediate Services Program
(ISP) on September 24, 2001,[Footnote 3] with subsequent amendments
bringing the ISP total to $22.8 million. In addition, FEMA awarded the
state of New York $132.1 million for a Regular Services Program (RSP)
on June 14, 2002.
The state of New York operated the crisis counseling and public
education program under the name Project Liberty. Project Liberty was
funded under FEMA's Crisis Counseling Assistance and Training Program
(CCP), which is an individual assistance program authorized by the
Robert T. Stafford Disaster Relief and Emergency Assistance Act
(Stafford Act).[Footnote 4] The CCP is administered by FEMA and its
federal partner, the Substance Abuse and Mental Health Services
Administration (SAMHSA), an agency of the Department of Health and
Human Services (HHS) responsible for improving the quality and
availability of mental health services. Although all crisis counseling
services for the general public had been phased out by December 31,
2003, Project Liberty continued to provide these services to New York
City firefighters and schoolchildren through December 31, 2004.
Because of concerns that Project Liberty may be discontinuing services
without having spent all of the funds it received from the federal
government to assist in providing crisis counseling and public
education following the September 11 terrorist attacks, you requested
that we review and report on the use of funds given to the state of New
York by the federal government for crisis counseling services. In
response to this request, we reviewed the use of funds given to the
state of New York by the federal government by determining (1) the
extent to which Project Liberty expended the funds awarded from the
federal government, (2) whether the federal government had an effective
process in place to determine the amount of funds to provide Project
Liberty, (3) whether the federal government had adequate financial
oversight of Project Liberty, and (4) steps taken by the federal
government and the state of New York to assess the effectiveness of the
program in meeting stated objectives and the results of these
assessments.
To address these objectives, we (1) reviewed documentation relating to
the expenditure of Project Liberty funds through September 30, 2004,
the most recent data available as of March 31, 2005, the end of our
fieldwork, and found it sufficiently reliable for the purpose of this
report; (2) reviewed the grant applications and correspondence used to
determine funding; (3) assessed the sufficiency of the federal
government's financial oversight of Project Liberty in light of GAO's
Standards for Internal Control in the Federal Government;[Footnote 5]
and (4) reviewed assessments of Project Liberty. We performed our work
from July 2004 through March 2005 in accordance with generally accepted
government auditing standards. Our scope and methodology are discussed
in greater detail in appendix I.
We requested written comments on a draft of this report from the
Secretary of Homeland Security. We received written comments from DHS.
The DHS comments (reprinted in appendix II) incorporate by reference a
letter from SAMHSA to FEMA commenting on the draft (reprinted in
appendix III). We also provided excerpts of a draft report for
technical comment to the New York State Office of Mental Health (NYS
OMH), the New York City Department of Health and Mental Hygiene (NYC
DOHMH), and the New York City Department of Education (NYC DOEd). NYS
OMH technical comments and the coordinated NYC DOHMH and NYC DOEd
technical comments were incorporated as appropriate.
Results in Brief:
For the period September 11, 2001, through September 30, 2004, Project
Liberty reported that it had expended[Footnote 6] approximately $121
million, or three-quarters of the $154.9 million in grants awarded by
FEMA, leaving a remaining balance of $33.9 million. The majority of the
remaining balance, approximately $32 million, related to unresolved
issues involving the adequacy of supporting documentation for NYC
DOEd's expense claims. According to NYS OMH, NYC DOEd had not been
fully reimbursed for the Project Liberty expenses it incurred
throughout the program because NYC DOEd had not been able to provide
support for these expenses that met the CCP documentation standards for
reimbursement under federal grants. NYS OMH has been working with NYC
DOEd to develop alternative forms of support, including internal
control summary memos prepared by NYC DOEd, as a basis to pay NYC
DOEd's expense claims. As of March 31, 2005, NYS OMH had paid $5.2
million of NYC DOEd expense claims based on such alternative support.
However, this type of indirect supporting evidence provides only
limited assurance of the propriety of claimed amounts, and it is
unclear whether it will also be used to justify payment for the
remaining NYC DOEd expense claims.
FEMA had processes in place to assist New York in preparing its grant
applications and determining the level of funding for Project Liberty
immediately after the September 11 terrorist attacks. Because FEMA's
processes for determining funding are designed to be implemented
quickly after a presidential disaster declaration, the state of New
York's ISP and RSP grant applications were developed during the initial
dynamic stage of the recovery effort when damage reports were
continuing to be updated and response plans were still being
formulated. The budgets included in the grant applications were
developed using estimates established during the initial stages of the
disaster. Although the budgets submitted with the grant applications
were revised by the grantee to satisfy certain conditions of grant
award, FEMA and SAMHSA never required Project Liberty to formally
submit revised budget requests to reflect new information and
subsequent changes to the program. As a result, FEMA and SAMHSA did not
have realistic budget information that could be used to effectively
assess how city and state officials were planning to spend Project
Liberty grant funds.
While SAMHSA did have procedures in place to monitor Project Liberty's
delivery of services, it did not have procedures in place to
effectively monitor financial information reported by Project Liberty
about the cost of those services. SAMHSA's limited financial oversight
of Project Liberty was driven in part by its assessment that the
program was not high risk, but this assessment did not fully consider
the magnitude, complexity, and unique nature of the program and was not
revisited even after significant program changes occurred. As a result,
SAMHSA was not in a position to exercise a reasonable level of
oversight to ensure that funds were used efficiently and effectively in
addressing the needs of those affected by the September 11 terrorist
attacks.
Both the state of New York and the federal government have taken steps
to assess how Project Liberty delivered services. NYS OMH undertook its
own assessment of Project Liberty and partnered with the New York
Academy of Medicine (NYAM) to obtain information from telephone
surveys. SAMHSA contracted with the National Center for Post-Traumatic
Stress Disorder (NCPTSD), a center within the Department of Veterans
Affairs, to conduct a case study of New York's response to the
terrorist attacks on September 11, with a primary focus on Project
Liberty. Both NYS OMH and NCPTSD's overall assessments of the program
were ongoing as of March 2005. FEMA plans to consider lessons learned
from NYS OMH and NCPTSD when conducting its own internal review of the
CCP.
To improve accountability for federal grant funds, this report makes
recommendations for FEMA to work with SAMHSA to (1) help ensure proper
and timely expenditure of the remaining grant funds, (2) strengthen
federal financial oversight of future CCP grants, and (3) help ensure
that lessons learned from Project Liberty will be used to improve
future programs funded by the CCP.
In commenting on a draft of this report, DHS and SAMHSA generally
agreed with our recommendations. However DHS stated that we should give
more weight to the unprecedented conditions that led to Project
Liberty, and that it was these unique circumstances that led to our
findings and recommendations. SAMHSA took issue with our
characterization of SAMHSA oversight and stated that overall, the
federal oversight of Project Liberty was appropriate, reasonable, and
responsive to state and local needs. Our report clearly acknowledges
the unprecedented circumstances that led to the establishment of
Project Liberty--it was these very circumstances that led us to
conclude that Project Liberty required a higher level of federal
oversight than was provided by SAMHSA.
Background:
Following the terrorist attacks on September 11, 2001, the President
signed under the authority of the Stafford Act a major disaster
declaration for the state of New York. The presidential declaration
allowed the state of New York to apply for federal assistance to help
recover from the disaster. FEMA was responsible for coordinating the
federal response to the September 11 terrorist attacks and providing
assistance through a variety of programs, including the CCP. The CCP
was authorized in section 416 of the Stafford Act to help alleviate the
psychological distress caused or aggravated by disasters declared
eligible for federal assistance by the President. Through the CCP, FEMA
released federal grant awards to supplement the state of New York's
ability to respond to the psychological distress caused by the
September 11 terrorist attacks through the provision of short-term
crisis counseling services to victims and training for crisis
counselors.
FEMA relied on SAMHSA to provide expertise related to crisis counseling
and public education for Project Liberty. FEMA assigns SAMHSA's
responsibilities for the CCP through an annual interagency agreement.
These responsibilities included, among other things, providing
technical assistance, monitoring the progress of programs conducted
under the CCP, and performing program oversight. Within SAMHSA, the
Center for Mental Health Services (CMHS) carried out these
responsibilities for Project Liberty. CMHS received support from
SAMHSA's Division of Grants Management, which provides grant oversight.
NYS OMH established Project Liberty under the CCP to offer crisis
counseling and public education services throughout the five boroughs
of New York City and 10 surrounding counties free of charge to anyone
affected by the World Trade Center disaster and its aftermath. The
areas served by Project Liberty are shown in the shaded areas of figure
1.
Figure 1: New York Areas Serviced by Project Liberty:
[See PDF for image]
[End of figure]
The state of New York's primary role was to administer, oversee, and
guide Project Liberty's program design, implementation, and evaluation
and pay service providers, but not to provide services itself. New York
City and the surrounding counties contracted with over 200 service
providers and were responsible for overseeing day-to-day activities.
Figure 2 shows the organization structure of Project Liberty at the
federal, state, and local levels.
Figure 2: Organizational Structure of Project Liberty:
[See PDF for image]
[End of figure]
Under the CCP, Project Liberty's goal was to serve New York City and
the 10 surrounding counties by assisting those affected by the
September 11 terrorist attacks to recover from their psychological
reactions and regain predisaster level of functioning. The CCP supports
services that are short-term interventions with individuals and groups
experiencing psychological reactions to a presidentially declared
disaster and its aftermath. Crisis counseling services were primarily
delivered to disaster survivors through outreach, or face-to-face
contact with survivors in familiar settings (e.g., neighborhoods,
churches, community centers, and schools). Although the CCP does not
support long-term, formal mental health services such as medications,
office-based therapy, diagnostic services, psychiatric treatment, or
substance abuse treatment, FEMA approved an enhanced services program
for Project Liberty. This enhanced services program allowed for an
expansion of services, including enhanced screening methods; a broader
array of brief counseling approaches; and additional training,
technical assistance, and supervision to a set of service providers.
These enhanced services were intended to address the needs of
individuals who continued to experience trauma symptoms and functional
impairment after initial crisis counseling but did not need long-term
mental health services.
Project Liberty was funded through two separate, but related, grant
programs: the ISP and RSP. The ISP grant was designed to fund Project
Liberty for the first 60 days following the disaster declaration.
Because there was a continuing need for crisis counseling services, the
ISP was extended to last about 9 months, until the RSP began. The RSP
grant was awarded and was designed to continue to provide funding for
an additional 9 months of crisis counseling services, but was extended
to last for 2 ½ years.[Footnote 7] Figure 3 shows key milestones for
Project Liberty.
Figure 3: Key Milestones for Project Liberty:
[See PDF for image]
[A] According to SAMHSA officials, there have been discussions about
extending the closeout for Project Liberty through September 30, 2005.
[End of figure]
For the approved ISP application, FEMA made funds available directly to
the state. Under the RSP, after approval, funds were transferred from
FEMA to SAMHSA, which awarded the grant to the state of New York
through SAMHSA's grants management process. The state of New York, in
turn, disbursed funds to the service providers and local governments
through the Research Foundation for Mental Hygiene, Inc. (RFMH), a not-
for-profit corporation affiliated with the state of New York that
assists with financial management of federal and other grants awarded
to NYS OMH. Figure 4 shows the flow of funds for Project Liberty's ISP
and RSP.
Figure 4: Flow of Funds for Project Liberty:
[See PDF for image]
[End of figure]
Service providers were required to submit claims and supporting
documentation to receive reimbursement for expenses incurred to provide
services. As shown in figure 5, these claims were to have multiple
levels of review to determine whether the expenses claimed were
allowable under the CCP's fiscal guidelines. This review structure,
which placed primary responsibility for reviewing claims on the local
government units, was based on the state of New York's existing grant
management policies. Additional controls for Project Liberty included
(1) NYS OMH site visits to service providers in New York City and
surrounding counties; (2) closeout audits by independent auditors of
certain New York City service providers to test whether claims were
documented and allowable; and (3) annual audits of New York City and
surrounding counties conducted under the Single Audit Act,[Footnote 8]
which requires independent auditors to provide an opinion on whether
the financial statements are fairly presented, a report on internal
control related to the major programs, and a report on compliance with
key laws, regulations, and the provisions of the grant
agreements.[Footnote 9]
Figure 5: Claim Review and Approval Process for Project Liberty:
[See PDF for image]
[End of figure]
Our publication, Standards for Internal Control in the Federal
Government, provides a road map for entities to establish control for
all aspects of their operations and a basis against which entities can
evaluate their control structures.[Footnote 10] The five components of
internal control are as follows:
* Control environment. Creating a culture of accountability within the
entire organization--program offices, financial services, and regional
offices--by establishing a positive and supportive attitude toward the
achievement of established program outcomes.
* Risk assessment. Identifying and analyzing relevant problems that
might prevent the program from achieving its objectives. Developing
processes that can be used to form a basis for measuring actual or
potential effects of these problems and manage their risks.
* Control activities. Establishing and implementing oversight processes
to address risk areas and help ensure that management's decisions--
especially about how to measure and manage risks--are carried out and
program objectives are met.
* Information and communication. Using and sharing relevant, reliable,
and timely information on program-specific and general financial risks.
Such information surfaces as a result of the processes--or control
activities--used to measure and address risks.
* Monitoring. Tracking improvement initiatives over time and
identifying additional actions needed to further improve program
efficiency and effectiveness.
SAMHSA and FEMA were responsible for providing oversight to ensure that
the state of New York had a reasonable level of controls in place.
Although FEMA retained responsibility for providing leadership and
direction for Project Liberty, it assigned primary responsibility to
SAMHSA for oversight and monitoring through an interagency agreement.
Remaining Grant Funds Primarily Relate to Unresolved Issues at NYC
DOEd:
Approximately $121 million, more than three-quarters of the $154.9
million in federal funds provided to Project Liberty, were reported as
expended as of September 30, 2004, leaving a remaining balance of $33.9
million. About $32 million of the $33.9 million pertain to unresolved
NYC DOEd expense claims. According to NYS OMH, NYC DOEd had not been
reimbursed for the Project Liberty expenses it incurred throughout the
program because NYC DOEd had not been able to provide support for these
expenses that met the CCP documentation standards for reimbursement
under federal grants. NYS OMH began considering alternative indirect
forms of evidence, including internal control summary memos prepared by
NYC DOEd, to begin paying NYC DOEd's expense claims. As of March 31,
2005, NYS OMH had accepted alternative forms of supporting evidence to
pay $5.2 million of NYC DOEd expense claims; however, this type of
alternative evidence provides only limited assurance of the propriety
of the claimed amounts. NYS OMH was not sure when and how the remaining
NYC DOEd expense claims would be resolved.
Timing of Reported Expenditures:
For the period September 11, 2001, through September 30, 2004,[Footnote
11] Project Liberty reported that it had expended all of the $22.8
million ISP grant and about $98.2 million of the $132.1 million RSP
grant for total reported expenditures of approximately $121 million,
leaving a remaining balance $33.9 million. Although crisis counseling
services had been phased out as of December 31, 2004, Project Liberty
will continue to use the remaining grant funds to process claims for
reimbursement of program-related expenses incurred through December 31,
2004, and to cover administrative expenses during the closeout period,
which at the end of our fieldwork, was scheduled to end on May 30,
2005. Table 1 and figure 6 show the timing and amount of expenditures
reported by Project Liberty for the ISP and RSP grants by quarter
through September 30, 2004, compared to the total CCP grant awards for
Project Liberty.
Table 1: Reported CCP Grant Activity for Project Liberty from September
11, 2001, through September 30, 2004:
Dollars in thousands.
CCP grant funds awarded:
September 2001 - ISP[A]: $22,777.
June 2002 - RSP[B]: 132,148.
Subtotal: $154,925.
Project Liberty reported expenditures: September 11, 2001, through
September 30, 2004:
ISP - amounts per RFMH:
12/14/2001[C]: $$6,056.
03/14/2002: $7,995.
06/14/2002[D]: $8,726.
Subtotal: $22,777.
RSP - amounts per quarterly reports:
09/14/2002: $24,217.
12/14/2002: $7,739.
03/14/2003: $6,454.
06/14/2003: $10,264.
09/14/2003: $18,618.
12/14/2003: $11,754.
03/14/2004: $8,813.
06/14/2004: $7,389.
09/30/2004[E]: $2,961.
Subtotal: $98,209.
Total reported expenditures: $120,986.
Remaining grant funds as of September 30, 2004: $33,939.
Source: GAO analysis of FEMA, NYS OMH and RFMH data.
Note: All amounts are reported in nominal dollars:
[A] The ISP award of $22.7 million was made on September 24, 2001, with
subsequent adjustments bringing the ISP total to about $22.8 million.
[B] The RSP award was made on June 14, 2002.
[C] Includes expenditures from September 11, 2001, through December 14,
2001.
[D] Includes ISP expenditures incurred after June 14, 2002, and
reductions for expenditures transferred to the RSP.
[E] Project Liberty modified its reporting period to include
expenditures incurred through September 30, 2004.
[End of table]
Figure 6: Project Liberty's Total CCP Grant Awards and Reported
Expenditures for the Period September 11, 2001, through September 30,
2004:
[See PDF for image]
[A] Includes expenditures from September 11, 2001, through December 14,
2001.
[B] Includes ISP expenditures incurred after June 14, 2002, and
adjustments for expenditures transferred to the RSP.
[C] Project Liberty modified its reporting period to include
expenditures incurred through September 30, 2004.
[End of figure]
According to NYS OMH officials, the expenditures reported by Project
Liberty from September 11, 2001, through September 30, 2004, included
expenses incurred as well as amounts advanced to service providers.
During the RSP, Project Liberty made advances to 109 service providers,
for a total of about $25.8 million. As of September 30, 2004, the
outstanding advance balance was $5.8 million; however, according to an
NYS OMH official, the balance had been reduced to $1.2 million as of
March 31, 2005.[Footnote 12]
NYC DOEd Expense Claims Not Fully Resolved:
The vast majority of remaining Project Liberty funds related to
unresolved expense claims of NYC DOEd. As of March 31, 2005, NYS OMH
officials told us that NYC DOEd had submitted claims for a portion of
the $32 million that was budgeted to NYC DOEd to provide crisis
counseling services to New York City school children, and planned to
ultimately submit claims for the full amount.
NYS OMH and NYC DOHMH had not approved the majority of NYC DOEd claims
for reimbursement incurred during the RSP because NYC DOEd had not
provided support for these expenses that met the CCP documentation
standards for reimbursement under federal grants. These standards
require that the expenditure of grant funds be supported by detailed
documentation, such as canceled checks, paid bills, time and attendance
records, and contract and subgrant award documents. According to NYC
DOEd officials, they could not meet the documentation standards
established by NYS OMH because (1) NYC DOEd reorganized on July 1,
2003, which coincided with the delivery of crisis counseling services
under the Project Liberty grant, resulting in significant loss of
staff, loss of institutional knowledge, and therefore lost or
diminished ability to retrieve supporting documentation, and (2) NYC
DOEd's complex financial systems cannot produce the type of transaction-
specific documentation required by NYS OMH and makes the process of
retrieving supporting documentation unwieldy and administratively
burdensome.
A SAMHSA official told us SAMHSA was aware of issues involving the
supporting documentation for the NYC DOEd expense claims; however,
because officials viewed it as a grantee issue, they have had limited
involvement with NYS OMH's efforts to resolve these issues. NYS OMH
decided to consider alternative evidence, including supplemental
supporting documentation in the form of internal control summary memos
prepared by NYC DOEd that describe the controls over payments for
personnel, other-than-personnel, and community-based organization
expenses.[Footnote 13] Personnel expenses include NYC DOEd workers
while the other-than-personnel expenses include other costs incurred
directly by NYC DOEd. The community-based organization expenses are
those incurred by other service providers on behalf of NYC DOEd.
Although NYC DOEd's Chief Financial Officer has signed an attestation
stating that the controls described in the summary memos for personnel
and other-than-personnel expenses were in place and working during
Project Liberty, the level of assurance provided by these internal
control summary memos is limited for several reasons. First and
foremost, the memos do not provide the type of supporting documentation
necessary to verify the validity of the claimed expenses as required by
the federal documentation standards. Second, the memos are not
certified by an external source, such as an independent auditor. Third,
the memos were prepared solely to support NYC DOEd's Project Liberty
expenses and may not represent written policies and procedures that
existed during the time the claimed expenditures were incurred. And
lastly, the memos were prepared toward the end of the program by
officials who did not, in all cases, have firsthand knowledge of the
controls that existed during the program.
As of March 31, 2005, NYS OMH and NYC DOHMH had reviewed and accepted
internal control summary memos that describe the controls over payments
for personnel and other-than-personnel expenses, and NYS OMH had used
these memos and other alternative forms of evidence to reimburse NYC
DOEd for $5.2 million in expense claims. These other forms of evidence
included observations of services being provided during site visits,
the existence of encounter logs evidencing that some services had been
provided, and general familiarity with service providers. NYS OMH
officials were not sure when they would complete the review of the memo
covering the controls over payments for community-based organization
expenses and how this memo, along with other alternative forms of
evidence, would be used to resolve the remaining $26.8 million in NYC
DOEd expense claims.
As part of its approval process for expense claims, NYS OMH relied upon
NYC DOHMH to certify that the claims submitted were valid and met the
CCP documentation requirements. However, because NYC DOEd did not
provide the required supporting documentation, NYC DOHMH could not
perform the same level of review as it did for the claims of the other
Project Liberty service providers.[Footnote 14] Further, although NYC
DOHMH contracted with independent auditors to perform audits of expense
claims of certain service providers[Footnote 15] for Project Liberty,
there were no audits performed of NYC DOEd claims, which are expected
to total approximately $32 million.
At the end of our audit fieldwork, it was not clear when and how the
remaining expense claims would be resolved. However, if the internal
control summary memos and other alternative evidence continue to be the
primary supporting documentation for $32 million in NYC DOEd expense
claims, the federal government will have only limited assurance that
these payments are an appropriate use of Project Liberty grant funds.
Improvements Needed in the Process for Determining Federal Funding:
FEMA's process for determining funding is designed to be implemented
quickly after a state requests federal assistance to recover from a
presidentially declared disaster. The state of New York's grant
applications for Project Liberty were developed during the initial
dynamic stages of the recovery effort when damage reports and response
plans were subject to frequent change. The budgets submitted with the
grant applications were revised by the grantee to satisfy certain
conditions of grant award. However, we found that although the budgets
were developed using estimates established during the initial stages of
the disaster, FEMA and SAMHSA never required the state of New York to
formally submit revised budget requests to reflect new information and
significant changes to the program that occurred as the needs of the
affected population became better identified. As a result, FEMA and
SAMHSA did not have realistic budget information that could be used to
effectively assess how responsible city and state officials planned to
spend Project Liberty grant funds.
Federal Assistance Application Process:
The grant applications that the state of New York submitted to FEMA for
Project Liberty were prepared with assistance from FEMA and SAMHSA and
included a needs assessment, plan of services, and budget. The needs
assessment, which was based on a formula developed by SAMHSA, was the
state's estimate of the number of people who would need crisis
counseling. The plan of services described the state's plan for
treating the identified population, including segments of the
population needing special services or outreach methods such as
counseling and training in various languages. The budget was developed
based on the estimated cost to treat the population identified in the
needs assessment through the program outlined in the plan of services.
FEMA and SAMHSA provided the state of New York the flexibility to
submit grant applications that reflected its identified and estimated
needs, which were based on information available at the time. In
preparing the budget, the state of New York relied on SAMHSA's Budget
Estimating and Reporting Tool, which was designed to assist states in
developing budgets consistent with FEMA guidelines. The state of New
York took two different approaches in constructing the ISP and RSP
budgets for Project Liberty. The ISP budget used estimates of
administrative costs and a simple direct services cost calculation. The
direct services costs were based on the estimated number of people
needing crisis counseling services, the estimated average length of
treatment each person would need, the estimated hourly rate for crisis
counselors, and the estimated length of the ISP. The RSP budget, on the
other hand, was prepared by the state of New York based on estimates
provided by NYS OMH, each of the New York City boroughs, and the 10
surrounding counties eligible for CCP grant funding.
Once the state of New York submitted its ISP and RSP grant
applications, FEMA had processes in place to review and approve them.
Although the processes differed, both shared common elements. The first
step for both applications was a technical review conducted by the FEMA
regional office with jurisdiction over the state of New York to ensure
that the applications had a direct link to the September 11 terrorist
attacks. Once this technical review was completed, the applications
were sent to FEMA headquarters and to SAMHSA for review and comment. In
addition, the RSP was reviewed by a panel of mental health
professionals who had experience with CCP grants. The ISP and RSP
review processes also differed in that FEMA's regional office had final
decision authority for the ISP application while FEMA headquarters had
final decision authority for the RSP application. Figure 7 shows the
application processes for the ISP and RSP.
Figure 7: ISP and RSP Application Processes for Project Liberty:
[See PDF for image]
[End of figure]
After the reviews conducted by FEMA and SAMHSA were completed, FEMA
awarded the state of New York $22.7 million for the ISP on September
24, 2001,[Footnote 16] with subsequent amendments bringing the ISP
total to $22.8 million. In addition, FEMA awarded the state of New York
$132.1 million for the RSP immediately after the ISP ended on June 14,
2002.
Budgets Were Not Adjusted to Reflect New Information or Program
Changes:
Because FEMA's process for determining funding is designed to be
implemented quickly after presidential disaster declarations and
official loss numbers were not known at the time the Project Liberty
applications were prepared, the state of New York used estimates of the
number of people who would need crisis counseling services, the length
of the program, and the services that would be provided. However, FEMA
and SAMHSA never required the budgets to be modified to reflect new
information or significant changes to the program.
The estimates used by the state of New York to develop its initial
needs assessment, or number of people it believed would need crisis
counseling services, included several risk factors and loss categories.
In keeping with existing CCP policy, FEMA and SAMHSA encouraged the
state of New York to modify the needs assessment formula by adjusting
the loss categories of affected persons and the risk factors for each
of those loss categories to better reflect the situation in New York.
The state of New York also estimated the number of direct victims in
each loss category because official numbers were not available. For
example, the official number of deaths was not known until more than 2
years after the disaster. As a result of these estimates, the needs
assessment for the state of New York's ISP application determined that
2.3 million people would need crisis counseling services as a result of
the terrorist attacks on September 11, 2001. With the RSP application,
the needs assessment formula was modified to estimate the pervasive
reactions to the disaster and to update the loss category numbers, such
as the number of people dead, missing, or hospitalized. These
modifications increased the estimate of the people who would need
crisis counseling to 3.4 million.
We found that based on the approved budgets for the ISP and RSP,
Project Liberty estimated that it would need $154.9 million to provide
crisis counseling and public education to the estimated 3.4 million
people and training for Project Liberty staff who would be delivering
these services, at a cost of approximately $46 per person. In its
report for the period ending September 30, 2004, Project Liberty
estimated that it had provided crisis counseling to 1.5 million people
at a cost of $121 million, or approximately $83 per person.
Another estimate used in preparing the grant applications was the
length of time needed to carry out the services identified in the plan
of services. The state of New York used the maximum length of service
provision allowed by FEMA regulations in its ISP and RSP applications,
60 days and 9 months, respectively. However, crisis counseling services
were actually provided for approximately 9 months under the ISP and
over 30 months under the RSP.
In addition, the state of New York initially understood that crisis
counseling and public education services offered by Project Liberty
would be limited to the services normally allowed by the CCP, such as
short-term individual and group crisis counseling, community outreach,
and training for crisis counselors. However, in August 2002, Project
Liberty was authorized to adjust the program to include enhanced
services and began providing these services in May 2003.
Other significant changes, which were not reflected in Project
Liberty's budget, included a reallocation from New York City's budget
to the NYC DOEd, which increased NYC DOEd's budget from $8.9 million to
$40 million and subsequent reductions of NYC DOEd's budget to $32
million. Despite these major changes in the program, FEMA and SAMHSA
did not require and Project Liberty did not prepare adjusted budgets to
reflect their revised plans for meeting the needs of the victims of
September 11. Therefore, New York State and City officials did not have
realistic budget information to use as a tool to manage program funds,
and FEMA and SAMHSA were not in a position to effectively assess the
planned use of the funds.
Federal Oversight of Project Liberty's Financial Information Was
Limited:
While SAMHSA provided oversight of Project Liberty's delivery of
services, it provided only limited oversight of financial information
reported by Project Liberty about the cost of those services. SAMHSA
received periodic financial reports but did not perform basic analyses
of expenditures to obtain a specific understanding of how Project
Liberty was using federal funds. In addition, as discussed above,
budget information was outdated and therefore an ineffective tool to
monitor actual expenditures. SAMHSA's limited level of oversight over
Project Liberty's financial information was driven in part by its
assessment that the program was not high risk, but this assessment did
not fully consider the magnitude, complexity, and unique nature of the
program and was not revisited even after significant program changes
occurred. As a result, SAMHSA was not in a position to exercise a
reasonable level of oversight to ensure that funds were used
efficiently and effectively in addressing the needs of those affected
by the September 11 terrorist attacks.
SAMHSA's oversight for Project Liberty included review of service
delivery information and identification of unusual items included in
Project Liberty's program reports, eight site visits, and routine
communication with NYS OMH and FEMA. These oversight activities helped
SAMHSA gain assurance that NYS OMH was delivering appropriate services.
However, SAMHSA's oversight of these services did not directly link
with, and therefore did not provide assurance related to, financial
information reported by Project Liberty. In addition to requiring
Project Liberty to submit budgets to show how it planned to use federal
funds, FEMA regulations also required Project Liberty to periodically
submit financial reports to show how funds were actually spent.
Required financial reports included quarterly expenditure reports, a
final accounting of funds, and a final voucher. SAMHSA officials told
us they did some high-level review of the financial information
provided to determine how quickly the program was using grant funds and
when the grant funds should be made available to NYS OMH. However, they
did not perform basic analyses of expenditures to obtain a specific
understanding of how Project Liberty was using federal funds.
We found that SAMHSA did not use financial information submitted by
Project Liberty to conduct basic analytical reviews of how funds were
being spent and whether this spending was consistent with the budgeted
program expenditures. Table 2 illustrates a basic analysis we performed
of Project Liberty's reported and budgeted expenditures for the period
June 14, 2002, through September 30, 2004, which identified significant
differences by category between reported expenditures and budget.
Table 2: Comparison of Project Liberty's RSP Reported Expenditures to
Budget from June 14, 2002, through September 30, 2004:
Dollars in thousands.
Category: Personnel;
Reported expenditures (6/14/2002 through 9/30/2004): $25,942;
RSP budget [A]: $93,489;
Difference--reported expenditures (under)/over budget: ($67,547);
Difference as a percentage of budget: (72%).
Category: Office space;
Reported expenditures (6/14/2002 through 9/30/2004): $2,245;
RSP budget [A]: $674;
Difference--reported expenditures (under)/over budget: $1,571;
Difference as a percentage of budget: 233%.
Category: Consulting/contracts;
Reported expenditures (6/14/2002 through 9/30/2004): $5,527;
RSP budget [A]: $10,884;
Difference--reported expenditures (under)/over budget: ($5,357);
Difference as a percentage of budget: (49%).
Category: Media;
Reported expenditures (6/14/2002 through 9/30/2004): $9,347;
RSP budget [A]: $8,887;
Difference--reported expenditures (under)/over budget: $460;
Difference as a percentage of budget: 5%.
Category: Crisis counseling;
Reported expenditures (6/14/2002 through 9/30/2004): $47,912;
RSP budget [A]: $15,809;
Difference--reported expenditures (under)/over budget: $32,103;
Difference as a percentage of budget: 203%.
Category: Advances;
Reported expenditures (6/14/2002 through 9/30/2004): $5,798;
RSP budget [A]: 0;
Difference--reported expenditures (under)/over budget: $5,798;
Difference as a percentage of budget: >100%.
Category: Other expenses;
Reported expenditures (6/14/2002 through 9/30/2004): $1,438;
RSP budget [A]: $2,405;
Difference--reported expenditures (under)/over budget: ($967);
Difference as a percentage of budget: (40%).
Total;
Reported expenditures (6/14/2002 through 9/30/2004): $98,209;
RSP budget [A]: $132,148;
Difference--reported expenditures (under)/over budget: ($33,939);
Difference as a percentage of budget: (26%).
Source: GAO analysis of FEMA, HHS, and Project Liberty data.
[A] Reflects revisions made to the budget by the grantee to satisfy
conditions of the grant award.
[End of table]
Notwithstanding the fact that budgets were not updated for major
program changes, several of these differences should have raised
questions about whether Project Liberty was using federal funds within
allowable categories and within its approved budget. For example, the
Project Liberty personnel budget was over $93 million; however, as of
September 30, 2004, over 26 months into the program that was initially
planned for completion in 9 months, it had reported personnel
expenditures of only about $26 million, for a difference of about $67
million. A SAMHSA official said that because of the way Project Liberty
reported its expenditures, SAMHSA officials could not track its
financial reports to its budget. As a result, we found that SAMHSA was
not aware of the significant variations between Project Liberty's
reported expenditures and budget and did not make inquiries of Project
Liberty officials to obtain an understanding of why these variations
were occurring. Some of the differences between reported and budgeted
expenditures may have resulted from the fact that Project Liberty was
not required to formally adjust the initial program budget to reflect
significant changes. However, the differences may also have raised
questions about whether SAMHSA's understanding of how the program was
planning to spend funds was consistent with actual spending patterns.
Comparisons between Project Liberty's reported budget and expenditures
could have helped SAMHSA better assess the status of the program to
allow it to take effective action to ensure that Project Liberty was
using federal funds to provide the most value for victims of the
September 11 terrorist attacks.
The differences between Project Liberty's reported budget and
expenditures may also have been caused by inconsistencies in financial
information submitted by Project Liberty. FEMA and SAMHSA did not
provide detailed guidance on how to classify CCP expenditures but
instead left Project Liberty to interpret how expenditures should be
classified. We found that Project Liberty expenditures were not always
consistently reported to FEMA and SAMHSA. For example, Project Liberty
did not consistently classify evaluation expenditures. If an NYS OMH
employee was evaluating the program, the expenditure was classified as
personnel, but if the work was contracted to someone outside of NYS
OMH, the expenditure was classified as evaluation. As a result, SAMHSA
could not reliably use Project Liberty's financial reports to determine
how much it cost to evaluate the program. By obtaining a better
understanding of how federal funds were spent by Project Liberty,
SAMHSA would have improved its ability to determine whether funds were
used most efficiently and effectively in carrying out the objectives of
the program.
SAMHSA's limited oversight of Project Liberty's financial information
was driven in part by its own assessment that the program was not high
risk.[Footnote 17] SAMHSA's oversight of Project Liberty included an
initial assessment of the risk associated with the grantee. SAMHSA
applied risk factors identified in HHS regulations regarding
grants,[Footnote 18] including financial management issues, such as
financial stability and experience in handling federal grants, to RFMH,
the fiscal agent for NYS OMH responsible for making payments to service
providers. For example, SAMHSA reviewed the result of RFMH's fiscal
year 2001 financial audit that was required by the Single Audit Act and
found that RFMH received an unqualified audit opinion while handling a
total of about $62 million in federal funds. SAMHSA concluded that RFMH
had a strong track record for handling federal funds and classified
RFMH as not high risk. Based in part on this risk assessment, SAMHSA
officials told us staff with financial backgrounds were not actively
involved in the oversight of Project Liberty.
However, we found that SAMHSA's risk assessment only considered risks
associated with RFMH and did not consider other potential risks
associated with the Project Liberty grant. For example, the assessment
did not consider all significant interactions in the complex federal,
state, and local government environment that existed for Project
Liberty; the amount of the RSP grant award, which was the largest RSP
grant[Footnote 19] ever made by FEMA; or the geographic complexities of
the program, including the size of the area affected and the diversity
of the community being served. In addition, SAMHSA did not revisit its
initial risk assessment even after the program encountered significant
changes and challenges, including the design of the first-ever enhanced
services program and the documentation issues with NYC DOEd expenses,
which have yet to be resolved. As a result, SAMHSA's level of oversight
was not in line with the challenges and complexities that increased the
risks associated with Project Liberty.
Based in part on its risk assessment process, SAMHSA's oversight of
Project Liberty was primarily carried out by its programmatic staff who
focused on activities that did not directly link to the financial
information being reported by NYS OMH. Without useful financial
information, including updated budgets, and without analyses of the
financial information Project Liberty was reporting, SAMHSA was not in
a position to exercise a reasonable level of oversight to ensure that
grant funds were effectively used to address the needs of those
affected by the September 11 terrorist attacks.
Assessments of Project Liberty Ongoing:
Both the state of New York and the federal government have taken steps
to assess how Project Liberty delivered services. NYS OMH is conducting
its own assessment of Project Liberty and partnered with NYAM to obtain
information from telephone surveys. SAMHSA contracted with NCPTSD, a
center within the Department of Veterans Affairs, to conduct a case
study of New York's response to the terrorist attacks on September 11,
with a primary focus on Project Liberty. Both NYS OMH and NCPTSD's
overall assessments of the program were ongoing as of March 2005. FEMA
plans to consider lessons learned from NYS OMH and NCPTSD when
conducting its own internal review of the CCP.
NYS OMH is conducting an evaluation of Project Liberty, which includes
designated funding for program evaluation. This nonstatistical
evaluation consists of several components, including analysis of data
collected by service providers documenting services delivered through
encounter data forms, recipient feedback through written questionnaires
and telephone surveys,[Footnote 20] provider feedback through written
reports and staff surveys,[Footnote 21] and other initiatives. The data
collected by service providers was the primary method used to assess
the services delivered by the program.[Footnote 22] Based on these
data, NYS OMH preliminarily found that Project Liberty had reached a
large number of people affected by the September 11 terrorist attacks
and that it was successful in reaching many diverse communities. NYS
OMH reported that 95 percent of providers who responded to its surveys
rated the overall quality of services provided as good or excellent.
NYS OMH also reported that the majority of respondents to its recipient
surveys indicated that they have returned to their predisaster mental
health condition, a goal of Project Liberty. However, according to NYS
OMH, the recipient surveys were made available beginning in July 2003
to organizations providing crisis counseling for distribution to
individuals receiving services and therefore may not be representative
of all Project Liberty recipients. NYS OMH did not report the number of
providers who received surveys and reported a low response
rate[Footnote 23] for recipients. Because the number of surveys offered
to providers was not disclosed and because of low response rates for
the recipient surveys, we were unable to determine the level of
coverage provided by these surveys.
NYS OMH also partnered with NYAM, a not-for-profit organization
dedicated to enhancing public health through research, education,
public policy, and advocacy. NYAM conducted nonstatistical telephone
surveys in 2001 and 2002 of New Yorkers to assess the magnitude and
duration of the mental health effects of the terrorist
attacks.[Footnote 24] NYS OMH worked with NYAM to assess the reach and
recognition of Project Liberty by adding questions to NYAM's ongoing
September 11 telephone surveys. NYAM and NYS OMH reported that 24
percent of the respondents interviewed were aware of Project
Liberty[Footnote 25] and, among respondents who had heard of the
program, 67 percent had a good impression of the program.[Footnote 26]
However, because the sampling methodology for the NYAM phone surveys
was not disclosed and because of low response rates, we were unable to
determine the survey coverage.
Based on these evaluation activities, as well as their own experience
with Project Liberty, NYS OMH officials have begun to identify lessons
to be learned. For example, they found that emergency mental health
plans and resources in place prior to September 11 were insufficient to
fully respond to the mental health impact of the terrorist attacks.
Much of the infrastructure needed to implement Project Liberty, such as
data collection procedures and public education materials, had to be
developed in the immediate aftermath of the terrorist attacks. In
addition, NYS OMH found that the services covered by the CCP were not
sufficient to meet the mental health needs of the minority of
individuals who developed severe and persistent symptoms that
substantially interfered with day-to-day functioning. Although the
state of New York was given permission to develop and implement an
enhanced services program to meet the needs of the more severely
affected individuals, similar intensive interventions are not currently
routinely included as part of the FEMA CCP. NYS OMH officials told us
that when their evaluation is completed, they expect that they will
have comprehensively identified best practices and obstacles
encountered and that they will make recommendations to FEMA and SAMHSA
for actions needed to better organize a mental health response to
future disasters funded by the CCP.
SAMHSA entered into an interagency agreement with NCPTSD, a center
within the Department of Veterans Affairs, to conduct a case study of
New York's response to the September 11 terrorist attacks. The primary
purpose of the NCPTSD case study was to identify lessons to be learned
from New York's experience that could be useful to other communities
that might have to respond to major disasters, including acts of
terrorism. As part of its study, NCPTSD interviewed 103 individuals,
including service providers and management from 50 public and private
provider organizations in New York City and the surrounding
counties.[Footnote 27] NCPTSD used a qualitative methodology to analyze
the data to develop findings and recommendations. According to SAMHSA,
the NCPTSD report is expected to be issued as soon as all stakeholders'
comments have been received and considered.
FEMA officials told us they plan to consider lessons learned from the
NCPTSD and NYS OMH assessments of Project Liberty through FEMA's
internal review of the CCP that was ongoing as of March 2005.[Footnote
28] This internal review is being conducted in partnership with SAMHSA
and, according to FEMA, will consider whether aspects of FEMA's CCP,
including its regulations and guidance, need to be improved. For
example, FEMA plans to work with SAMHSA to consider the extent to which
the enhanced services should be included as a permanent part of the
CCP. FEMA officials told us that the internal review will have to be
completed in conjunction with their primary work responding to
disasters; therefore, they have not established a timetable to complete
this review. Given that Project Liberty was awarded the largest RSP
grant in the history of FEMA's CCP and that FEMA provided funding to
the state of New York to evaluate Project Liberty, the timely
assessment of lessons learned from this program would be beneficial to
future CCPs.
Conclusions:
FEMA and SAMHSA's limited oversight of the planned and actual spending
of Project Liberty impeded their ability to monitor whether the grant
funds were being used in the most efficient and effective way to meet
the needs of those affected by the terrorist attacks of September 11,
2001. Further, until recently, FEMA and SAMHSA had limited involvement
in efforts to resolve issues surrounding the outstanding NYC DOEd
expense claims; additional oversight in this area could help bring
appropriate and timely resolution to these issues. FEMA will have an
opportunity to address these oversight issues, as well as lessons
learned identified by NYS OMH and NCPTSD, as part of its ongoing
internal review of its CCP.
Recommendations for Executive Action:
In order to address the issues identified in our report, we recommend
that the Secretary of Homeland Security direct the Under Secretary of
Emergency Preparedness and Response to take the following eight
actions:
To help ensure proper and timely expenditure of the remaining Project
Liberty funds, FEMA should work with SAMHSA to:
* provide assistance to New York City and State officials in
appropriately resolving issues surrounding the NYC DOEd expense
reimbursements and:
* determine whether an independent review of the propriety of the use
of funds for payments to the NYC DOEd is needed.
To strengthen federal financial oversight of future CCP grants, FEMA
should work with SAMHSA to:
* require the recipients of CCP grants to submit updated budgets to
reflect approved changes to the program;
* revise the current risk assessment process to comprehensively
identify and assess risks associated with CCP grants;
* establish a process to update the risk assessment for significant
program changes;
* consider developing formal requirements for consistent
classifications of expense data; and:
* develop formal procedures to perform more detailed analyses of
financial reports, including comparing actual expenditures and budgets
to identify variations and obtain an understanding of the reasons for
any unusual variations.
To help ensure that the lessons learned from Project Liberty will be
used to help improve future programs funded by the CCP, FEMA should
establish a clear time frame to complete its internal review of the CCP
as expeditiously as possible.
Agency Comments and Our Evaluation:
We received written comments on a draft of this report from DHS who
generally concurred with our recommendations but expressed reservations
regarding our assessment of the adequacy of FEMA and SAMHSA oversight.
SAMHSA in a separate comment letter to FEMA, did not object to our
recommendations but did take issue with our assessment of its
oversight, particularly given the unprecedented circumstances that led
to the establishment of Project Liberty. SAMHSA also provided
additional information on the NYC DOEd claim issue. DHS's comment
letter (reprinted in appendix II) incorporates by reference SAMHSA's
letter (reprinted in appendix III). We also received technical comments
from NYS OMH, NYC DOHMH, and NYC DOEd on excerpts of the report, which
we incorporated as appropriate.
DHS stated that our report should give more weight to the unprecedented
conditions that led to Project Liberty, and that it was these unique
circumstances that led to our findings and were the basis for our
recommendations. It further stated that our recommendations primarily
relate to the use of grant funds by NYC DOEd, and that no similar
issues were identified with respect to the use of funds by other
program subgrantees.
Our report clearly acknowledges the unique and unprecedented
circumstances that led to the establishment of Project Liberty. These
unique circumstances were largely the basis for our conclusion that
Project Liberty required a high level of federal oversight. A number of
red flags signaled the need for a heightened federal role, including:
the RSP grant was the largest such grant ever made by FEMA; the program
initially designed to last about a year is now over 3 ½ years old and
still ongoing, with an extension being considered to September 30,
2005; and reimbursements for approximately $32 million, representing
over 20 percent of the total federal funds awarded, remained unresolved
as of May 2005. The fact that the level of federal oversight was not
commensurate with the unprecedented circumstances surrounding Project
Liberty was what led us to our findings and recommendations in this
area.
Five of our eight recommendations relate to strengthening federal
financial oversight of future CCP grants; two of the recommendations
specifically address the NYC DOEd use of grant funds; and the remaining
recommendation calls for ensuring that lessons learned from Project
Liberty will be used to improve future programs funded by the CCP.
Thus, DHS was incorrect in stating that our recommendations primarily
relate to the NYC DOEd issues.
As to FEMA's statement that we did not identify any other issues about
the use of grant funds, the scope of our work included determining the
extent to which Project Liberty expended grant funds and whether the
federal government had adequate financial oversight of Project Liberty.
Our work did not address whether payments made, including those made by
NYC DOEd, were a valid use of federal resources. We have no basis for
reaching the conclusion suggested by FEMA.
SAMHSA's letter also discussed the unprecedented conditions surrounding
Project Liberty and, as discussed below, strongly disagreed with our
assessment that SAMHSA's financial oversight was limited. SAMHSA also
stated that during a recent site visit, NYC DOEd's Chief Financial
Officer indicated that documentation was available to support claims as
necessary. SAMHSA further stated that it will be recommending that the
NYS OMH conduct an independent audit of these claims as one of the
conditions of approving an extension of the grant to September 30,
2005. During our fieldwork, we were consistently told by NYC DOHMH
officials that NYC DOEd had not been able to produce documentation for
the majority of expenses it incurred on behalf of Project Liberty that
met the documentation standards for reimbursement under federal grants.
Given ongoing questions about the existence of documentation supporting
NYC DOEd claims, the sufficiency of this documentation, or both, we
agree that an independent audit is appropriate.
SAMHSA stated that overall, the federal oversight of Project Liberty
was appropriate, reasonable, and responsive to state and local needs.
SAMHSA outlined several factors to support this statement, including
that it received financial data from the state of New York on a routine
basis and monitored the allocability, allowability, and reasonableness
of project expenditures. While SAMHSA acknowledged that project budget
data were not updated comprehensively, it stated that it did request
and receive updated budget information in several instances,
particularly in conjunction with project extensions. SAMHSA further
stated that we had not cited any problems with program expenditures but
instead seemed to focus on differences between classification of
budgeted and reported expenditures. SAMHSA acknowledged that the budget
was not prepared in the same format as reported expenditures, and
stated that inconsistent categorization of expense accounts were
largely the reason for the classification discrepancies we highlighted
in our report.
Our conclusion that SAMHSA's oversight of Project Liberty's financial
information was limited was based in large part on the fact that the
SAMHSA did not have a basis to reliably monitor how Project Liberty was
using federal funds, since, as SAMHSA acknowledged, it did not have
updated budget information and the reported expenditure data were not
accurate due to classification discrepancies. At the time of our
review, SAMHSA was not aware of these discrepancies because it had not
been conducting basic analyses, such as comparisons between Project
Liberty's budgeted and reported expenses. Further, there were no staff
with financial backgrounds involved with the oversight of Project
Liberty expenditures. SAMHSA's limited oversight was based in part on
the fact that it did not deem the project high risk from a financial
standpoint, despite the complex federal, state, and local environment,
the fact that this was by far the largest RSP grant ever awarded by
FEMA, the size and diversity of the community being served, and the
overall challenging and changing circumstances of September 11.
Overall, we found that SAMHSA's level of oversight was not in line with
these challenges and complexities associated with Project Liberty.
SAMHSA went on to state that in its opinion, classification of Project
Liberty as high risk simply based on total estimated project
expenditures would be inappropriate. It further noted that there is no
regulatory mechanism allowing SAMHSA to assess risk on a complex
federal, state, and local government environment as was specified in
our report.
We did not suggest that the risk classification should simply be based
on total estimated project expenditures. As discussed above, our report
clearly delineates a number of different risk factors that should have
been considered in the risk classification. Further, we disagree that
the current regulatory mechanism would not allow SAMHSA to consider
these risk factors in making its risk assessment of Project Liberty.
While current regulations do not require SAMHSA to consider
programmatic factors in its risk assessment, they do not prevent SAMHSA
from considering risk factors other than those delineated in its
regulations in its overall assessment of the program and its
operations. As noted by SAMHSA in its written comments, Project Liberty
was by far the largest and most complex effort in the 30-year history
of the CCP and presented unique and unprecedented challenges for
government authorities at all levels. We believe these should have been
key factors in SAMHSA's risk assessment and should have triggered
heightened financial oversight of Project Liberty.
As agreed with your offices, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days
from its date. At that time, we will send copies to appropriate House
and Senate committees; the Secretary of Homeland Security; the Under
Secretary of Homeland Security for Emergency Preparedness and Response;
the Administrator, Substance Abuse and Mental Health Services
Administration; the Director, Office of Management and Budget; and
other interested parties. We will make copies available to others upon
request. In addition, the report will be available at no charge on the
GAO Web site at http://www.gao.gov.
If you or your staffs have any questions about this report, please
contact me at (202) 512-8341 or calboml@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. Major contributors to this report are
listed in appendix IV.
Signed by:
Linda M. Calbom:
Director, Financial Management and Assurance:
[End of section]
Appendixes:
Appendix I: Objectives, Scope, and Methodology:
To determine the extent to which Project Liberty spent the Immediate
Services Program (ISP) and Regular Services Program (RSP) grant funds
received from the Federal Emergency Management Agency (FEMA), we did
the following:
* Reviewed various documents, including quarterly RSP expenditure
reports for the first (June 15, 2002, through September 14, 2002)
through the ninth (June 15, 2004, through September 30, 2004) quarters;
a detailed listing of the outstanding advance balances as of September
30, 2004, obtained from the Research Foundation for Mental Hygiene,
Inc. (RFMH); a summary of expense claims submitted by the New York City
Department of Education (NYC DOEd) as of March 2005; internal control
summaries prepared by NYC DOEd for its personnel and other-than-
personnel expenses; a draft internal control summary prepared by NYC
DOEd for its community-based expenses; Crisis Counseling Assistance and
Training Program (CCP) guidance on appropriate uses of grant funds; and
FEMA and Department of Health and Human Services (HHS) regulations
pertaining to the CCP.
* Interviewed officials from FEMA's headquarters and finance office,
the Substance Abuse and Mental Health Services Administration's
(SAMHSA) Center for Mental Health Services (CMHS), the New York State
Office of Mental Health (NYS OMH), RFMH, the New York City Department
of Health and Mental Hygiene (NYC DOHMH), and NYC DOEd.
* Determined that the total expenditures data obtained from RFMH and
Project Liberty's quarterly expenditure reports were sufficiently
reliable for the purposes of this report by the following:
* Obtaining and reviewing a copy of the independent auditor's report of
RFMH's financial statements for fiscal years ending March 31, 2004 and
2003, and Report on Compliance and on Internal Control Over Financial
Reporting Based on an Audit of Financial Statements Performed in
Accordance with Government Auditing Standards as of March 31, 2004. We
determined that RFMH received a clean opinion on its fiscal year 2004
and 2003 financial statements. In addition, the auditor concluded that
its tests of RFMH's compliance with certain provisions of laws,
regulations, contracts, and grants did not disclose any instances of
noncompliance that are required to be reported under Government
Auditing Standards. Finally, the auditor's consideration of internal
control over RFMH's financial reporting did not identify any matters
involving the internal control over financial reporting and its
operation that it considered to be material weaknesses.
* Analyzing a database obtained from RFMH of the payments made on
behalf of Project Liberty for the ISP and RSP from the first payment
made on September 25, 2001, through September 30, 2004, including
advances made to service providers.
* Determining that the amount of the payments included in the database
was consistent with the total reported expenditures in the ISP final
report and the RSP quarterly expenditure reports that were prepared by
Project Liberty and submitted to SAMHSA and FEMA.
* Comparing the Project Liberty expenditures as reported by RFMH to
drawdowns reported by SAMHSA on Project Liberty's RSP grant award.
* Obtaining a written certification of data completeness from the
Managing Director of RFMH that the expenditures reported in the
database were complete and accurate for all payments made for, or on
behalf of, Project Liberty for the ISP and the RSP through September
30, 2004.
* Reviewing Single Audit Act reports for fiscal years 2003 and 2002 of
New York City and surrounding counties.
To determine whether the federal government had an effective process in
place to determine the amount of funds to provide to Project Liberty,
we:
* interviewed officials from FEMA headquarters, SAMHSA's CMHS, NYS OMH,
and RFMH;
* reviewed various documents, including the state of New York's ISP and
RSP grant applications, the ISP and RSP grant awards, and federal
guidance for the CCP, including the Robert T. Stafford Disaster Relief
and Emergency Assistance Act and FEMA and HHS regulations; and:
* reviewed correspondence between officials from FEMA, SAMHSA's CMHS,
NYS OMH, and RFMH.
To assess federal oversight over Project Liberty's expenditures, we:
* obtained an understanding of CCP oversight roles and responsibilities
by reviewing FEMA and HHS regulations, FEMA and SAMHSA's fiscal year
2004 interagency agreement, CCP fiscal guidelines, HHS's grants
management manual, summary documents of the CCP's oversight structure
prepared by SAMHSA, and GAO reports;
* reviewed available documentation of oversight performed for Project
Liberty, including Project Liberty's financial reports and
documentation of site visits conducted by FEMA and SAMHSA;
* analyzed Project Liberty's financial reports and compared them to
initial grant budgets;
* designed our work to assess the effectiveness of federal oversight
and therefore considered but did not assess the controls over Project
Liberty payments implemented at the state and local levels;
* interviewed officials from FEMA headquarters and the FEMA regional
office that serves New York, SAMHSA's CMHS, SAMHSA's Division of Grants
Management, NYS OMH, and RFMH to identify policies and procedures for
overseeing Project Liberty; and:
* reviewed and used Standards for Internal Control in the Federal
Government as criteria.
To identify the steps that have been taken by the federal government in
partnership with the state of New York to assess Project Liberty, we:
* reviewed documentation of assessments performed, including a draft of
the National Center for Post-Traumatic Stress Disorder case study of
Project Liberty, NYS OMH summaries of survey results, an article
written by the Deputy Commissioner of NYS OMH on lessons learned about
the mental health consequences of the September 11 terrorist attacks,
articles published by the New York Academy of Medicine, and
documentation from FEMA related to its internal review of the CCP;
* reviewed various documents related to Project Liberty including the
grant applications and the response to conditions of the grant award
set out by FEMA and SAMHSA;
* reviewed GAO and FEMA Office of Inspector General reports to
determine whether the CCP was evaluated; and:
* interviewed officials from FEMA headquarters, SAMHSA's CMHS, and NYS
OMH.
We requested written comments on a draft of this report from the
Secretary of Homeland Security. We received written comments from DHS.
The DHS comments (reprinted in app. II) incorporate by reference a
letter from SAMHSA to FEMA commenting on the draft (reprinted in app.
III). We also provided excerpts of a draft for technical comment to NYS
OMH, NYC DOHMH, and NYC DOEd. NYS OMH technical comments and the
coordinated NYC DOHMH and NYC DOEd technical comments are incorporated
as appropriate.
We performed our work from July 2004 through March 2005 in accordance
with generally accepted government auditing standards.
Organizations Contacted:
Federal Agencies:
Department of Homeland Security, Federal Emergency Management Agency:
* Headquarters:
* New York Regional Office:
* Finance Office:
Department of Health and Human Services, Substance Abuse and Mental
Health Services Administration:
* Center for Mental Health Services:
* Division of Grants Management:
State of New York:
New York State Office of Mental Health:
Research Foundation for Mental Hygiene, Inc.
New York City:
New York City Department of Health and Mental Hygiene:
New York City Department of Education:
[End of section]
Appendix II: Comments from the Department of Homeland Security:
U.S. Department of Homeland Security:
Washington, DC 20528:
May 25, 2005:
Ms. Linda M. Calbom:
Director, Financial Management and Assurance:
U.S. Government Accountability Office:
441 G St., NW:
Washington, D.C. 20548:
Dear Ms. Calbom:
Thank you for the opportunity to review and provide comments on the
Government Accountability Office (GAO) draft report entitled, "Crisis
Counseling Grants Awarded to the State of New York after the September
11 Terrorist Attacks," (GAO-05-514). We generally concur with your
recommendations and look forward to incorporating your recommendations
while monitoring the fiscal closeout of Project Liberty, as well as in
preparation for future Crisis Counseling Assistance and Training
Programs (CCP).
Given the devastating circumstances surrounding the September 11
terrorist attacks on the World Trade Center, we respectfully request
that you give considerably more weight to the unique and unprecedented
conditions that led to the subsequent establishment of the Project
Liberty Program. It was these unique circumstances that led to your
findings and were the basis for the recommendations made in your
report.
The report's recommendations relate primarily to the use of CCP funds
by one sub-grantee, the New York City Department of Education. No
similar issues are identified, with respect to the use of CCP funds,
with other program sub-grantees. The final report should indicate this
in order to provide a more accurate reflection of the entire program.
Through FEMA, we will continue to consult with the Substance Abuse and
Mental Health Services Administration (SAMHSA) in the incorporation of
lessons learned from the terrorist events of September 11, 2001
throughout Federal Emergency Management Agency's (FEMA) internal review
of the CCP. FEMA and SAMHSA will revise CCP guidance to require updated
needs assessments and budgets to reflect new information or significant
changes to individual programs. We will work together with SAMHSA to
implement procedures to obtain more accurate classifications of expense
data for future CCP projects; therefore ensuring consistent reporting
to FEMA and SAMHSA. In addition, concrete timelines for program review
completion will be established.
I have enclosed SAMHSA's comments to the draft report, which elaborate
our response. Thank you again for the opportunity to provide comments
to the draft report.
Sincerely,
Signed by:
Steven J. Pecinovsky:
Director, Departmental GAO/OIG Liaison:
Office of the Chief Financial Officer:
U.S. Department of Homeland Security:
[End of section]
Appendix III: Comments from the Substance Abuse and Mental Health
Services Administration:
DEPARTMENT OF HEALTH & HUMAN SERVICES:
Substance Abuse and Mental Health Services Administration:
Center for Mental Health Services:
Center for Substance Abuse Prevention:
Center for Substance Abuse Treatment:
Rockville MD 20857:
MAY 23 2005:
Mr. Daniel A. Craig:
Director, Recovery Division:
Federal Emergency Management Agency:
U.S. Department of Homeland Security:
500 C Street, SW:
Washington, D.C. 20472:
Dear Mr. Craig:
Thank you for the opportunity to provide comments from the Substance
Abuse and Mental Health Services Administration (SAMHSA) on the
Government Accountability Office (GAO) draft report on Crisis
Counseling Grants Awarded to the State of New York after the September
11 Terrorist Attacks (GAO-05-514). We welcome the opportunity to review
program accomplishments and challenges in order to assure
accountability in the fiscal close out of Project Liberty as well as to
prepare for future disaster crisis counseling needs.
We have reviewed the GAO assessment as well as the recommendations in
the report. Based on our review of the draft document, the GAO has
identified concerns with the claims process within the New York City
Department of Education as well as concerns with SAMHSA's oversight of
budget adjustments. After a brief background on the project, we have
addressed each area of GAO concern separately, followed by our proposed
actions in response to GAO recommendations.
Background on Project Liberty:
New York's crisis counseling response to the September 11 terrorist
attacks, known as Project Liberty, was by far the largest and most
complex effort in the 30-year history of the Crisis Counseling
Assistance and Training Program. The project presented unique and
unprecedented challenges for government authorities at all levels.
While the administrative challenges associated with mobilizing this
large scale effort were immense, on balance the record of Project
Liberty is one of remarkable achievement.
Given the scope and scale of this major effort, it is also not
surprising that there have been administrative and programmatic issues
that have challenged our grants processes. Our priority has been to
assure that services were delivered in a timely and effective manner
while assuring accountability for Federal funds. Overall, we believe
that Federal oversight of Project Liberty has been appropriate,
reasonable, and responsive to State and local needs.
Prior to September 11, 2001, there had never been a Federal Emergency
Management Agency (FEMA) Crisis Counseling Program grant for services
in New York City. In fact, the State of New York's experience with the
Crisis Counseling Program prior to September 11, 2001, had been limited
to two small grants in 1996 for flooding in areas north of New York
City. The New York State Office of Mental Health was engaged in
significant disaster preparedness efforts prior to September 11, 2001,
but the World Trade Center attacks impacted the entire metropolitan
region of New York on a scale and level of severity that were
unprecedented.
In the aftermath of the attacks, Federal, State, city and county
governments combined efforts to mobilize an outreach and counseling
effort involving 10 county governments, two major government
departments within the City of New York, and 210 community-based
organizations. Project Liberty's success in mobilizing outreach and
counseling on such a large scale is notable considering the
extraordinary circumstances in which the project was developed. During
the chaotic aftermath of the terrorist attacks, fiscal and
administrative staff were reassigned from other program areas (often as
in-kind contributions), new staff were hired, and fiscal and
administrative systems were developed to implement a major new program
effort within a matter of weeks. Throughout the program implementation,
the project has made quality assurance adjustments to ensure
accountability of funds, responsiveness to changing needs and high
quality of services.
The accomplishments of Project Liberty are truly noteworthy. As noted
in project reports, Project Liberty providers have delivered nearly
812,000 individual or family crisis counseling sessions to
approximately 527,000 individuals. An additional 223,000 persons
participated in one or more of the 69,000 group crisis counseling
sessions held and more than 738,000 people attended one of the nearly
42,000 group public education sessions offered by crisis counseling
providers in New York City and in the ten county disaster area.
Approximately 453,000 people received one-on-one education about
program offerings, common reactions to a disaster, and general disaster
mental health topics either in person or over the telephone. Over 19.7
million pieces of educational materials were distributed. Overall,
nearly 1.5 million people have been served through face-to-face
counseling and group public education. [NOTE 1]
Working with researchers and noted clinical professionals, the project
has also created important new models of crisis counseling service
delivery that help bridge the gap between immediate crisis response and
more intensive clinical services. Even as the project closes down its
operations, we are continuing to receive results from State and Federal
evaluation efforts, which will help us prepare for future disasters and
acts of mass violence.
Response to GAO Concerns about New York City Department of Education
Claims:
The draft report describes challenges with the process of reimbursing
claims from the New York City Department of Education for services
delivered to children and youth. Specifically, the GAO report raises
questions about the veracity of the New York City Department of
Education's Chief Financial Officer's attestation that internal
controls were in place for payments for personnel, other-than-
personnel, and community-based organization expenses. In order to
answer the questions raised by the GAO report, SAMHSA is recommending
that the New York State Office of Mental Health conduct an independent
project audit of these claims. SAMHSA does support the reimbursement of
the New York City Department of Education for all supported claims for
service delivery. Project Liberty data indicate that approximately
408,000 individuals have been served through face-to-face counseling or
public education through the Department of Education. [NOTE 2] During a
recent site visit, the New York City Department of Education's Chief
Financial Officer indicated that documentation was available to support
all claims and that the Department of Education would prepare
documentation to support claims as necessary.
Response to GAO Assessment of SAMHSA Oversight:
The draft report states that "SAMHSA was not in a position to exercise
a reasonable level of oversight to ensure that funds were used
efficiently and effectively in addressing the needs of those affected
by the September 11 terrorist attacks." The report states that "while
SAMHSA provided oversight of Project Liberty's delivery of services, it
provided only limited oversight of financial information reported by
Project Liberty about the cost of those services." We disagree strongly
with both of these statements.
While the challenges of Federal oversight for Project Liberty have been
daunting, it is our position that both FEMA and SAMHSA have, in fact,
exercised careful stewardship of Federal funds under extraordinarily
challenging circumstances. Our oversight has been consistent with the
existing legal and regulatory framework for the program, Federal grants
management policies and procedures, and existing fiscal and
administrative systems at the local and State levels.
In order to oversee a project of this scale, it has been critical to
build an oversight and monitoring partnership with the New York State
Office of Mental Health. SAMHSA staff worked intensively at the outset
to help design a project structure that would assure accountability and
appropriate oversight at each level of government while also allowing
flexibility to address changing circumstances and needs. As noted
earlier in this letter, Project Liberty involved 10 county governments,
two major government departments within the City of New York, and 210
community-based organizations. It is neither reasonable nor appropriate
for the Federal Government to exercise direct financial control of
budget adjustments within each of these jurisdictions and subproviders.
The State of New York did provide financial data on a routine basis for
review. Financial reporting has been provided in the SF-269 Financial
Status Report format, consistent with standard grants reports, as well
as in more detailed fiscal reports. The SF-269 format, which is the OMB
approved format for financial reports from grantees, does not include
categories that compare to original budgets. In order to provide FEMA
and SAMHSA with additional information on the financial status of the
project, the State of New York provided additional financial updates on
a routine basis. SAMHSA monitored the allocability, allowability and
reasonableness of project expenditures.
We acknowledge that the revised budget summarized in the GAO report was
not updated comprehensively after the State responded to the conditions
of the original award, but we would note that SAMHSA did request and
receive updated budget information from the State in several instances,
particularly during the period of project extensions. The Regular
Services Program (RSP) budget included in the GAO report is not
comparable to reported expenditures in part because if expense
classification differences. We note that the GAO did not cite problems
with actual program expenditures. Instead, concern appears to center on
differences between the classification of budgeted and reported
expenditures.
The budget referred to by GAO was not prepared in the same format as
reported expenditures, which were intended to provide a rapid update to
the Federal Government on the status of expenditures while contracts
and vouchers were still in process. Based on our discussions with the
New York State Office of Mental Health, we believe that inconsistent
categorization of expenses accounts in large part for the
classification discrepancies in the reporting noted in Table 2.
Comparison of Project Liberty's RSP Reported Expenditures to Budget
from June 14, 2002 through September 30, 2004. For example, based on
our discussions with State staff, the budget line item "crisis
counseling," which was originally approved in order to allow
implementation of a fee-for-service outreach approach reflects service
contracts reported by the New York City Department of Health and Mental
Hygiene and includes personnel services.
At several points in the project, the New York State Office of Mental
Health has requested approval for major budget adjustments and has
provided revised budget documentation in response to SAMHSA requests.
Our review of project paperwork disclosed classification
inconsistencies. We have discussed the inconsistencies in the
classification of expenses with the State and are requesting a review
of all expense classifications in preparation for the final report and
fiscal close-out of the project.
As noted in the GAO report, SAMHSA reviewed State single audit reports
performed on an annual basis in accordance with OMB Circular A-133. The
FY 2001, 2002 and 2003 audits disclosed unqualified audit opinions over
both financial statements and the State's administration of Federal
programs. The reports cite no reportable conditions and no material
weaknesses. Results of the single audits are one of the tools SAMHSA
uses to assess project and grantee risk. Results of these audits
disclose no risk with this grantee.
Classification as high risk simply on the basis of total estimated
project expenditures would, in our opinion, be inappropriate. It should
be noted that Federal regulations assign responsibility for monitoring
sub-awards to the grant recipient. There is no current regulatory
mechanism allowing SAMHSA to assess risk on a "complex Federal, state
and local government environment" as specified in the GAO report.
SAMHSA Response to Recommendations in Draft GAO Report:
The draft report includes recommendations specifically related to
Project Liberty, as well as general recommendations related to the
Crisis Counseling Assistance and Training Program.
Recommendations Regarding Project Liberty:
The GAO report recommends that to ensure proper and timely expenditure
of remaining Project Liberty funds, FEMA should work with SAMHSA to:
* Provide assistance to New York City and State officials in
appropriately resolving issues surrounding the New York City Department
of Education expense reimbursements; and,
* Determine whether an independent review of the propriety of the use
of funds for payments to the New York City Department of Education is
needed.
SAMHSA Response:
SAMHSA has no objections to these specific recommendations related to
the close-out monitoring of Project Liberty. SAMHSA is prepared to work
with FEMA to determine whether an independent review of the propriety
of the use of funds for payments to the New York City Department of
Education is needed.
FEMA and SAMHSA are currently in the process of reviewing an
administrative extension of the RSP grant to New York that supports
Project Liberty. SAMHSA has proposed conditions that will help address
concerns raised in the GAO draft report. Based on recent site visits
and plans presented in the State extension request, we expect that
remaining fiscal close-out issues involving the New York City
Department of Education can be addressed between now and the proposed
extension date of September 30, 2005.
The proposed conditions of the extension are as follows:
1. The State of New York must conduct an independent project audit of
claims made by the New York City Department of Education.
2. The State must provide bi-weekly written updates on the process of
fiscal close-out, with particular emphasis on progress in completing
the process of certification and reimbursement of claims by the New
York City Department of Education, as well as updates on the process of
audits and audit recoveries among other service providers.
3. By July 1, 2005, the State shall provide an estimate to SAMHSA of
all remaining funds required for program close-out so that SAMHSA can
recommend and FEMA can release all necessary remaining funds by
September 30, 2005.
4. In reviewing program documentation, SAMHSA has noted that although
the State submitted a revised budget in response to original award
conditions, the classifications of budget categories have not been
consistent with the major budget categories of the SF-424. For example,
personnel expenditures by subcontract agencies are most appropriately
classified under the heading of subcontracts for the purpose of State
budgets. The State must review expense classification to ensure
consistency with the classifications of the SF-424. SAMHSA's Office of
Grants Management is available to provide guidance on appropriate
documentation according to the SF-424 categories. In preparation for
program close-out and the final program report, the State must evaluate
the classification of its expenditures for the project and report on
expenditures using categories from the originally approved budget
appropriately classified within the SF-424 categories.
Recommendations Regarding Oversight of Future Crisis Counseling Program
Grants:
To strengthen Federal financial oversight of future Crisis Counseling
Program (CCP) grants, the GAO report recommends that FEMA should work
with SAMHSA to:
- Require the recipients of CCP grants to submit updated budgets to
reflect approved changes to the program;
- Revise the current risk assessment process to comprehensively
identify and assess risks associated with CCP grants;
- Establish a process to update the risk assessment for significant
program changes;
- Consider developing formal requirements for consistent
classifications of expense data; and,
- Develop formal procedures to perform more detailed analyses of
financial reports, including comparing actual expenditures and budgets
to identify variations and obtain an understanding of the reasons for
any unusual variations.
In addition, the GAO recommends that FEMA should establish a clear time
frame to complete its review of the CCP as expeditiously as possible to
ensure that the lessons learned from Project Liberty will be used to
help improve future programs funded by the CCP.
SAMHSA Response:
SAMHSA has no objections to the general recommendations regarding the
Crisis Counseling Program, but we would note that these recommendations
would need careful consideration to ensure appropriate implementation.
Because the Project Liberty response to the September 11 attacks was
dramatically different in scale and complexity than most FEMA Crisis
Counseling Program grants, FEMA and SAMHSA must consider potential
thresholds (e.g., size of grant, scope of impact) that may trigger more
intensive processes of review and oversight, as well as more intensive
Federal technical assistance. At the same time, we must recognize that
State grant recipients, especially in the early stages of grant
implementation, are likely to be overwhelmed. We must maintain high
standards of accountability while being careful not to overburden State
systems faced with the challenge of organizing service delivery in
emergency situations.
SAMHSA concurs that administering the September 11 grant will provide
valuable experience for future projects. As part of an overall program
review, SAMHSA staff will work with FEMA to develop more formalized
processes for budget modification, particularly for large or unusual
programs with multiple extension requests or major program
modifications. Likewise, SAMHSA will work with FEMA to formalize
requirements for consistent classifications of expense data.
As we have noted in meetings with GAO staff, FEMA and SAMHSA are
currently engaged in a comprehensive review of program procedures to
assure Federal monitoring and technical assistance efforts within the
Crisis Counseling Assistance and Training program are of high quality.
We are proud of our record of service to communities impacted by the
September 11 attacks and will work with FEMA to strengthen the
program's ability to meet future challenges.
Sincerely,
Signed by:
Charles G. Curie, M.A., A.C.S.W.
Administrator:
NOTES:
[1] FEMA-1391-DR-NY Tenth Quarterly Report, received by SAMHSA May 10,
2005.
[2] FEMA-1391-DR-NY Tenth Quarterly Report.
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Linda Calbom, (202) 512-8341.
Acknowledgments:
Robert Owens (Assistant Director), Donald Neff (Auditor-in-Charge),
Lisa Crye, Edward Tanaka, and Brooke Whittaker made key contributions
to this report.
(190128):
FOOTNOTES
[1] In March 2003, FEMA became part of the Department of Homeland
Security. Most of FEMA--including its disaster assistance efforts--is
now part of the department's Emergency Preparedness and Response
Directorate; however, it has retained its name and individual identity
within the department. We therefore simply refer to FEMA in this
report.
[2] In the past, only individuals from a declared disaster area were
eligible to receive counseling services. However, because of the broad
impact of the September 11 terrorist attacks, residents from New
Jersey, Connecticut, Massachusetts, and Pennsylvania were also eligible
to receive services from Project Liberty.
[3] Although the ISP grant was awarded to Project Liberty on September
24, 2001, the grant gave Project Liberty the authority to reimburse
service providers for services they began to provide immediately after
the terrorist attacks on September 11, 2001.
[4] Pub. L. No. 93-288, 88 Stat. 143 (1974), as amended. The Stafford
Act authorizes the public assistance program that gives FEMA authority
to provide assistance, defines basic program criteria and eligibility,
and authorizes FEMA to publish regulations.
[5] GAO, Standards for Internal Control in the Federal Government,
GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999), which can be
found at www.gao.gov.
[6] Reported expenditures represent amounts included in periodic
financial reports submitted by the grantee, NYS OMH, to the federal
government. According to Project Liberty officials, reported
expenditures include program expenditures that have been paid, amounts
advanced to service providers, and certain accrued but unpaid expenses.
As of the end of our fieldwork in March 2005, the latest expenditure
report submitted was for the period ending September 30, 2004.
[7] At the time of the RSP grant award for Project Liberty, FEMA's
regulations provided for a maximum grant term of 9 months with one
extension of 90 days. FEMA amended the regulations effective March 3,
2003, to allow for extensions for more than 90 days for disasters of a
catastrophic nature when in the public interest. See 44 C.F.R.
206.171(g)(4)(2004).
[8] The Single Audit Act of 1984, as amended (31 U.S.C. § 7502 (a)),
required that nonfederal entities that spend $300,000 or more in
federal funding under more than one program undergo single audits. In
2003, the threshold was raised to $500,000 for fiscal years ending
after December 31, 2003.
[9] New York City's Single Audit Act audit for fiscal years 2002 and
2003 resulted in unqualified opinions for the city's financial
statements, no reported weaknesses in internal control, and no reported
instances of noncompliance.
[10] Internal controls are an integral component of an organization's
management that provide reasonable assurance that the organization
achieves its objectives of (1) effective and efficient operations, (2)
reliable financial reporting, and (3) compliance with laws and
regulations. For more information on internal controls, see GAO/AIMD-
00-21.3.1, which can be found at www.gao.gov.
[11] Project Liberty's ninth quarterly report, which includes reported
expenditures through September 30, 2004, was the last report issued by
the end of our fieldwork on March 31, 2005.
[12] In providing technical comments on a draft of this report, NYS OMH
officials told us the balance had been reduced to $483,000 as of May
13, 2005.
[13] The internal control memos use the terms personal services, other-
than-personal services, and community-based organization to denote the
categories of expenses.
[14] In providing technical comments on a draft of this report, NYS OMH
officials told us that they plan to rely on NYC DOHMH to certify that
the NYC DOEd claims are valid and meet the FEMA fiscal guidelines and
documentation standards. Further, subsequent to completion of our audit
fieldwork in March 2005, NYC DOHMH developed a random sampling
methodology that will be used to sample 20 percent of provider claims
for each of the NYC DOEd school years.
[15] According to RFMH, as of April 28, 2005, audits of 92 providers of
service had been completed and 7 were in process. RFMH further stated
that these audits will cover approximately $50.5 million, or 42
percent, of total reported expenses for Project Liberty of $121 million
through September 30, 2004. NYC DOEd, the New York City Fire
Department, and certain other organizations were not selected for audit
by NYC DOHMH.
[16] The ISP grant was awarded to Project Liberty on September 24,
2001, and authorized Project Liberty to reimburse service providers for
expenses it incurred beginning immediately after the terrorist attacks
on September 11, 2001.
[17] SAMHSA classifies grantees as either high risk or not high risk.
[18] See 45 C.F.R. § 92.12 (2004).
[19] The RSP grant award for Project Liberty of $132.1 million almost
equaled the total amount of RSP grant awards by FEMA for crisis
counseling in the history of the program.
[20] NYS OMH contracted with researchers at the Mount Sinai School of
Medicine to pilot methodologies for obtaining feedback from service
recipients. These methodologies included written surveys and telephone
interviews. According to NYS OMH, individuals who participated in the
written surveys and telephone interviews were representative of those
served by Project Liberty in terms of gender, age, race/ethnicity, and
preferred language. The written survey that had been piloted was
provided to all of Project Liberty's crisis counseling programs for
distribution. The written surveys asked service recipients about the
Project Liberty services they used, their opinions of the services, and
their reactions to the terrorist attacks on September 11. In February
2004, NYS OMH reported results from its recipient surveys based on a
total of 357 surveys collected.
[21] In August of 2003, NYS OMH distributed 1,500 surveys to all
organizations providing crisis counseling. Each organization's director
was asked to give a survey to each staff member. Staff members were
asked to rate Project Liberty using a four-point scale (poor, fair,
good, or excellent). NYS OMH reported results from its survey based on
a total of 265 surveys that were returned.
[22] According to NYS OMH officials, service providers' staffs were
responsible for completing encounter log forms documenting their
encounters with service recipients and providing this information to
NYS OMH for analysis. NYS OMH's data collection efforts were
supplemented with site visits to service providers, which covered the
use of encounter logs.
[23] According to NYS OMH, this low response rate resulted, in part,
because of the challenge in obtaining feedback from recipients, who
were anonymous as required by the CCP.
[24] NYAM conducted two telephone surveys. The sampling frame for the
first survey was adult residents of Manhattan living closest to the
World Trade Center, and the sampling frame for the second survey
included all adults in New York City with an oversampling of residents
of Manhattan living closest to the World Trade Center to permit
comparison between the two surveys. Both surveys used random-digit
dialing. NYAM reported that 988 individuals responded to its first
survey, and 2,001 responded to its second survey.
[25] According to NYS OMH, NYAM conducted a third survey, which showed
that the percentage of respondents who were aware of Project Liberty
increased from January 2002 through September 2002, from 24 percent to
53 percent.
[26] Sasha Rudenstine and others, "Awareness and Perceptions of a
Communitywide Mental Health Program in New York City After September
11," Psychiatric Services, vol. 54, no. 10 (2003).
[27] According to NCPTSD, it chose the interview subjects based on
input from NYS OMH management.
[28] In 2002, we reported that FEMA and SAMHSA had not evaluated the
effectiveness of the disaster crisis counseling program and recommended
that the Director of FEMA work with the Administrator of SAMHSA to
evaluate the effectiveness of the program. See GAO, Mental Health
Services: Effectiveness of Insurance Coverage and Federal Programs for
Children Who Have Experienced Trauma Largely Unknown, GAO-02-813
(Washington, D.C.: Aug. 22, 2002).
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