Millions in Hurricane Florence relief money remains untracked | Beaufort County Now | N.C. State Auditor Beth Wood’s office recently issued an audit that shows millions of dollars of Hurricane Florence disaster recovery funds were distributed with limited monitoring and/or without ensuring all recipients had a method to measure the results.

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    Publisher's Note: This post appears here courtesy of the Carolina Journal. The author of this post is Theresa Opeka.

    N.C. State Auditor Beth Wood's office recently issued an audit that shows millions of dollars of Hurricane Florence disaster recovery funds were distributed with limited monitoring and/or without ensuring all recipients had a method to measure the results.

    In October 2018, the N.C. General Assembly enacted the Hurricane Florence Emergency Response Act after the hurricane made landfall in eastern North Carolina the previous month. The act established the Hurricane Florence Disaster Recovery Fund to provide relief and assistance from the effects of the hurricane. The fund allocated $942.4 million in assistance across the state.

    The auditor's report found as of Jan. 31, 2021, there was limited monitoring of $502 million of the funds, and $783 million was distributed without ensuring all recipients had a method to measure the results.

    Those that received the funds included: the Department of Agriculture - $295 million, Department of Public Safety - $271.3 million, Department of Public Instruction - $91.5 million, Department of Transportation - $65 million, Department of Environmental Quality - $55.4 million, University of North Carolina System - $43.2 million, The Golden LEAF Foundation - $34.5 million, Office of State Budget and Management - $28.2 million, North Carolina Community College System - $23.4 million, Department of Health and Human Services - $17 million, Housing Finance Agency - $10 million, Department of Cultural and Natural Resources - $5 million, Wildlife Resources Commission - $1 million, Administrative Office of the Courts - $1 million, and the Department of Insurance - $0.9 million.

    The audit concluded that the Department of Public Safety didn't plan to verify external recipient spending by comparing supporting documents (i.e., invoices, receipts, payroll records) to expenditures reported by external recipients. They also didn't require recipients to submit supporting documentation to verify expenditures. Without independent verification, the department could not detect misuse of the funds that could occur due to misunderstandings, errors, or omissions.

    "A number of the recipients didn't even bother to send in how they planned to measure, and nobody measured against what they said they were going to do," Wood told Carolina Journal. "You can spend money on debris removal, but did you way overpay what you normally would? Did you sign a contract and then six months later, they were getting the debris removed? There should be some measurement. That's what the General Assembly asked for."

    Wood said it showed a lack of accountability for how and on what the money was spent. "It's depressing as a taxpayer. I may be the state auditor, but I am a taxpayer, too," she said.

    The legislation required the Department of Public Safety to administer the funds and created the N.C. Office of Recovery and Resiliency within the department to distribute, audit, and report on the disaster recovery funds - including reporting on the use, oversight, and results achieved. However, department management stated to the auditor's office that it did not independently verify spending because the legislation did not specifically require monitoring of recipient spending.

    The audit responded that although the legislation did not explicitly require the department to monitor recipients to ensure funds were spent in accordance with Hurricane Florence recovery legislation, they were required to administer the Disaster Recovery Fund to carry out provisions of the legislation.

    Wood's office recommended that the department should monitor external recipients of the Hurricane Florence Disaster Recovery Fund spending to ensure funds are being spent in accordance with Hurricane Florence recovery legislation, develop policies and procedures to ensure all recipients have objectives for what they will do with the funds, and measure their progress toward meeting their objectives.

    They also recommend that the General Assembly should consider including monitoring requirements in future legislation regarding the spending of Hurricane Florence money or other emergency relief funds.

    "It was certainly our intention to comply with subrecipient monitoring standards and maintain proper program accountability within our legal authority," the Department of Public Safety responded to the audit. "Specific needs are not clear to the General Assembly at the time they must act on a bill, so that the outcome language may be vague. In the absence of specifically articulated outcomes, DPS now utilizes a Scope of Work document in which recipients explain a plan to expend funds along with a projected budget, and these recipients must also provide quarterly progress reports on the scope and budget. Nevertheless, the Department's authority is limited in withholding any funds or providing oversight on grants."

    The auditor's office disagrees, saying that despite the department claiming that it does not have the authority to monitor recipient spending, it actually monitored recipient spending in the past but has since stopped.

    From Nov. 1, 2018, through July 31, 2019, the department verified recipient spending if supporting documents were received. Also, legislation enacted by the General Assembly required the department to administer the Hurricane Florence Disaster Recovery Fund to carry out the provisions of the legislation.
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