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Report urges FEMA to suspend grant to Mississippi over mismanagement

A Department of Homeland Security inspector general’s report urges the Federal Emergency Management Agency to suspend nearly $30 million in grant payments to Mississippi’s coastal retrofit program because of allegations the state mishandled the funds.

The Aug. 10 report said Mississippi did not provide “proper oversight” for a $29.9 million federal grant aimed at helping 2,000 homeowners in six counties, beginning with those hardest hit by Hurricane Katrina in 2005, to strengthen their residences against damaging winds from future storms.

FEMA approved the grant program in 2011, and the first home retrofit began in 2012.

The report said the state had allowed “one employee” with the state’s Department of Finance "complete authority over the Program,” which gave the employee influence over “the approval and completion of work, and payments to contractors.”

It said  Mississippi officials “became aware of improper oversight in December, 2014,” but took no corrective actions until “after we initiated this audit” in February, 2016.

Lee Smithson took over as executive director of the Mississippi Emergency Management Agency on Feb. 1 from Robert Latham, who retired after 15 years with the agency.

Smithson, according to the inspector general’s report, took immediate action to improve oversight at the agency, including “firing several employees” for not following state accounting procedures, "securing program records,” and referring some matters to the state’s attorney general for further investigation.

The state said it spent $31.5 million of its own funds to complete work on 945 of the 2,000 homes scheduled for retrofitting, but, according to the inspector general, Mississippi “has claimed only $957,776 for FEMA reimbursement.”

The inspector general also said the state had provided no documentation to support payments to contractors for the 945 homes it says were retrofitted.

The inspector general’s report said retrofitting each of the 2,000 homes in the program should have cost an average of $14,944.  Retrofitting the 945 homes completed so far has cost an average of $33,308.

The inspector general’s report said Mississippi’s emergency management agency “did not provide any substantial evidence to justify the increase in costs.” Moreover, it said “the one employee who had complete control of the Program would not allow us or Mississippi officials access to the contractors’ invoices totaling $30,517,930.”

The report said FEMA should either “de-obligate or, at minimum, suspend payments on the $29.9 million approved for the Program,” unless the state of Mississippi can clearly document how it has spent its funds so far, and offer “assurance that the scope of the work is complete” and meets FEMA guidelines.

The inspector general also wants Mississippi officials to explain why “less than half of the 2,000 homes have been retrofitted, while Mississippi contends it has spent more than the total … FEMA approved for the Project.”

The inspector general said FEMA should also halt “all payments” for the more than $176,000 in administrative costs Mississippi asked to be reimbursed for under the grant until the state provides all the documents necessary to justify its spending.

FEMA agreed with the report’s recommendations.