Politicians, in response to any disaster, are always prone to throw money at the problem in hopes that they will be seen and remembered by the recipients as caring. But when the dust, or in the case of hurricane Florence the water recedes, questions arise about what was done with all the funds flowing from the political well; then it becomes a matter of accountability and the need to follow the money.
That issue of accountability is a concern for N.C. State Auditor Beth Wood, who has identified failures and potential fraud in two recovery programs administered by the N.C. Office of Recovery and Resiliency (NCORR), a division of the N.C. Department of Public Safety (DPS).
Over the past five years state and national politicians have opened the financial taps, providing billions of dollars to individuals, businesses and local governments in response to catastrophic events, often times without articulating clear goals and establishing guidelines for accountability.
In 2018, Hurricane Florence literally flooded the coast, resulting the second most destructive hurricane in the state’s history behind Hurricane Hazel. This was followed a year later by Hurricane Dorian which revisited the same areas devastated by Florence. Added to these recovery concerns was a need to assist in the slow recovery efforts from Hurricane Matthew (2016) and devastation of wildfires in the western region of the state that same year.
Following the 2018 hurricane the legislature allocated $942.4 million for the Hurricane Florence Recovery Fund to be distributed by NCORR.
Then the state, nation and world faced the COVID-19 pandemic, which further exacerbated disasters already facing state residents, resulting in a sudden flow of federal funds to state and local governments with little guidance other than to respond.
A little more than a year after the hurricane recovery act was in place, DPS was called upon to oversee the distribution of state and federal funds to businesses and communities suffering from the closure of business due to state and federally mandated quarantines. The federal funding for American Rescue Plan Act (ARPA) mounted to almost $2 trillion, with money flowing into state coffers at “warp speed” with only cursory guidelines.
Part of those funds distributed within the state by DPS provided relief for renters unable to afford their rent due to forced unemployment because of federal and state pandemic restrictions. The federally funded Coronavirus Aid, Relief and Economic Security Act (CARES) was established to cover the rental needs for qualified renters until the pandemic ended and the business quarantines lifted.
Because all of the state and federal recovery programs were initiated in a crisis environment, there were only vague guidelines for the distribution and measurement for disbursing the money, which is a concern for the state auditor.
In the case of the hurricane recovery fund, the auditor’s office identified limited monitoring of $502 million distributed and another $783 million expensed without developing a means to measure the benefits.
Theresa Opeka, reporting for the Carolina Journal, noted that the audit didn’t establish verification to assure the money went for actual recovery and not supplant other expenses, thereby identifying possible misuse of the funds. “A number of the recipients didn’t even bother to send in how they planned to measure (the use of the funds), and nobody measured against what they said they were going to do,” Ms. Wood told the Carolina Journal.
A second audit of DPS regarding the distribution of federal funds coming through the CARES act also raised concerns for the State Auditor.
That audit indicates that DPS transferred funds to reimburse rent and utility payments that were previously paid for by other funding sources, resulting in overpayments of $1.2 million. In many cases those payments lacked documentation or didn’t agree with supporting documents.
Because of these double payments and poor record keeping the state, through DPS, may have to pay back more than $1.3 million to the U.S. Department of Treasury. But this may not be the only loss. According to the auditor, the misuse of federal funds may also prohibit funding for households that would qualify for financial support.
Poor documentation and review of funding activities have also raised the specter of fraud and abuses, which the state auditor noted in her comments about the rental assistance program which is known by the acronym of HOPE (Housing Opportunities and Prevention of Eviction). This program, Ms. Wood noted, has come under fire for having significant fraud and has “been in the news for months.”
Now that the state and nation are in the midst of recovery and the crisis seems momentarily left behind, the financial reviews are beginning and the picture is muddy at the very least. And though it is easy to criticize the various agencies involved, the real culprits are the very creators of the programs.
While it is a natural response for elected officials and government agencies to rush out to help, sometimes it pays to step back and determine what is needed. There is no question funds were and are needed to provide immediate assistance, but once that assistance is started, analysis is needed to determine how to measure recovery and to assure that support gets to those communities and individuals in need.
The State Auditor’s review is welcomed but her apportionment of blame on the agencies, which is undeniable, avoids the fault of those in charge, the elected officials. They too have a responsibility to lead in a crisis, otherwise they are just throwing money at the problem, which creates greater problems of resentment as well as lost opportunities.