Report 95114 Summary - January 1996
Office of Emergency Services:
Has Met Most of Its Emergency Management Responsibilities Despite Administrative Problems
OES is very effective at coordinating responses to disasters and does a good job of helping state and local governments prepare for future emergencies. However, OES must improve its disaster recovery efforts by:
In addition, OES has serious administrative inefficiencies, including its:
- Inability to demonstrate its staffing needs;
- Failure to manage contracts and information technology adequately; and
- Failure to budget and estimate its cash flow needs accurately.
Results in Brief
This report presents the results of the California State Auditor's
comprehensive performance audit of the Office of Emergency Services
(OES), determining its effectiveness in fulfilling its mission
and its administrative efficiency. OES
is responsible for administering the State's emergency management program. This program includes preparing for emergencies before they occur, organizing the immediate response to emergencies, and overseeing the recovery from disasters after they have occurred. Our audit revealed that OES is very effective in responding to emergencies, quickly directing state and local resources to assist areas struck by disaster. In general, OES is also doing a good job assisting the State and local governments prepare for emergencies to help mitigate the effects of disasters.
However, OES's effectiveness in coordinating the disaster recovery effort is significantly impaired by certain policies and practices of the Federal Emergency Management Agency (FEMA), which provides most of the funding for state and local government recovery efforts, and by its own inadequate practices. FEMA's inconsistent funding policies and slow system for resolving disagreements make an already cumbersome process for claiming federal funds even more difficult. OES's lack of an adequate system for managing documents created during the recovery process, tracking related costs for each disaster, and identifying its costs for reimbursement from FEMA delays access to important information needed for effective management of the recovery process.
Although it is able to meet its emergency management responsibilities, OES has serious administrative problems. A series of major disasters in California since 1989 has overwhelmed OES's ability to perform some of its basic functions, such as budgeting, hiring, and using information technology, exposing many inefficiencies in its administration. These inefficient practices have resulted in an administrative crisis in which OES uses more resources than necessary and incurs extra costs for the State.
For example, in part because OES does not estimate its budget
needs accurately, lacks an information system to support billings
and account for pending claims, does not ensure that
costs it incurs will be reimbursed, and is late in billing for federal reimbursements, the State's General Fund had to lend $3.3 million to OES in November 1995 so that it could meet its November payroll. Additional loans or deficiency funding will be needed for the remainder of fiscal year 1995-96. Although federal funds may ultimately be received, the interest costs on the loans from the General Fund will be borne by state government. Federal reimbursements may never be received for some costs OES incurred, such as $770,000 for 140 laptop computers and related equipment purchased during the winter storms of 1995, because it failed to receive assurance of federal reimbursement before purchasing the computers.
Until recently, OES has not had a strategic plan for information technology. The resulting problems include incompatible computer hardware and software and a poorly defined and managed information technology contract. The incompatibility that has resulted from the lack of central planning needlessly consumes employees' time. Also, OES has spent over $5 million on a contract to automate the management of recovery documents that does not yet meet its needs. Although it needs a replacement for the inefficient manual system it currently uses, better planning of this automation project could have saved the time and financial resources used to correct avoidable problems.
OES also does not consistently practice good contract management, failing to assess the reasonableness of costs on sole-source contracts and ensure that services for which it contracts are received. Weaknesses in contract management can be costly to the State in the form of undelivered contract services and the payment of contract rates that may exceed the "going rate" for such services.
In addition, OES has significant problems with staffing, which contribute to inefficiencies. Its inability to demonstrate its staffing needs with reliable workload analyses has contributed to understaffing and high overtime costs. Because FEMA does not reimburse OES for overtime costs, the State loses money on those costs that would have been reimbursable if the employees were working regular time. Other staffing problems have led to inefficiencies that are beyond OES's control. When a major disaster strikes and OES needs large numbers of additional employees, the number of employees in its own personnel unit is not adequate to process personnel documents, resulting in delayed hiring of needed employees. Also, most of the employees OES hires for the recovery process have a limited term of only two years at the same position. Because the recovery from a major disaster such as the Northridge earthquake takes longer than two years, OES clearly needs these trained employees beyond the two-year limit.
Several changes are needed to improve the effectiveness with which OES fulfills its mission and the efficiency of its administration. Specifically, to ensure that OES has adequate facilities and equipment, the Legislature should provide funding for facilities that meet the requirements of an essential services building and for the replacement of aging equipment, such as fire engines.
To remove federal impediments to the efficient recovery from disasters, OES, with the support of the Legislature, should negotiate with FEMA to make such changes as the following:
Allow OES to review damage claim documents from applicants affected by the winter storms of 1995 before FEMA determines whether it will approve costs; and
Set up a procedure for an independent third party review of major funding issues when FEMA, OES, and the applicant cannot agree on the propriety of FEMA's decisions.
If these negotiations fail, the Legislature should memorialize the Congress to amend federal codes to address these issues.
To maximize reimbursements obtained from FEMA through appeals, OES should solicit an opinion from the State's Attorney General that defines options available to OES and applicants for challenging the propriety of FEMA's funding decisions and the circumstances under which each option can be exercised.
We recommend that OES do a number of things to improve its administrative efficiency. To provide greater flexibility in hiring and retaining trained employees to work in the recovery phase of emergency management:
The Legislature should amend the California Government Code to allow OES to retain limited-term employees for the recovery process;
OES should work with the Department of Personnel Administration or State Personnel Board to establish a task force of trained personnel employees from other departments to help OES hire employees when the workload exceeds the capacity of its own personnel unit during emergencies. Further, OES and the Department of Personnel Administration or State Personnel Board should work together to establish a cadre of trained employees from other departments that would be consistently available to assist with the recovery from disasters for periods of up to a year; and
OES should establish a comprehensive time-reporting system that will enable it to demonstrate staffing and budgeting needs.
To ensure sufficient funds for OES to operate for the remainder of the fiscal year:
The Legislature should appropriate sufficient General Fund moneys for fiscal years 1995-96 and 1996-97 to fund approximately 600 positions for OES's Disaster Assistance Branch;
The Legislature should consider increasing OES's General Fund support appropriation for the remainder of the 1995-96 fiscal year to levels determined after a thorough analysis of federal and other reimbursements and cash needs; and
OES should establish a system for monitoring requests for reimbursements of all eligible costs from FEMA and ensure that such requests are made at least every quarter.
To improve its contract management, OES should:
Exercise discretion in the use of executive orders authorizing the suspension of contracting requirements for competitive bidding and for justifying the costs of sole-source contracts; and
Monitor contract performance to ensure the contractor complies with contract agreements.
Finally, to address its information technology needs, OES should place the highest priority on the implementation of effective systems for the management of documents created in the recovery process, maintaining an automated ledger for disaster assistance costs, and completing implementation of the Emergency Response Information Management System for tracking emergency resources.
OES agrees with most of the findings in our report, noting that it has already begun to address some of our recommendations and is committed to addressing the remainder. However, OES does not believe that it overused its emergency contracting authority. Nevertheless, OES has accepted our recommendations for its contracting practices in the future.