Legislative audit reveals lack of grant oversight

CHARLESTON — Less than a month ago, former Emergency Services Director Jimmy Gianato told lawmakers lack of staff was one reason his agency wasn’t able to adequately track grant dollars.
Now, a new legislative report says the agency actually could have drawn down millions in funding for grant oversight personnel but didn’t take the opportunity.
The report by the Legislative Auditor’s staff concludes that over a period of years, the Division of Homeland Security and Emergency Management  failed to provide adequate grant oversight.
The result was frequent untimely submissions of important financial data and being placed on manual reimbursement by the federal government.
“This mismanagement impacts not only the agency, but also the citizens, counties and other entities the DHSEM is charged with assisting,” the audit concluded.
The lack of oversight manifested in several ways.
Legislative auditors started by looking at why the agency was late four of the last six years in submitting financial data required by the state.
While looking into that, legislative auditors discovered the state  got sideways with the Federal Emergency Management Agency, resulting in financial penalties.
Federal and state officials  noted West Virginia is the only state, aside from Puerto Rico, under such heightened oversight by FEMA.
“The agency’s leadership has allowed grants management issues in two programs to continue unabated for several years, resulting in significant delays in drawing down millions of federal funds,” the audit stated.
FEMA instituted a manual mandatory reimbursement requirement in early 2016 after West Virginia failed to measure up following repeated warnings.
That action was revealed just last month when the Legislative Auditor’s staff considered that finding urgent enough to notify lawmakers.
Gianato testified Nov. 27 before the Legislature’s Joint Committee on Flooding and said the agency lacked enough staff for adequate grant oversight.
Moreover, he said, the agency had all it could handle with the emergencies themselves.
“We were dealing with the five disasters in early ’15,” Gianato said. “When this letter came, we had already been working on a plan, and the staff was to try to complete working on that plan.”
The legislative audit concluded that  FEMA  suggested applying for almost $14 million in funding that could have provided more staffing for grant oversight.
But the Division of Homeland Security and Emergency Management applied for only $1.1 million in such funding.
“Thus, had the DSHEM applied for and received the additional money available during this timeline, the DHSEM would have been able to hire personnel to address the issues cited by FEMA,” the audit stated.
The mandatory manual reimbursement penalty instituted by FEMA created extra layers of documentation as federal grant money flows to the state and then to subrecipients, such as municipalities.
West Virginia’s higher education system was threatened with the same financial punishment last year when the state missed an audit deadline for the third year in a row.
That threat prompted a stern statement from Governor Justice: “When I find out who is responsible, heads will roll.”
With the FEMA sanctions, heads seem to have remained generally intact.
Much of the focus of the grant oversight issues has been on Gianato, who started as director of West Virginia’s Department of Homeland Security and Emergency Management in 2005.
State cabinet-level officials  said they were not explicitly told by Gianato about federal notification of the financial penalties until they were brought up by the audit.
“It boggles me that being placed on manual reimbursement does not filter up the line,” said Senate President Mitch Carmichael, R-Jackson.
“I don’t see how that happens. Particularly in the midst of meetings as it relates to the current or past flood recovery efforts.”
House Finance Chairman Eric Nelson, R-Kanawha, asked Sunday afternoon about Gianato.
“What is the status of this individual where the communication stopped before?” Nelson asked.
“He has moved to a position working directly for me within the organization,” said state Adjutant General James Hoyer. “I think you’ll see a further transition here in the future.”
Gianato’s total state compensation over this year was about $80,000.
He remains with the state, but his role shifted in recent weeks.
On Oct. 9, the Legislative Auditor sent a question about FEMA oversight issues to Joe Thornton, the former state emergency management director.
By Oct. 23, without a public announcement, Governor Justice signed a letter making Gianato’s former deputy, Michael Todorovich, the director of Homeland Security and Emergency Management.
The same day, a letter went out from Justice to Hoyer, giving him oversight of Gianato, who would still be state homeland security adviser.
Also that day, MetroNews got wind of the change and called for confirmation. Hoyer made plans to call the next morning and confirmed Gianato had a new job description.
Gianato would no longer be director but would continue as adviser, part of a dual role he had all along.
Hoyer said Gianato would still be playing a significant role with Homeland Security, including working ahead on issues like hazard mitigation and federal funding.
Notably, Gianato will have a strategic part in drawing down federal grant money.
“Most of Jimmy’s responsibilities will be focused on how do we identify what Congress is going to do with mitigation dollars and how do we in West Virginia get our fair share of that to make sure ‘If we clean out these streams, it prevents these hundred houses from flooding the next time,’ ” Hoyer said.
By Nov. 5, less than a week before the initial Legislative Auditor’s findings were released, the Governor’s Office sent a letter to FEMA designating a new point of contact.
From now on, FEMA would be dealing not with Jimmy Gianato but with Michael Todorovich instead.