Record-Keeping Failure Could Cost Oklahoma Counties

The state of Oklahoma has disbursed hundreds of millions of dollars in disaster relief grants from FEMA over the last five years in response to a variety of disasters: tornadoes, ice storms, wildfires, and flooding. Many of the counties that received those grants, however, have little or no documentation to prove they used the funds appropriately.

The lack of a paper trail could be costly. FEMA has been known to demand reimbursement when public entities fail to adequately document the expenditure of relief grants.  

Recent Examples Of FEMA Demanding Reimbursement

Services in Wagoner County, in eastern Oklahoma, nearly came to a standstill inDecember 2007 following a major winter storm, and county officials were desperate for help.

"I was just trying to get the school bus running, the mail routes running," recalled Jim Hargrove, who was the District 3 commissioner at the time.

Former commissioner Hargrove remembers the situation well. What he doesn't remember is what happened to the paperwork showing how he used $375,000 in disaster relief funds from FEMA.

"We had that all documented -- how much time we spent on a project, how much material we used and what machinery we used," explained Hargrove.

But, as for what happened to all that paperwork-- "I have no idea," stated Hargrove.

See the associated SEFA (Schedule of Expenditure of Federal Awards) report

A few months earlier, in May-June 2007, a series of severe storms hammered Pottawatomie County, in central Oklahoma. District 2 Commissioner Jerry Richards recently showed us one location that was overwhelmed by flooding.

"The water got so deep," Richards pointed out, "it took out about 80 or 90 feet of is road, and the horn, too."

Pottawatomie county got $265,000 in relief funding from FEMA to help patch, repair, or, in some cases, rebuild damaged roads, and remove debris. But, according to the state auditor, almost all of it, $256,000, was NOT properly documented.

Following a recent commission meeting in Shawnee, we asked Commissioner Richards about the $96,000 that was apparently spent but not documented in his district. We even showed him a document that broke down the $96,000 by individual project. Richards' signature was at the bottom of the sheet.

"I don't know where you got that...from FEMA?" remarked Richards. "I didn't know this 'til right now."

Associated SEFA report 1

Associated SEFA report 2

Associated SEFA report 3

There's confusion surrounding these records, and it isn't limited to Pottawatomie and Wagoner counties. According to the state auditor, a dozen counties across the state failed to properly document the use of $3.9 million in FEMA funds from 2007 to 2009.

Map of counties cited by the State Auditor for failing to properly document FEMA funds

FEMA is slowly becoming aware of the auditor's findings, and, with them, the scope of the record-keeping problem in Oklahoma.

They say the consequences could be costly.

"If, in fact, what I'm hearing is correct," said Karri DuBois, FEMA's regional supervisor, "those funds will have to be returned, if there is no documentation to support that project's completion."

Back in Pottawatomie County, Commissioner Richards insists they have all the supporting documents. "Yes, yes, yes sir," he said.

Within days of our first visit with Richards, he invited us to come out to the District 2 barn, which is where all the records allegedly sit, and where he says they have been all along. He and a secretary showed us files filled with what appear to be the sort of supporting documents that should have been made available to the auditor more than a year ago.

"Why didn't you provide this to the auditor before," the Oklahoma Impact Team asked Commissioner Richards.

Richards answered indirectly, saying only that the auditor never looked at the records.

Oklahoma Impact Team: "Is it their responsibility to look, or your responsibility to provide the documents to them?"

Commissioner Richards: "Probably both...probably both."

State Auditor and Inspector Gary Jones agrees that his staff should make additional efforts to find documents when the entity being audited hasn't produced them.

Jones says, in this case, that's exactly what they did -- his auditors paid multiple visits to the Pottawatomie county offices, even going out to the district two barn on August 22, 2011 and asking commissioner Richards if he could show them any supporting documents other than the few they already had. Jones says his answer was "no," and that he then signed the sheet acknowledging $96,000 in undocumented funds.

The poor record-keeping is only now coming to light because, when Jones took office in 2011, he says the state was years behind on its county audits.

"Many counties that hadn't been audited," said Jones, "hadn't seen an auditor since probably 2006 or 2007."

What his auditors found, he says, were counties struggling to adapt to, what for them was, a recent change in the reporting process.

Up until the early 2000's, Jones says, the Auditor's office was preparing the financial reports on use of federal funds for the counties. It was determined, however, that this was improper, since the Auditor's office was also charged with auditing those reports -- a clear conflict of interest.

Jones says, as that responsibility for documenting disaster relief grants and other federal funds was transferred to the counties, his office could have done more, in terms of providing guidance and training. Still, he says, commissioners should have understood the necessity of keeping detailed records of how the FEMA money was used.

Officials with the Oklahoma Department of Emergency Management, the state agency that passes the FEMA grants through to recipients, agree.

"I can promise you this," said Albert Ashwood, ODEM Director, "that every time we have a declared disaster in the state of Oklahoma, we do applicants' briefings that explain to the subgrantees -- which would be counties, and cities and certain private nonprofits -- that they're required to keep all their documentation."

Still, Auditor Jones feels the counties alone are not to blame for the shoddy record-keeping.

"I think we all share responsibility," Jones stated, "I think it's a combination of all of us."

But who's to blame may not matter to FEMA. The federal agency will want proof that the disaster relief projects in question were, not only completed, but with the assigned FEMA funds.

Providing that proof, if things get that far, would fall to ODEM.

"[FEMA] wouldn't be going to the counties and saying 'we need that money back,'" explained Director Ashwood, "they'd be going to the state of Oklahoma, in which case, I would be the one going to the counties saying, 'hey, unless we can prove differently, you have to pay the money back.'"

So far, Ashwood has not been notified by FEMA that it desires such proof. But the auditor's reports are only beginning to trickle down to the people who will make that decision, so it's certainly still a possibility.

And then, if ODEM were unable to come up with satisfactory explanations for the use of the funds, FEMA could demand repayment of a portion, if not all, of the $3.9 million in question.

Map of counties cited by the State Auditor for failing to properly document FEMA funds