The Ins and Outs of Deobligation

At HORNE, we work with the end goal in mind.  When it comes to disaster response and recovery, the scale of efforts is massive. From first responders in the wake of tragedy to the individuals and groups involved in the years of sweat equity as State and local jurisdictions rebuild, a purpose and vision to carry out the team’s mission is vital. Here, we can only see success if we plan from the beginning.

As an endurance athlete, I know that anyone can toe the start line – those that planned, trained, prepared, and executed will complete the journey and cross the finish.  But, the finish line for State and local jurisdictions after a major disaster can be a ten-year journey. 

The Journey

Federally declared disasters trigger a wide array of federal grants and resources including public assistance (PA) and hazard mitigation (HM) grants for states, tribal and local governments, and certain types of private nonprofit organizations. These grants are awarded by FEMA and pass through a state’s emergency management department as a pass-through-entity to the local jurisdictions so communities can quickly respond and recover. 

Depending on the frequency of major disasters to states and local jurisdictions, the federal financial and programmatic requirements are often unfamiliar and daunting – causing them to be overlooked during the journey.  Let’s be honest, ten years is a long time.  Where were you a decade ago? 

Lack of technical training, sub-recipient staffing turnover and constraints, and insufficient project file maintenance can lead to improper administration of these federal grants and can result in deobligation – the process of reducing the previously awarded federal grant oftentimes as a result of programmatic or financial violations. 

The Office of Inspector General (OIG) highlights frequent audit findings that resulted in deobligation including:

  • Poor contracting practices
  • Unsupported costs
  • Poor project accounting
  • Duplication of benefits
  • Excessive equipment charges
  • Excessive labor and fringe benefit charges
  • Unrelated project charges
  • Unapplied credits
  • Direct administrative costs

The Finish Line

We’re here to join in the journey and rebuild communities in the wake of disaster.  So, what does it take to cross the finish line with minimal risk of deobligation? 

  • Forward-thinking and planning: Implement debris management plans to capitalize on cost-savings available for sub-recipients. Ensure that anticipated needs within the first 90 days of response are covered with pre-positioned contracts and utilize resources to confirm contracting practices meet federal guidelines. 
  • Collaboration: Integrate grants management and finance departments early in disaster response. Clearly define roles and responsibilities and include these teams within the disaster’s operation center. 
  • Document, document, document: Establish processes and systems to track expenditures on a project-by-project basis. Work with State and Federal resources now to obtain and review all documentation requirements.  Record minutes of key decisions made throughout the life of the grant.
  • Strategic funds management: FEMA PA and HM grants are a funding source of last resort.  Review availability of other funding sources and maximize use of PA and HM grants.
  • Utilize a flex force of technical expertise:  Navigating 2 CFR, 44 CFR, 6 Circulars, more than eight program-specific policy documents, pilot programs, and the implementation of the issuance of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Super Circular) requires focused, technical expertise and advice. Define and utilize your team of technical exerts during the journey.
  • Training and knowledge transfer: Implement avenues for continuous, high-impact education within your teams including policy and procedures overviews, on-the-job training, and State and Federal resources.

At HORNE, we’re skilled at assessing the financial and programmatic risks that often lead to deobligation. We work with agencies as a partner and guide so that we can cross the finish line together.

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Topics: Disaster Recovery

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