DSBlog

Comments (0)

The Federal Emergency Management Agency (FEMA) will soon start distributing urban security grants that had been held up by repeated delays in finalizing the fiscal-year 2011 federal budget.

U.S. cities that are eligible to receive much-needed funding under this Urban Areas Security Initiative (UASI) are eagerly anticipating the details, which have not yet been made public by the Department of Homeland Security (DHS). But their eagerness is tempered by anxiety over exactly how this year’s smaller pool of grant funds will be allocated.

UASI has typically been the second-largest component of FEMA’s Homeland Security Grant Program (HSGP), after the State Homeland Security Program (SHSP) we analyzed in Part 1 of this DSBlog series. However, FY2011 marks the first time more grant dollars will be distributed through the UASI program than through SHSP.

To fill the void in advance of the DHS announcement we decided to take a look at the “known knowns” – how FY2010 UASI appropriations were allocated, top-line FY2011 appropriations numbers and relevant statutory requirements – and use those to make educated judgments as to how this year’s UASI funds might be distributed.

How the UASI Program Works
UASI (pronounced yu-AZZ-ee) differs significantly from SHSP in several respects, but these differences can be summed up in two broad categories: grant eligibility and allocation guidance.

Grant Eligibility
Each year SHSP grants are allocated to all 50 states, plus the District of Columbia, the Commonwealth of Puerto Rico and four U.S. territories: American Samoa, Guam, Northern Mariana Islands and the U.S. Virgin Islands. By contrast, the list of cities that are eligible to receive UASI grants can change from one year to the next as they are added or removed from the program.

Section 2003 of the Implementing Recommendations of the 9/11 Commission Act of 2007 directs the FEMA Administrator to assess the relative threat, vulnerability and consequences from acts of terrorism to each of the 100 most populous metropolitan statistical areas, or MSAs, in the U.S. (MSAs in Puerto Rico are typically included in this.) Sec. 2007 of the 9/11 Act further identifies specific data elements that must be considered in this risk assessment, including population, population density, history of threats, borders, coastlines, unmet target capabilities and other items that are specified in writing by FEMA.

As part of this evaluation, the Administrator is instructed to engage each large MSA to ascertain whether it has relevant threat, vulnerability or consequence information, to review DHS risk assessments for all urban areas, and to give each one the opportunity to remedy erroneous or incomplete information. The language then states that “based on that assessment, the Administrator shall designate high-risk urban areas that may submit applications for grants under this section.” In other words, 100 MSAs form the starting point and then, based on a risk assessment performed transparently with the MSAs, high-risk urban areas are designated that can apply for grants. These designees are known colloquially as “the UASIs.”

Allocation Guidance
Once the UASIs are determined for a new fiscal year, all of the funds are allocated essentially at the discretion of the FEMA Administrator. For the SHSP, the 9/11 Act stipulates that all of the 50-states-plus-six must receive at least a pre-established minimum grant amount, with the balance of funds allocated on the basis of assessed risk and effectiveness. UASI on the other hand has no minimums, but there are other factors that must be considered in the allocation formula.

Sec. 2007 of the 9/11 Act states that “in allocating funds… the Administrator shall consider” the same series of risk factors used to designate eligible MSAs as UASIs in the first place, as well as each UASI’s effectiveness in the proposed use of the grant. This has traditionally been communicated as a risk-based allocation, and the dollars have followed the risk curve. Thus, unlike SHSP where most of the available dollars are allocated to the minimums by a legislative formula, all of the UASI funds are distributed at the discretion of DHS.

UASI Funding Analysis
For political and program-continuity reasons cities are rarely dropped from the UASI program, and the list has thus tended to grow larger from year to year. Moreover, although not specified by law, for the past several years the UASIs have been divided into two tiers, with the higher Tier-I cities receiving proportionally more funds than the lower Tier-II cities. There were 64 UASIs altogether in FY2010 of which 10, including the National Capital Region, were designated as Tier I and the remaining 54 were Tier II. Two of those cities were new to the program last year. (Click on the table at right to view all FY2010 UASIs, their tier rankings and allocated grant amounts).

In the FY2010 budget, Congress appropriated $1.786 billion for HSGP overall, and $887 million specifically for UASI. As with SHSP, however, the total sum allocated by FEMA under UASI each year is distinctly smaller than the amount appropriated, due to so-called “carve-outs” and other mandatory set-asides.

Of the $887-million appropriation there was a $19-million statutory carve-out for nonprofit organizations, leaving $868 million. In addition, FEMA traditionally takes a percentage cut to cover management and administration (M&A) of its grant programs. Congress authorized 4% for grant M&A in FY2010, which worked out to a further $35.5-million cut of the UASI appropriation, leaving $832.5 million for allocation to urban areas.

The sum was divided so that the 10 Tier-I UASIs received $524.5 million, or 63% of the total, and the 54 Tier-II UASIs received the remaining $308 million. New York City received the most funds – 18.2% of the total – with the smallest amount going to four UASIs, at slightly over $1 million apiece. (See chart at right for a graphical depiction of the FY2010 allocations).

For FY2011, Congress has appropriated $1.337 billion for HSGP, a decline of about 25% from last year. Of that total, the UASI appropriation was $725 million, an 18.3% drop from the $887-million top line in FY2010. After the $19-million nonprofit carve-out, $706 million will be left. FEMA is allowed to take an M&A cut this year of up to 5.8%, or just over $42 million. That would leave $663.95 million to be allocated to the UASIs, a decrease of 20.2% from 2010.

The following analysis uses the same methodology we used in Part 1 of this series. It likewise assumes that prior-year allocations were made proportional to risk and that, despite changes to the risk formula for FY2011, there will be no large fundamental changes to that underlying risk distribution. It also assumes the same UASIs are kept in the program for 2011.

On that basis, the distribution would look like the chart at right. Top-ranked New York City would receive $120.9 million, while Tier I as a whole would get $418.3 million and Tier II would take in only $245.7 million. To our mind, however, this graph and these results seem improbable. Cuts to high-risk Tier-I cities are very hard to defend politically, and with a mere $800,000 allocation for each of the bottom cities it would be extremely difficult to run a UASI program and produce meaningful results.

What are the other allocation options DHS could pursue? First, they may decide to reduce the list of designated UASIs. This was last done in 2006, and it is a painful process for DHS and for the UASIs that don’t make the list. However, with declining budgets this may be inevitable. How many cities are removed from the list is the most critical factor, but considering that $162 million in appropriations have been removed from UASI (translating into $168.6 million less in allocations), that higher M&A cuts may be taken by FEMA, and that the bottom UASIs only receive minimal funds to begin with, it will take a lot of cutting at the bottom to make up for that shortfall.

A second option that may be pursued is to increase the percentage of dollars allocated to Tier I to try to limit the reductions to high-risk cities. Keeping the Tier-I cities at their 2010 levels would take 79% of overall funds, leaving only $139.5 million for Tier II, and increasing the likelihood of cuts to the bottom UASIs. (See chart, right.)

Other more extreme options are available to tweak the allocations. For example, if FEMA were to try to hold year-over-year UASI funding constant and start funding from the top, they would run out of money in Kansas City and there would only be 23 UASIs in the program. In other words, a 20% cut to the UASI program would require the wholesale sacrifice of the bottom 41 UASIs to keep the top 23 whole. While this is an unlikely scenario, it does in fact closely resemble one recently floated in Congress, where two members of the New York House delegation, no doubt reading the tea leaves, have proposed that FEMA restrict the UASI program to the top 25 cities.

Extreme scenarios aside, the most likely options – and the ones that will have the greatest impact – are cuts to the overall number of designated cities and/or adjustments between Tier I and Tier II. These decisions will be very difficult for DHS to make and even more difficult to communicate.

In addition to these cutbacks, a few other state and local issues should be considered. First, if DHS allocates SHSP funds to the states anywhere close to what we described in our previous post, New York and California already face significant cuts. If UASIs at the bottom are then cut from the program this year, they will feel a disproportionate impact, since likely candidates include Syracuse, Albany and Rochester in New York and Bakersfield, Oxnard and Sacramento in California. In other words, aggregate homeland security funds to these two states will take a beating.

Another important UASI consideration is the state’s holdback of UASI funds. States are required to distribute 80% of the UASI funds to local jurisdictions, but may withhold up to 20% at the state level to fund programs on behalf of the UASIs.  Many states in recent years have taken significantly less than their 20% holdback – most notably Texas, which has several UASIs and two Tier-I cities. But with SHSP reductions looming, and therefore less funds available at the state level, will these states increase their holdbacks, thus further reducing the amount of dollars available to their UASIs in FY2011?

––––––––––––––––

This is the second installment of a multi-part analysis of the Federal Emergency Management Agency’s Fiscal-Year 2011 Homeland Security Grant Program (HSGP), including comparisons with prior-year funding and an assessment of key grant programs. In subsequent posts we will be evaluating the analytical implications of these grants, comparison of these analyses to actual grant allocations, and analyses of other HSGP grant programs.

––––––––––––––––

Digital Sandbox is the leader in public safety risk management, providing analytic tools and information products to government agencies and large enterprises, for optimizing risk-based strategic, policy, and budgetary decisions.