Our review of California's mutual aid system and the California Emergency Management Agency's (Cal EMA) reimbursement process highlighted the following:
The California Emergency Management Agency (Cal EMA) needs to improve its administration of the process by which local agencies, such as cities, counties, and other jurisdictions within California are reimbursed for providing emergency assistance to other agencies and regions. California is a complex patchwork of lands under the jurisdiction of local, state, and federal agencies that are responsible for obtaining and supplying aid when emergencies and disasters strike. When an emergency or disaster exceeds the resources of the jurisdiction in which the event occurs, the local agency may request assistance through the State's Standardized Emergency Management System, which Cal EMA manages. Doing so makes the agency eligible for funding under disaster assistance programs for personnel costs related to the emergency response. Emergency response agencies provide much of the assistance, through either mutual aid or assistance by hire.1 When applicable, Cal EMA also handles the process by which the agency receiving assistance reimburses the agency providing the assistance.
Generally, Cal EMA processes local agencies' requests for reimbursement within the time frames required by the California Fire Assistance Agreement (CFAA)—a memorandum of understanding between California and federal agencies for the provision of aid during severe wildfire conditions and other emergencies—and local agencies receive their reimbursements in a timely manner. Nonetheless, Cal EMA could improve its oversight of other aspects of the reimbursement process. Although the CFAA outlines procedures for obtaining fire suppression resources and sets reimbursement rates for fire personnel, many agencies may have submitted inaccurate average actual hourly rates used to determine their reimbursements. Our analysis of 718 transactions found that these inaccuracies may have resulted in some agencies overbilling for personnel costs by nearly $674,000, while other agencies were underbilling by nearly $67,000. Cal EMA stated that, although it has contractual authority under the CFAA to conduct an audit, it does not have express authority under state law to do so. Cal EMA also stated that even if state law were amended to provide it with express audit authority, it does not have adequate resources to conduct the audits.
Further, Cal EMA may need to improve the system it uses to generate invoices on behalf of local agencies that provide assistance. Specifically, its invoicing system does not provide sufficient information for entities to calculate reimbursement amounts in accordance with certain Federal Emergency Management Agency (FEMA) requirements. Cal EMA stated that it is currently in the process of seeking a replacement for its invoicing system but has experienced delays due to staff turnover. A March 2011 audit conducted by the U.S. Department of Homeland Security's Office of Inspector General found that the California Department of Forestry and Fire Protection (CAL FIRE) was not in compliance with FEMA's reimbursement criteria. FEMA is actively reviewing this issue, and its review may result in a decision to recover some or all of the $6.7 million in reimbursements identified in the audit report. If FEMA determines that the CAL FIRE calculations and claims identified in the audit were erroneous, Cal EMA will need to modify its invoicing system to comply with FEMA's reimbursement criteria. For example, applying FEMA's requirements, we found that CAL FIRE may have billed FEMA $22.8 million more than it should have.
The majority of the 15 local fire agencies we interviewed stated that they had not evaluated how providing mutual aid affects their budgets. Most of these local fire agencies also stated that they absorb the costs of responding to mutual aid requests in their operating budgets. Similarly, the five local law enforcement agencies we interviewed stated that they have not evaluated how their provision of mutual aid affects their budgets. Our review of agreements that some local fire agencies have with other jurisdictions to provide mutual aid as part of their day to day operations showed that the agreements often do not require reimbursement.
Some of the 15 local fire agencies and the majority of the five local law enforcement agencies we interviewed stated that, although their budgets have been reduced in the last five years, they do not believe that budget restrictions hinder their ability to respond to mutual aid requests. Generally, the local fire agencies did not begin to experience budget reductions until fiscal year 2009-10. On average, the reductions were 1.5 percent of their total budgets. Four of the 15 local fire agencies and one of the five local law enforcement agencies said that they were projecting budget reductions for future years. However, only one local fire agency we spoke with has evaluated the impact that budget reductions will have on its ability to provide mutual aid. Specifically, the Riverside County Fire Department stated that its fiscal year 2011-12 budget will have a $9 million shortfall, which will affect its ability to provide mutual aid because there will be five fewer engines in its system.
To make certain that local agencies correctly calculate their average actual hourly rates, Cal EMA should audit a sample of invoices each year and include in the review an analysis of the accuracy of the local agencies' average actual hourly rates. If Cal EMA does not believe that it has the statutory authority and resources to audit the average actual hourly rates reported by the local agencies, it should either undertake the necessary steps to obtain that authority and resources or obtain statutory authority to contract with the State Controller's Office to perform audits.
If FEMA determines that the calculations and claims identified in the Office of Inspector General's audit report were erroneous, Cal EMA should ensure that the replacement for its current invoicing system can calculate reimbursement amounts in accordance with FEMA's requirements.
If FEMA determines that the calculations and claims identified in the Office of Inspector General's audit report were erroneous, CAL FIRE should take these steps:
Cal EMA generally agreed with our findings and recommendations. Cal EMA stated it will continue to strive for improvements and excellence toward administering reimbursements for California's mutual aid system. CAL FIRE disagreed with our conclusion that it may have billed FEMA $22.8 million more than it should have. Specifically, CAL FIRE believes it is premature to characterize any of its related billings as "incorrect" or "erroneous" until FEMA issues its final decision. However, CAL FIRE agreed with our recommendations that are contingent upon FEMA's final determination.
1 Title 19 of state regulations defines mutual aid as "voluntary aid and assistance by the provision of services and facilities, including but not limited to fire, police, medical and health, communication, transportation, and utilities."