Monitoring. Although FEMA retained responsibility for providing leadership and  direction for Project Liberty, it assigned primary responsibility to SAMHSA  for oversight and monitoring through an interagency agreement. Remaining Grant Funds Primarily Relate to Unresolved Issues at NYC DOEd

Approximately $121 million, more than three-quarters of the $154.9 million  in federal funds provided to Project Liberty, were reported as expended as  of September 30, 2004, leaving a remaining balance of $33.9 million. As of March 31, 2005, NYS OMH  had accepted alternative forms of supporting evidence to pay $5.2 million  of NYC DOEd expense claims; however, this type of alternative evidence  provides only limited assurance of the propriety of the claimed amounts. Timing of Reported Expenditures

For the period September 11, 2001, through September 30, 2004, Project  Liberty reported that it had expended all of the $22.8 million ISP grant and  about $98.2 million of the $132.1 million RSP grant for total reported  expenditures of approximately $121 million, leaving a remaining balance  $33.9 million. However, we found that although the budgets were developed using  estimates established during the initial stages of the disaster, FEMA and  SAMHSA never required the state of New York to formally submit revised  budget requests to reflect new information and significant changes to the  program that occurred as the needs of the affected population became  better identified. As a result, FEMA and SAMHSA did not have realistic  budget information that could be used to effectively assess how  responsible city and state officials planned to spend Project Liberty grant  funds. Federal Oversight of Project Liberty’s Financial Information Was Limited

While SAMHSA provided oversight of Project Liberty’s delivery of services,  it provided only limited oversight of financial information reported by  Project Liberty about the cost of those services. SAMHSA received  periodic financial reports but did not perform basic analyses of  expenditures to obtain a specific understanding of how Project Liberty was  using federal funds. Without useful financial information,  including updated budgets, and without analyses of the financial  information Project Liberty was reporting, SAMHSA was not in a position  to exercise a reasonable level of oversight to ensure that grant funds were  effectively used to address the needs of those affected by the September 11  terrorist attacks. Assessments of Project Liberty Ongoing

Both the state of New York and the federal government have taken steps to  assess how Project Liberty delivered services. FEMA plans  to consider lessons learned from NYS OMH and NCPTSD when conducting  its own internal review of the CCP. Objectives, Scope, and Methodology

To determine the extent to which Project Liberty spent the Immediate  Services Program (ISP) and Regular Services Program (RSP) grant funds  received from the Federal Emergency Management Agency (FEMA), we  did the following:  Reviewed various documents, including quarterly RSP expenditure  reports for the first (June 15, 2002, through September 14, 2002) through  the ninth (June 15, 2004, through September 30, 2004) quarters; a  detailed listing of the outstanding advance balances as of September 30,  2004, obtained from the Research Foundation for Mental Hygiene, Inc.  (RFMH); a summary of expense claims submitted by the New York City  Department of Education (NYC DOEd) as of March 2005; internal  control summaries prepared by NYC DOEd for its personnel and other- than-personnel expenses; a draft internal control summary prepared by  NYC DOEd for its community-based expenses; Crisis Counseling  Assistance and Training Program (CCP) guidance on appropriate uses of  grant funds; and FEMA and Department of Health and Human Services  (HHS) regulations pertaining to the CCP. To identify the steps that have been taken by the federal government in  partnership with the state of New York to assess Project Liberty, we  reviewed documentation of assessments performed, including a draft of  the National Center for Post-Traumatic Stress Disorder case study of  Project Liberty, NYS OMH summaries of survey results, an article  written by the Deputy Commissioner of NYS OMH on lessons learned  about the mental health consequences of the September 11 terrorist  attacks, articles published by the New York Academy of Medicine, and  documentation from FEMA related to its internal review of the CCP;  reviewed various documents related to Project Liberty including the  grant applications and the response to conditions of the grant award set  out by FEMA and SAMHSA;  reviewed GAO and FEMA Office of Inspector General reports to  determine whether the CCP was evaluated; and  interviewed officials from FEMA headquarters, SAMHSA’s CMHS, and  NYS OMH.
Why GAO Did This Study

To help alleviate the psychological distress caused by the September 11, 2001, attacks the Federal Emergency Management Agency (FEMA) awarded the state of New York two grants totaling $154.9 million to provide crisis counseling and public education. Because of questions about whether the program, called Project Liberty, had spent all the funds it received from the federal government, GAO was asked to determine (1) the extent to which the program expended the funds awarded from the federal government, (2) whether the federal government had an effective process in place to determine the amount of funds to provide the program, (3) whether the federal government had adequate financial oversight of the program, and (4) steps taken by the federal government and New York State to assess the program's effectiveness.

What GAO Found

For the period September 11, 2001, through September 30, 2004, Project Liberty reported that it had expended approximately $121 million, or three-quarters of the $154.9 million in grants awarded by FEMA, leaving a remaining balance of $33.9 million. The majority of the remaining balance, approximately $32 million, related to unresolved issues involving the adequacy of supporting documentation for the New York City Department of Education's (NYC DOEd) expense claims. As of March 31, 2005, city and state officials told GAO they had accepted alternative forms of supporting evidence related to $5.2 million in NYC DOEd expenses; however, this alternative evidence provides only limited assurance of the propriety of the claimed amounts. It is unclear whether similar alternative sources of evidence will be accepted for the remaining $26.8 million in NYC DOEd expense claims. FEMA assisted state officials in developing estimated funding needs for Project Liberty immediately after the terrorist attacks. By necessity, these initial budgets were developed using estimates established during the initial stages of the disaster. However, FEMA never required Project Liberty to prepare adjusted budgets to reflect new information or subsequent changes to the program. As a result, FEMA did not have realistic budget information to assess how city and state officials were planning to spend Project Liberty grant funds. FEMA assigned primary responsibility for oversight and monitoring to the Substance Abuse and Mental Health Services Administration (SAMHSA) through an interagency agreement. Although SAMHSA had procedures in place to monitor Project Liberty's delivery of services, it performed only limited monitoring of financial information reported by Project Liberty about the cost of those services. For example, while SAMHSA received periodic financial reports from Project Liberty, it did not perform basic analyses of expenditures in order to obtain a specific understanding of how the grant funds were being used and, as noted above, did not have updated budget information to gauge how actual spending compared to budgets. As a result, SAMHSA was not in a position to exercise a reasonable level of oversight to ensure that funds were being used efficiently and effectively in addressing the needs of those affected by the September 11 attacks. Both the state of New York and the federal government have taken steps to assess how Project Liberty delivered services. These assessments were ongoing as of March 2005. FEMA plans to consider lessons learned from Project Liberty when conducting its own internal review of the crisis counseling program.