Homeland Security audits disaster recovery money for Sandy on Long Island

The inspector general’s office for the U.S. Department of Homeland Security is auditing how Long Beach City schools, the Town of North Hempstead and the Roman Catholic Diocese of Brooklyn are handling superstorm Sandy disaster recovery money.

Audits of the three entities have been ongoing since last year and were included in an end-of-year roundup of investigations and other projects undertaken by the inspector general’s office.

“We end up doing a lot of audits to see if the money is being spent consistent with policies and procedures,” said Homeland’s Assistant Inspector General John Kelly, whose division is emergency management oversight.

Kelly’s unit is charged with ensuring Federal Emergency Management Agency disaster money is spent properly and that abuse, fraud and waste are identified in a timely manner. About 15 to 20 Sandy audits have been conducted or are ongoing from all the areas affected by Sandy, Kelly said.

While reports of fraud can trigger an audit, it is not the only reason the inspector general’s office will take a look at a project. The dollar value of FEMA grants, if a community got money in the past, or a unique or out-of-the-ordinary project can also lead to an audit, he said.

“There’s a variety of different things we use when we decide who to audit,” Kelly said.

Long Beach was hit hard by the 2012 storm when a surge of waves washed through the barrier island city, knocking out power and damaging thousands of housing units, businesses and school facilities.

Long Beach schools also were badly damaged. The district has 15 separate FEMA projects worth $26.1 million in recovery money to fix up schools, facilities and fields, according to a FEMA database.

One project — to repair an administrative building — was given a block of money up front with a fixed price, which is not normally how FEMA disburses money, so the inspector general is taking a look. “When a federal agency does something new, there is a higher risk that there may be some problems with it,” Kelly said.

The Long Beach audit began in late 2014. “It seems as though they’re auditing FEMA, the process and our particular case,” Long Beach schools chief operating officer Michael DeVito said. “Did FEMA follow guidelines and are we complying with FEMA and guidelines?”

North Hempstead, which FEMA has awarded more than $36.2 million for 31 projects as of last year, is also getting a closer look. Town officials said the audit concerns 14 projects totaling nearly $19.5 million and focuses on debris removal, equipment damages, fencing issues, vehicles and affected cemeteries.

The town would not make an official available for comment because the audit is ongoing.

“We have been fully cooperative with the audit,” spokeswoman Carole Trottere said in a statement.

Jon Kaiman, who was town supervisor at the time and is now Long Island’s recovery czar for the Governor’s Office of Storm Recovery, said he has not been contacted by auditors.

“I don’t believe it’s because anyone did anything wrong,” said Kaiman, who is also chairman of the Nassau Interim Finance Authority overseeing county spending. “It could be that they’re arbitrarily taking some communities and looking. There’s constant, constant auditing and inspections of storm recovery stuff.”

Kelly could not comment specifically on the audit. “We are just working with the town concerning some of our observations,” he said.

Brooklyn Diocese spokeswoman Rocío Fidalgo at first said the organization had applied for FEMA money, but had not yet been approved, and later declined to comment.

Federal records online show that as of November, FEMA has awarded the diocese and affiliates more than $5.5 million in Sandy recovery money for 24 separate projects. The diocese covers Brooklyn and Queens.

Each of the audits will be publicly released, Kelly said. Annual audits of FEMA also occur.

In September, the inspector general’s office found that in fiscal 2014, an estimated $971.7 million of $3.4 billion in Sandy recovery aid nationally that was audited may have been improperly spent in public assistance and hazard mitigation grants issued by FEMA. Of that amount, FEMA took back or did not agree to fund $43.6 million, or 4.5 percent of what the inspector general’s office flagged.

“We continue to find problems with grant management, ineligible and unsupported costs, and noncompliance with federal contracting requirements,” the report said. “A new significant issue this year is unused funding that could be put to better use.”

Before Sandy, auditors examined projects after they finished, but the inspector general’s office now evaluates them while they are ongoing to prevent mistakes or improper payments before they happen, Kelly said. Getting money back after big projects can be tough on a community’s budget and sometimes can’t always be recouped.

“In the past, we would just come in after the money was spent and say it was misspent,” Kelly said. “Unfortunately, the federal taxpayer doesn’t benefit from that.”

If fraud or other illegal activity is discovered, the case is turned over to the legal system.