Are you ready for some outrage?

Earlier this year, the Ohio Emergency Management Agency repaid $2.9 million from Ohio’s General Fund to the Federal Department of Homeland Security for misspent homeland security grant money.  (A request for spending authority was buried as item 48 on the agenda of the January 30, 2012 Controlling Board.)

A brief background:  In 2004, the Ohio Association of Chiefs of Police received a $21 million federal anti-terrorism grant to develop the Ohio Local Law Enforcement Information Sharing Network.  The network is still is in operation today, and probably has provided some benefits to law enforcement in Ohio.

Some folks in law enforcement disagree about whether the benefits were worth the costs or the best use of resources – but that is a question for another day and, frankly, of minimal interest to most people outside of law enforcement.  Today, we want to focus on what should be of interest to every Ohioan:  how the network was developed.

The development of the Ohio Local Law Enforcement Information Sharing Network is a classic government spending scandal.  This trainwreck features the classic trio of waste, fraud, and abuse.  Take a look:

Waste:  An audit from the Department of Homeland Security concluded that the grant was severely mismanaged.  You can read the audit here.  The audit identified approximately $4.8m in improper spending.

Highlights of the improper spending include:

  • Improper or unsupported use of grant money for maintenance expenses and utilities
  • Improper allocation of costs and improper spending outside of the grant performance time period
  • Printing of books, award plaques, and lapel pins

The second biggest apparent wasteful spending was for a boondoggle educational trip to Turkey for a number of Ohio officials.

The biggest apparent wasteful spending was for salaries.  The Homeland Security audit noted that only 85 of the required 832 timesheets for employees were maintained and available for inspection.  What is worse is that the OACP’s Executive Director received over $800,000 – an amount that the audit found, not surprisingly, to be “unreasonable” and “unallowable.”

Fraud:  OACP never should have received this money.  The federal grants were designed to go to local law enforcement agencies – first responders in the event of a terrorist attack.  In fact, the grant application from OACP was initially rejected by the federal government because funds could only be used by local government agencies. Then, as we noted back in January, James Canepa, then Chief Deputy Attorney General under AG Jim Petro, now Chief Legal Counsel for Tom Charles at the Department of Public Safety — provided a strange, unofficial, legal opinion.  He wrote a letter suggesting that, under Ohio law, the nonprofit, nongovernmental Ohio Association of Chiefs of Police was a “Regional Planning Commission.”  As a Regional Planning Commission, the OACP was considered to be a local government entity eligible to receive the money.

We have spoken to a number of attorneys about this opinion, and the conclusion is unanimous:  this opinion was obviously wrong and impossible to defend.  (If you are curious:  the OACP does not fit within the statutory definition of a Regional Planning Commission for a number of reasons.  The most obvious is that it was not created by joint resolutions of local and county governments under Revised Code 713.21.)  This legal lie fiction by Canepa allowed the money to start flowing to the OACP.  (We won’t speculate about Canepa’s motives here – but he was invited on the boondoggle trip to Turkey.)

Abuse:  The Ohio Emergency Management Agency (OEMA), under the leadership of Nancy Dragani, was responsible for monitoring how the federal money was spent.  The audit from the Department of Homeland Security found that OEMA was “severely lacking” both in its record-keeping and oversight.

Under federal law, because OEMA had ultimate authority over the project, the agency – and thus the State – is responsible for repaying any improperly spent money to the federal government.

Let’s be clear about how this works.  OACP improperly spent money on things like trips, promotional materials, and excessive and undocumented salaries.  OEMA failed to adequately supervise the spending and approved the improper spending.  OEMA could seek reimbursement from the OACP or, even, its former management.  The Agency has apparently, however, decided not to seek to recover the mis-spent and wasted money.  Instead, Ohio taxpayers are left holding the bag.

That is why OEMA went before the Ohio Controlling Board in January.  OEMA requested that the State of Ohio take almost $3 million from the general fund to make an initial payment to the federal government.  An additional $1.1 million may be requested in the future if an appeal is unsuccessful.  That is at least $3 million – and ultimately maybe over $4 million — that could have been spent on roads or schools or police officers.

Two big questions:

First, why are those responsible still working in high-level positions for the state?  We are pretty confident that if our actions cost our employer $3 million, we would be looking for a new job the next day.

Second, where is the outrage from the General Assembly?  Whether this matter came before the Controlling Board, members asked only a couple of questions and seemed to accept at face value the claim by OEMA that the severely lacking oversight won’t happen again.

Remember the “GSA Scandal” from a couple of weeks ago?  In that case, former and current employees of the General Services Administration were brought before Congressional Committees as a result of the disclosure of over-spending in connection with a 2010 conference for federal employees.  That conference cost about $830,000, and not all of the money was wasted.

The OACP Scandal is the type of waste, fraud, and abuse that makes the GSA scandal look quaint.  After all, the GSA only wasted a portion of $830,000 in taxpayer money.  Here we have documented waste of at least $2.9 million.  In response to the GSA scandal, Senator Boxer said, “There must be justice and restitution for this and those who are responsible for the outrageous conduct and who violated the public trust must be held accountable.”  We wish Ohio legislators from both parties had pressed the EMA officials with hard questions that indicate — no matter their political affiliation — they are angry about this squandering of taxpayer dollars.