Being prepared for disaster: strategies and tactics for finance managers.

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Since the events of September 11, 2001, the role of government financial managers has changed along with the rapidly changing environment of emergency management. Demand for funding to be prepared for disasters comes at a time when budgets are already strained and revenues limited. Consequently, budget officials are continually juggling requests for normal operations with public safety requests for disaster preparedness.

The demand for public safety funding has come from almost every conceivable direction. The threat of terrorist attacks, concerns about severe weather events, especially after hurricanes Katrina and Rita, and the ongoing fear of an influenza pandemic have all driven demands for more and better public safety programming. State and local jurisdictions' perception that the federal government's response has often been indifferent has led these governments to become more self sufficient. With each of these challenges, budget requests are made in the name of better protecting the public and first responders. Elected officials and their department heads face serious consequences if requests are not funded. Finance officials are often directed to "just find the money!" Frequently the amounts are measured in millions rather than thousands. Much of the demand for funding is driven by computer technology for sharing intelligence information and costly items such as bioterrorism protective equipment for emergency services. As the predictions for terrorist targets change from buildings to transportation systems, the U.S. Department of Homeland Security (DHS) dictates funded and unfunded mandates to local governments for passenger safety. Funding is also needed after natural disasters or acts of terrorism to house displaced persons, put government services back in business, and purchase medical supplies.

The following tactics have been used by finance managers to respond to requests for public safety spending and still manage the budget. Be forewarned, these solutions were not always popular, but they worked.

FUNDING

Annual Budget Requests. Given the level of concern for disaster preparedness, public safety departments often request a significant increase in their annual capital and operating budgets even when all departments, public safety included, have been instructed to cut their budgets from prior year spending levels due to necessary budget constraints. To address these requests, budget managers may choose to

* re-examine the public safety department's line-item justification statements and compare them to the prior year's actual spending levels and current spending levels. If current spending does not utilize the entire budget for some items, cut the budget in those areas to allow for increased funding for next year's requests;

* look for areas where common functions can be shared across public safety departments, such as technology, finance, marketing, and public outreach. Savings gained from consolidating senior management positions can make a big difference.

Capital Purchases, Disaster management is heavily dependent on equipment needed to respond to emergency situations to protect the public. Public safety departments' budget requests consequently often include significant outlay for capital expenditures.

* Given the evolution of technology, the lengthy procurement process, and potential for obsolescence in the interim, consider leasing certain capital equipment, such as emergency communications and other equipment whose technology evolves quickly, rather than buying, if regulations allow.

* Make sure department managers provide information on annual maintenance and repair costs before you approve a purchase. For those jurisdictions that receive DHS Urban Area Security Initiative (UASI) funding, determine if the costs can be assigned to the grant.

* If new higher-priority safety initiatives appear necessary explore the possibility of using UASI dollars by submitting a request to the administrative agent to reprogram grant dollars. For instance, suppose New York recently caught a terrorist in its subway system with explosive devices and Chicago officials want to install explosive detection equipment at train-line entrances as a new preventative measure. Potentially, funding previously designated in a different grant, for instance, one designed to fund public education, could be diverted for this new effort because of the higher risks involved.

* If yours is a large jurisdiction that receives UASI funding to acquire high-priced equipment, consider sharing these resources with smaller surrounding jurisdictions. The regional resource argument in a grant application is well-received by grant-making authorities because the resource is available to a larger population base. Charge the surrounding jurisdictions a reasonable maintenance fee for managing the asset, if appropriate.

Supplies. Departments want to stockpile items in anticipation of the influenza pandemic and mass care events. In addition, warehouses are needed to store the items.

* Phase in these supplies based on a risk assessment. For example, the area that includes the most terrorist targets receives the initial stockpile.

* Look at vacated government-owned properties as potential storage facilities before they are scheduled to be sold.

Before certain supplies are acquired, ask if they have a fixed shelf life. If they do, make sure department management has developed a procurement and rotation schedule that supports the acquisition program. This prevents storing unusable inventory.

AGREEMENTS AND PARTNERSHIPS

Based on the experiences of September 11th and Hurricane Katrina, first responders have recognized that the scene of a disaster is not the right time to establish a relationship with organizations needed to help the affected jurisdictions respond or recover from that disaster. If a fire escalates to five alarms and depletes the fire resources that normally cover several neighborhoods, another jurisdiction needs to be able to step in quickly. When police officers from a distant jurisdiction are being deployed to a location several states away for days or weeks at a time, they need to move at a moment's notice, have a means to be transported to a site, be able to refuel and eat along the way, and be able to acquire what they need to perform the job once they get to the site. Consider the following to address these imperatives.

* Develop formal mutual aid agreements like Illinois' Mutual Aid Box Alarm System (MABAS) and the Illinois Law Enforcement Alarm System (ILEAS).These alarm systems provide each member jurisdiction several advantages for dealing with major crises where the individual entity's resources are overwhelmed: (1) with a signed mutual aid agreement, each participating member entity is on secure legal footing to exercise authority outside of its jurisdiction when responding to a call for assistance pursuant to the agreement. Additionally, every member involved has signed the same agreement statewide and the risks, liability authority, and cost distribution are clearly spelled out; (2) the mutual aid response is "pre-planned" and there is less chaos during the emergency, The time-consuming task of calling individual agencies for help is the responsibility of the alarm system, alleviating the stricken jurisdiction of the burden; and (3) the agreement provides an established platform for potential cost reimbursement if a state or federal disaster is declared.

* Create agreements with private sector companies that may be called upon to support your operations. If during a mass casualty event there are insufficient means of transporting the injured, an agreement with the private ambulance companies can fill the gap, or if a large area needs to be evacuated quickly, an arrangement with private bus companies can help speed the process.

* Establish agreements with national suppliers like the Graingers, Home Depots, and Wal-Marts of the world. These companies have established distribution systems and access to large inventories of critical supplies such as water, cots, and blankets, and of lumber, saws, and other basic supplies that both responders and victims may need. Advance agreements with each vendor allows you to establish pricing upfront so you are not overcharged after the fact. It also gives you the ability to predefine their response times and other critical protocols. Establish multiple agreements so you are not reliant on any one vendor.

* Understand the capabilities and expectations of support agencies like the Salvation Army and Red Cross. Can they provide cots and foods to an entire region affected by an ice storm or floods, or are there limits? Can the responders being deployed to a disaster several states away stop at designated locations the Salvation Army or Red Cross has established along the route? Putting agreements or even plans in place that define the thresholds or reimbursement terms for providing such support is another critical proactive solution to consider.

* Participate in or establish private sector industry segment consortium groups. Building managers and owners, utility and other infrastructure companies, healthcare organizations, hotels, as well as universities and colleges, can play an important role in disaster management. Having previously established relationships, contacts, and agreements with these industry segments can make life a lot easier during a disaster.

PROCUREMENT

Public safety departments often complain that standard procurement procedures are overly time consuming and that it takes too long to acquire items that are needed immediately. The time it takes to draft the specifications, wait for bids to come back, select the vendor, negotiate the contract, and sign the contract increases the risk of not having the tools needed to minimize loss of life or damage to property. In addition, local public safety departments are competing for backlogged supplies with other municipal public safety entities. Further, private sector companies from around the world are competing for the same resources and they do not have to cope with the internal processes governments must work through, especially for pandemic stockpiles. I offer the following solutions for consideration:

* Piggyback on state and federal contracts if they meet the requirements of your jurisdiction's procurement process.

* Determine whether the item being procured has a unique feature that make sole source purchasing justifiable.

* Establish a working group of public safety department end users, procurement and budget representatives, procurement department representatives, budget office representatives, and grant administration department representatives and schedule regular meetings. Having all concerned parties in the same room to identify and resolve issues goes a long way to keeping things on track, especially if grant expiration dates are looming.

* Draft legislation that provides temporary authority to public safety departments to procure critical safety-related items. The temporary nature of this authority may fare better with legislative bodies.

Coordinate with other agencies and departments to purchase compatible equipment. Individual departments sometimes purchase incompatible equipment. This results in additional interface costs and potential higher maintenance costs. This usually happens when vendors shop their product to the various public safety departments independently and there is no central coordination between departments.

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* Make sure your public safety departments regularly communicate with one another at the top level. Urge them to meet regularly so each is aware of the others' plans and needs. Sometimes they are unknowingly trying to achieve the same objectives, or they already have found a solution to a common problem.

* For the more expensive technology solutions, establish a public safety technology advisory group composed of key end users from the departments and their respective technology divisions. Have prospective solutions vetted through this group before they are presented to the public safety department leadership. Such cooperation can ensure that receiving the highest return on technology investments through the economies of scale and negotiating strength with common vendors.

REIMBURSEMENT

Claims are denied or maximum reimbursement levels are not obtained due to inappropriate documentation, missed deadlines, or not staying abreast of the regulatory requirements since the last disaster. Consider the following:

* Send the appropriate managers to be trained about requirements and procedures for declaring a disaster, as well as the reporting and appeal processes.

* Supplement internal resources with external experts who can help staff members when the disaster overwhelms them or when they have to return to other day-to-day activities. The continuity will help prevent jeopardizing maximum reimbursements from state and federal agencies.

CLOSING COMMENTS

As state and local governments exhaust the number and variety of high-ticket items they can purchase with the money they receive from DHS, they should look toward assigning more personnel salaries to this source of funding. Or consider sharing those dollars with their support partners who also share in the risk. Support partners include building owner and manager associations that can assist in transmitting emergency messages to tenants who are impacted by an emergency situation, universities whose stadium and dormitory facilities may be needed for refuge, or other non-profit social organizations who can lend a hand. Remember, government cannot respond and recover from an event without their help.

State and local governments need to work with federal leaders to find solutions and stay current with federal legislative changes. To the extent possible, state and local governments need to get involved in drafting federal legislation to assure that requirements are reasonable and executable. By taking a proactive versus a reactive stance, the community will be as prepared as possible when disaster strikes.

Deferring budgetary requests from non-public safety departments can have devastating consequences. The pieces may need to be picked up by public safety departments. Deciding what to fund and what not to fund before a disaster occurs is a fine line that finance officers and elected officials must walk.

VICKI WILSON is a deputy director with GlobalOptions Group, James Lee Witt Associates' Midwest Office, and the former chief administrative officer for emergency preparedness with the City of Chicago Office of the Mayor. She is a faculty member with the University of Chicago, Graham School's Master of Science in Threat and Response Management program. She can be reached at 312-634-6062 or by e-mail at [e-mail].