New Jersey Claimed Some Unallowable Costs Under a Hurricane Sandy Disaster Relief Act Grant

The New Jersey Department of Human Services (State agency) budgeted Disaster Relief Act funds under its Home Repair and Advocacy Program (HRAP) subaward to Ocean County that were appropriate. However, the State agency claimed some Disaster Relief Act costs under its HRAP subaward to Ocean County that did not comply with the Disaster Relief Act. Of the $198,000 in costs that we reviewed, $161,000 complied with the Disaster Relief Act. The State agency claimed costs totaling $23,000 that were unallowable because they were already covered by other sources. The State also allocated $14,000 in salary costs to the HRAP subaward without consideration of whether the employees' activities were directly related to Hurricane Sandy.

The State agency claimed unallowable Disaster Relief Act funds because it (1) did not consider the funding disclosed by applicants and (2) had not established a methodology for ensuring that only Hurricane Sandy expenses were charged to the award; therefore, funds that were to be used only for Sandy-related activities were used to benefit other activities.

We recommended that the Administration for Children and Families ensure that the State agency (1) refunds $23,000 to the Federal Government, (2) identifies and refunds the portion of $14,000 in salary costs that was improperly allocated to the HRAP subaward, (3) verifies other funding sources for all services provided and recovers costs claimed under the State agency's HRAP subaward to Ocean County that were already covered, and (4) establishes a methodology to ensure that Social Services Block Grant supplemental funding is used solely for expenses directly related to Hurricane Sandy recovery activities. The State agency, through the New Jersey Office of the Attorney General, disagreed with our finding that certain costs were unallowable because they were already covered by other sources and requested that we clarify that employee leave costs are allowable under Federal grants. We modified our finding related to salary costs and added a recommendation to reflect that some portion of the $14,000 in salary costs may have been allocable to the HRAP subaward.