Supplanting - Will it be an issue for preparedness grants?

As you may know, the FEMA preparedness grant programs are designed to “enhance community emergency preparedness and participation capabilities”, not to help fund baseline programs. The common concept for grants is that they are to “supplement not supplant” local dollars. However, many communities are looking at a loss of both local tax dollars and grant funds at the same time; what are they to do? Tough decisions must be made; is the option of shifting tax-funded program activities to grants a viable one? Maybe, but caution is warranted.
Many grant programs, including FEMA preparedness grants, have specific requirements that all grant-funded expenses must be new and that grant funds cannot replace existing state or local government funding. Substitution of existing funds with federal grants (supplanting) will be the subject of monitoring and audit reports. Non-supplanting rules are serious business, violations can result in penalties, including suspension of current and future funds, suspension or debarment from federal grants, repayment of monies provided under a grant, and civil and/or criminal penalties. So it is wise to carefully consider this as you restructure programs in light of shrinking fiscal resources.
The DHS Financial Management Guide offers one possible source of relief to the non-supplanting requirement in light of the situation presented by budget cuts.The guidance states that: “Recipients therefore must ensure that they do not reduce the current overall level of funding support to preparedness missions,absent exigent circumstances.”
Exigent circumstances are emergency conditions and many communities are certainly in situations that are deemed financial emergencies. So, does a budget crisis meet the test of an “exigent circumstance”? I am not going to answer that but suggest grantees may want to ask the question of their legal advisors and/or ask the Grant Programs Directorate for and interpretation. I think a lot of grantees are going to be finding themselves in this situation.
The DHS Financial Management Guide language on supplanting is quoted verbatim below.

Recipients of G&T funds shall not replace funding appropriated from State and local governments with their Federal grant funding. It is the purpose of these grants to increase the overall amount of resources available to any G&T funded organization in order to bolster preparedness and to increase services and opportunities. Current levels of activities or programs funded by State, local or non-governmental entity resources should only be increased by receipt of Federal funding. Recipients therefore must ensure that they do not reduce the current overall level of funding support to preparedness missions, absent exigent circumstances.
For example, if a State pays the salaries of three intelligence analysts, it cannot begin to pay the salary of one of them with Federal grant funding. It could, however, hire a fourth analyst.
Potential supplanting will be the subject of application review, as well as pre-award review, post-award monitoring, and audit. If there is a potential presence of supplanting, the applicant or grantee will be required to supply documentation demonstrating that the reduction in non-Federal resources occurred for reasons other than the receipt or expected receipt of Federal funds.
A confirmation during the application process may be requested by the awarding agency or recipient agency stating that Federal funds will not be used to supplant State or local funds.


Steve Davis, All Hands

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