Bioterrorism: Information on Jurisdictions' Expenditure and	 
Reported Obligation of Program Funds (28-FEB-05, GAO-05-239).	 
                                                                 
In 1999, the Department of Health and Human Services' (HHS)	 
Centers for Disease Control and Prevention (CDC) began funding	 
jurisdictions' efforts to prepare for bioterrorism attacks	 
through the Public Health Preparedness and Response for 	 
Bioterrorism program. After the events of September 11, 2001, and
the 2001 anthrax incidents, program funds increased almost	 
twentyfold. Citing jurisdictions' unexpended program funds, HHS  
reallocated some fiscal year 2004 funds to support other local	 
and national bioterrorism initiatives. Jurisdictions and	 
associations representing jurisdictions disputed HHS's assertion 
that large amounts of funds remain unused, noting that HHS did	 
not acknowledge obligated funds that had not yet been expended.  
GAO was asked to provide information on (1) the extent to which  
jurisdictions had expended the fiscal year 2002 funds awarded for
the program's third budget period as of August 30, 2003, and	 
August 31, 2004, and the fiscal year 2003 funds awarded for the  
program's fourth budget period, as of August 30, 2004; (2) the	 
extent to which fiscal year 2001, 2002, and 2003 funds awarded	 
for the third and fourth budget periods remained unobligated as  
of August 30, 2004; and (3) factors jurisdictions identified as  
contributing to delays in expending and obligating funds and	 
actions some jurisdictions took to address them.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-239 					        
    ACCNO:   A18320						        
  TITLE:     Bioterrorism: Information on Jurisdictions' Expenditure  
and Reported Obligation of Program Funds			 
     DATE:   02/28/2005 
  SUBJECT:   Allocation (Budget Act)				 
	     Biological warfare 				 
	     Budget obligations 				 
	     Budget outlays					 
	     Counterterrorism					 
	     Emergency preparedness				 
	     Federal funds					 
	     Funds management					 
	     National preparedness				 
	     Terrorism						 
	     Unobligated budget balances			 
	     Federal aid programs				 
	     Future budget projections				 
	     CDC Public Health Preparedness and 		 
	     Response for Bioterrorism Program			 
                                                                 

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GAO-05-239

United States Government Accountability Office

GAO

                       Report to Congressional Requesters

February 2005

BIOTERRORISM

  Information on Jurisdictions' Expenditure and Reported Obligation of Program
                                     Funds

GAO-05-239

[IMG]

February 2005

BIOTERRORISM

Information on Jurisdictions' Expenditure and Reported Obligation of Program
Funds

  What GAO Found

Jurisdictions have expended a substantial amount of Bioterrorism program
funds. As of August 30, 2004, jurisdictions had expended over four-fifths
of the fiscal year 2002 funds awarded during the third budget period
through the HHS P accounts-the public assistance accounts that track over
90 percent of all funds awarded. As of that date, they had expended
slightly over half of P account funds awarded for the program's fourth
budget period. Jurisdictions continued, as authorized, to expend funds
beyond the budget period for which they were awarded. For example, some
expenditures, such as contract payments, extend beyond one budget period.

At the end of the program's third budget period, jurisdictions reported
that less than one-sixth of all bioterrorism funds awarded for that
period- including both fiscal year 2001 and 2002 funds-remained
unobligated, and some jurisdictions reported that none of their funds
remained unobligated. As of August 1, 2004, jurisdictions estimated that
less than one-quarter of all funds awarded for the fourth budget period
would remain unobligated as of August 30, 2004, and five jurisdictions
estimated that they would have no funds remaining unobligated.

Many jurisdictions reported facing challenges, partly related to
administrative processes, that delayed their obligation and expenditure of
bioterrorism funds. These included workforce issues such as hiring
freezes; contracting and procurement processes to ensure responsible use
of public funds; and lengthy information technology upgrades. Some
jurisdictions have simplified these processes to expedite the obligation
and expenditure of funds.

We provided a draft of this report to HHS for comment, and the agency
informed us it had no comments on the draft report.

Expenditure Rates of the Third Budget Period's Fiscal Year 2002
Bioterrorism Program Funds from P Accounts, by Jurisdiction, as of August
30, 2003, and August 30, 2004

Note: These data do not include all funds awarded to jurisdictions through
the Bioterrorism program. For example, while the program's third budget
period was a 24-month period, extending from August 31, 2001, to August
30, 2003, and used funds from both fiscal years 2001 and 2002, these
expenditure rates reflect data only on fiscal year 2002 funds.

                 United States Government Accountability Office

Contents

  Letter

Results in Brief
Background
Jurisdictions Have Expended over Four-Fifths of Fiscal Year 2002

Funds and over Half of Fiscal Year 2003 Funds Few Bioterrorism Funds
Remained Unobligated, According to Jurisdiction Reports

Jurisdictions Identified Administrative Processes and Other Challenges to
Obligation and Expenditure, and Some Jurisdictions Described Solutions

Concluding Observations Agency Comments

                                       1

                                      5 6

                                       8

11

14 19 20

Appendix I Scope and Methodology

Appendix II Bioterrorism Program's Budget Period Three Expenditures

Appendix III Bioterrorism Program's Budget Period Four Expenditures

Appendix IV Unobligated Bioterrorism Program Funds Reported by
Jurisdictions

Appendix V GAO Contact and Staff Acknowledgments 33

GAO Contact 33 Acknowledgments 33

Related GAO Products

34

Tables

Table 1: Bioterrorism Program Budget Periods Table 2: Funds Included in
Sources of Bioterrorism Expenditure and Obligation Data

Table 3: Public Health Preparedness and Response for Bioterrorism
Program's Budget Period Three Fiscal Year 2002 Funds Expended from P
Accounts, by Jurisdiction, as of August 30, 2003, and August 30, 2004

Table 4: Public Health Preparedness and Response for Bioterrorism
Program's Budget Period Four Funds Expended from P Accounts, by
Jurisdiction, as of August 30, 2004

Table 5: Unobligated Public Health Preparedness and Response for
Bioterrorism Program Funds Reported by Jurisdictions, as of the End of
Each Budget Period

7 23

26

28 30

Figures

Figure 1: Expenditure Rates of the Third Budget Period's Fiscal

Year 2002 Bioterrorism Program Funds from P Accounts,

by Jurisdiction, as of August 30, 2003, and August 30, 2004 9 Figure 2:
Expenditure Rates of the Fourth Budget Period's Fiscal Year 2003
Bioterrorism Program Funds from P Accounts, by Jurisdiction, as of August
30, 2004 11 Figure 3: Unobligated Third and Fourth Budget Period

Bioterrorism Funds Reported by Jurisdictions

(percentage) 13

Abbreviations

CDC Centers for Disease Control and Prevention
DPM Division of Payment Management
FMO Financial Management Office
FSR financial status report
G accounts general accounts
HHS Department of Health and Human Services
NCA Notice of Cooperative Agreement
P accounts public assistance accounts
PGO Procurement and Grants Office
PMS Payment Management System
RFP request for proposals

This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
work may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this material
separately.

United States Government Accountability Office Washington, DC 20548

February 28, 2005

The Honorable Joseph I. Lieberman
Ranking Minority Member
Committee on Homeland Security and Governmental Affairs
United States Senate

The Honorable Edward M. Kennedy
Ranking Minority Member
Committee on Health, Education, Labor, and Pensions
United States Senate

In 1999, the Department of Health and Human Services' (HHS) Centers for
Disease Control and Prevention (CDC) began funding state and municipal
efforts to prepare for bioterrorism attacks through the Public Health
Preparedness and Response for Bioterrorism program. Total funding
awarded through the program ranged from about $40 million in 1999 to
about $50 million in 2001 annually. The events of September 11, 2001,
increased concern about bioterrorism. In addition, the anthrax incidents
during the fall of 2001 strained the public health system, including
surveillance1 and laboratory workforce capacities, at the state and
municipal levels.2 Following these incidents, program funding increased
almost twentyfold,3 and this increased level of funding continued in
fiscal
years 2003 and 2004.4

With the substantial increase in funding after the terrorist attacks in
2001,
CDC modified the program's budget periods.5 The program's budget

1Public health surveillance uses systems that provide for the ongoing
collection, analysis, and dissemination of health-related data to
identify, prevent, and control disease.

2See U.S. GAO, Bioterrorism: Public Health Response to Anthrax Incidents
of 2001, GAO-04-152 (Washington, D.C.: Oct. 15, 2003).

3In February 2002, CDC awarded $918 million through the Bioterrorism
program. An additional $100 million was later awarded to support smallpox
vaccination programs.

4Throughout this report, the term fiscal year refers to the federal fiscal
year, which is from October 1 through September 30. In fiscal year 2003,
$870 million was awarded to states, selected municipalities, and
territories. Approximately $844 million was awarded to states, selected
municipalities, and territories in fiscal year 2004.

5Throughout this report, the term "budget period" is used to describe each
of the five periods for which funds were awarded within the multiyear
program period.

periods typically run from August 31 of one year to August 30 of the
next-a 12-month period-and use funds from the fiscal year under way at the
start of the period. However, the third budget period, which was already
under way at the time of the September 11 attack, was extended to 24
months, running from August 31, 2001, to August 30, 2003. It used funds
from both fiscal years 2001 and 2002. The fourth budget period reverted to
a 12-month period, running from August 31, 2003, to August 30, 2004, and
used funds from fiscal year 2003.

In May 2004, HHS reported that large unexpended balances remained of the
fiscal year 2002 and 2003 funds awarded to jurisdictions for the program's
third and fourth budget periods.6 Citing these large unexpended balances,
HHS made the decision to reallocate approximately $55 million of the funds
for the fifth budget period (August 31, 2004, to August 30, 2005) to
support other local and national bioterrorism initiatives.7 States and
national associations representing jurisdictions have disputed HHS's
assertion that large amounts of funds remain unused, noting that HHS chose
to focus only on expenditures, and did not focus on obligated funds, which
are funds that a jurisdiction has legally committed to spend-for example,
through a contract for services-but has not yet expended.8

You asked us to provide information on the expenditure and obligation of
funds awarded under the Public Health Preparedness and Response for
Bioterrorism program cooperative agreements and factors that may affect
these expenditures and obligations.9 In this report, we will provide

6Throughout this report, the term "jurisdictions" refers to the 50 states,
the District of Columbia, and the three funded municipalities-New York
City, Chicago, and Los Angeles County. The Bioterrorism program also
awards funds to the territories of American Samoa, Guam, and the U.S.
Virgin Islands; the commonwealths of the Northern Mariana Islands and
Puerto Rico; the Federated States of Micronesia; and the republics of
Palau and the Marshall Islands. These awardees were outside the scope of
our work.

7These initiatives included the Cities Readiness Initiative, which funded
21 cities to help develop their capacity to deliver medicines and medical
supplies in case of a public health emergency. In addition, funds were
used to expand the capacity of CDC's quarantine stations and to support
the BioSense surveillance program, an already existing program to detect
emerging diseases by collecting data from national, regional, and local
data sources such as hospital systems, ambulatory care sites, and pharmacy
chains.

8Obligated funds do not include future planned activities unless those
activities are actually contracted for. Expended funds refer to funds the
jurisdiction has issued as checks, disbursements of cash, or electronic
transfers to liquidate an obligation.

9A cooperative agreement is a mechanism used to provide financial support
when substantial interaction is expected between a federal agency and a
state, local government, or other recipient carrying out the funded
activity.

information on (1) the extent to which jurisdictions expended the fiscal
year 2002 funds awarded for the program's third budget period as of August
30, 2003, and August 30, 2004, and fiscal year 2003 funds awarded for the
program's fourth budget period, as of August 30, 2004; (2) the extent to
which fiscal year 2001, 2002, and 2003 funds awarded for the third and
fourth budget periods remained unobligated by jurisdictions as of August
30, 2004; and (3) factors that jurisdictions identified as contributing to
delays in expending and obligating funds and actions some jurisdictions
took to address those factors.

To determine the expenditure of fiscal year 2002 funds awarded during the
third budget period as of August 30, 2003, and August 30, 2004, and the
fourth budget period's expenditures as of August 30, 2004, we analyzed
expenditure data obtained from HHS's Division of Payment Management (DPM)
Payment Management System (PMS).10 These expenditure data come from PMS's
public assistance accounts (P accounts)-awardee accounts that are specific
to particular cooperative agreements, such as the Bioterrorism program, or
grants. The Bioterrorism P accounts do not include fiscal year 2001 funds
awarded during the first half of the third budget period. Therefore, we
were not able to include fiscal year 2001 funds in our analysis of the
third budget period's expenditures. In addition, the P accounts do not
include funds carried over, with CDC's approval, from prior budget
periods, funds related to the Strategic National Stockpile awarded after
fiscal year 2002,11 or funds provided to jurisdictions as direct
assistance.12 However, while the P accounts are a subset of the total
Bioterrorism funds awarded to jurisdictions, they

10DPM is a division within HHS that provides grant payment, cash
management, and grant accounting support services to HHS and other federal
departments and agencies. PMS is a DPM-operated centralized payment system
designed to expedite and manage the flow of cash for grants and
cooperative agreements from federal agencies to awardees and to provide
information on the disbursement of funds to the awarding agency.

11The Strategic National Stockpile is a repository of pharmaceuticals and
medical supplies that can be delivered to the site of a biological or
other attack. Responsibility for activities related to the stockpile had
been CDC's in prior years, but, in March 2003, this responsibility was
transferred to the Department of Homeland Security. However, CDC entered
into a reimbursable agreement with the Department of Homeland Security so
that the Strategic National Stockpile funds were included in the
Bioterrorism awards CDC made to jurisdictions in fiscal year 2003.

12Direct assistance refers to assistance jurisdictions ask CDC to provide
in the form of equipment, training, staff, or other services, rather than
as funds, referred to as financial assistance. We did not include direct
assistance in our analysis.

accounted for over 90 percent of program funds awarded.13 We determined
the percentage of both the third budget period's fiscal year 2002 and
fourth budget period's fiscal year 2003 funds expended by comparing
expenditures recorded in the PMS P accounts to the total funds in the P
accounts. We did not conduct a review to determine the appropriateness of
any jurisdiction's expenditures.

To obtain obligation data, we reviewed the financial status reports (FSR)
that CDC required jurisdictions to submit at the end of the third budget
period (August 31, 2001, to August 30, 2003) and the estimated FSRs for
the fourth budget period (August 31, 2003, to August 30, 2004) that CDC
asked jurisdictions to submit by August 1, 2004. We also reviewed the
Notices of Cooperative Agreement (NCA), which are provided by CDC to
jurisdictions and contain information on the total bioterrorism funds
awarded to the jurisdiction for a budget period. Unlike PMS's P account
data, the FSRs and NCAs include information on all bioterrorism funds
awarded as financial assistance, including both fiscal year 2001 and 2002
funds, funds carried over from prior periods, and funds related to the
Strategic National Stockpile.14 Because the FSR data related to obligation
are self-reported by jurisdictions, we interviewed officials from CDC,
HHS's Office of the Inspector General (OIG), and jurisdiction audit
agencies to obtain information on any efforts to determine the reliability
of these data. Based on the work of the OIG and jurisdiction audit
agencies, obligation data for the third budget period from 18
jurisdictions and for the fourth budget period from 1 jurisdiction can be
considered reliable. In other cases, the information presented is as
reported by jurisdictions, and we cannot attest to its reliability.

To describe factors that jurisdictions said contributed to delays in
obligating and expending funds and actions some jurisdictions took to
address those factors, we selected 19 jurisdictions, taking into account
diversity in geographic location, population size, urban and rural status,
and their expenditure and obligation patterns. We e-mailed these
jurisdictions to gather information on why some may have had

13The funds in the P accounts make up approximately 92 percent of
bioterrorism funds awarded to jurisdictions for the third budget
period-August 31, 2001, to August 30, 2003- and approximately 93 percent
of funds awarded for the fourth budget period-August 31, 2003, to August
30, 2004. When funds carried over from prior periods are included, the P
accounts make up 91 percent of all funds awarded during the third budget
period and 85 percent of all funds awarded during the fourth budget
period.

14While the NCAs include funds awarded as direct assistance, the FSRs do
not.

Results in Brief

unobligated or unexpended funds, and we obtained any necessary
clarification of responses by telephone or e-mail.15

We did our work from July 2004 through February 2005 in accordance with
generally accepted government auditing standards. (See app. I for
additional details on our scope and methodology.)

Jurisdictions have expended a substantial amount of Public Health
Preparedness and Response for Bioterrorism program funds. As of August 30,
2004, they had expended over four-fifths of the fiscal year 2002 funds
awarded through the HHS P accounts during the third budget period (August
31, 2001, to August 30, 2003). (The P accounts make up over 90 percent of
all Bioterrorism program funds.) As of August 30, 2004, jurisdictions had
also expended slightly over half of the funds in the P accounts awarded
for the program's fourth budget period (August 31, 2003, to August 30,
2004). As allowed by the CDC cooperative agreement, jurisdictions have
continued to expend funds beyond the budget period in which they were
awarded. Some expenditures, such as contract payments, take place over a
period of time; therefore, it may take jurisdictions longer than one
budget period to expend awarded funds.

At the end of the Bioterrorism program's third budget period,
jurisdictions reported to CDC that less than one-sixth of all fiscal year
2001 and 2002 bioterrorism funds awarded for that period remained
unobligated, and some jurisdictions reported that no funds remained
unobligated. As of August 1, 2004, jurisdictions estimated that less than
one-quarter of funds awarded for the fourth budget period would remain
unobligated as of August 30, 2004, and five jurisdictions estimated that
no funds would remain unobligated.

Many jurisdictions reported facing challenges, partly related to state and
local administrative processes, that slowed their obligation and
expenditure of bioterrorism funds. These challenges included workforce
issues such as hiring freezes and difficulty recruiting qualified staff;
contracting and procurement processes to ensure the prudent use of public
funds; and lengthy information technology upgrades. Some

15We contacted the following jurisdictions: Alaska, Chicago, Connecticut,
Delaware, Georgia, Kansas, Los Angeles County, Louisiana, Maryland,
Massachusetts, Michigan, Minnesota, Missouri, New Mexico, New York City,
North Dakota, Rhode Island, Tennessee, and Texas.

Background

jurisdictions found ways to simplify administrative processes to expedite
the obligation and expenditure of funds.

In assessing the pace at which jurisdictions are expending Bioterrorism
funds, it is useful to consider that responsible use of public funds
requires careful and often time-consuming planning before funds are
obligated and expended. In addition, it is important to recognize that
some expenditures take place over a period of time, which also can affect
the speed at which jurisdictions expend funds.

We provided a draft of this report to HHS for comment, and the agency
informed us that it had no comments on the draft report.

The Bioterrorism cooperative agreement program spans five budget periods
and is scheduled to end August 30, 2005. Under this program, CDC has made
funds available through cooperative agreements with all 50 states, the
District of Columbia, and three of the country's largest
municipalities-New York City, Chicago, and Los Angeles County. CDC has
distributed funds to these jurisdictions using a formula under which each
jurisdiction receives a base amount of $5 million, plus additional funds
based on the jurisdiction's population.16 The program's budget periods
typically run from August 31 of one year to August 30 of the next,
although the third budget period was extended to run from August 31, 2001,
to August 30, 2003. (See table 1 for more information on the budget
periods discussed in this report.) Under its cooperative agreement, a
jurisdiction is required to obligate funds before the end of the specified
budget period and expend funds before the end of the 12 months following
that period. However, CDC may give a jurisdiction permission to obligate
or expend funds beyond those time frames.

16For the program's fifth budget period, the base amount provided to most
jurisdictions was decreased to $3.9 million, and funds from the program
were redirected to other bioterrorism efforts. Jurisdictions that received
larger amounts during the fifth budget period included the District of
Columbia, which continued to receive a base amount of $10 million, and New
York City, Chicago, and Los Angeles County, which continued to receive
base amounts of $5 million.

                  Table 1: Bioterrorism Program Budget Periods

Budget period 3 Budget period 4 Budget period 5

Budget period

8/31/01 to 8/30/03 8/31/03 to 8/30/04 8/31/04 to 8/30/05

calendar dates

Federal fiscal year Fiscal year 2001 and Fiscal year 2003 Fiscal year 2004

funds used for each budget period

                                fiscal year 2002

Source: GAO analysis of HHS documents.

Note: The federal fiscal year runs from October 1 through September 30.
For example, federal fiscal year 2002 ran from October 1, 2001, through
September 30, 2002.

CDC's Procurement and Grants Office (PGO) is responsible for awarding and
administering CDC's grants and cooperative agreements. In this capacity,
PGO is responsible for notifying the jurisdictions, through an NCA, of the
funds awarded for each budget period. In addition to notifying the
jurisdictions, PGO also provides this information to CDC's Financial
Management Office (FMO), which processes CDC's grant awards and
cooperative agreements. FMO works with DPM to place the cooperative
agreement funds into the appropriate accounts and to ensure that
jurisdictions have access to their Bioterrorism funds through PMS's
accounts. CDC's Office of Terrorism Preparedness and Emergency Response,
which coordinates emergency response and preparedness across CDC, is
responsible for the programmatic components of the program and also works
with PGO and FMO to provide direct assistance to jurisdictions on request.
To monitor the use of the Bioterrorism funds, CDC requires that
jurisdictions submit regular progress reports that track their progress
toward completing a set of activities.17 Jurisdictions are also required
to submit annual FSRs that provide information on the expenditure and
obligation of Bioterrorism funds. In addition, DPM monitors the funds
drawn down by jurisdictions from PMS, and jurisdictions must submit
quarterly federal cash transaction reports to DPM.

17Jurisdictions are required to conduct activities in the following areas:
preparedness planning and readiness assessment, surveillance and
epidemiology, laboratories, communications and information technology,
risk communication and health information dissemination, and education and
training.

Jurisdictions Have Expended over Four-Fifths of Fiscal Year 2002 Funds and
over Half of Fiscal Year 2003 Funds

Jurisdictions had expended a substantial amount of fiscal year 2002 and
2003 program funds as of August 30, 2004. They had expended over
fourfifths of the fiscal year 2002 funds awarded through the HHS P
accounts for the program's third budget period and over half of the fourth
budget period funds awarded through the HHS P accounts. As allowed by
CDC's cooperative agreements, jurisdictions continued to expend fiscal
year 2002 funds after the end of the third budget period in August 2003
and have continued to expend funds awarded during the fourth budget period
since the end of that period.

Over 80 Percent of 2002 Bioterrorism Funds Were Expended over the Course
of the Third and Fourth Budget Periods

As of August 30, 2004, jurisdictions had expended 85 percent of the fiscal
year 2002 funds awarded through the PMS P accounts for the Bioterrorism
program's third budget period.18 There was considerable variation among
jurisdictions' expenditure rates, with individual jurisdictions' rates
ranging from a high of 100 percent to a low of 27 percent. Ten
jurisdictions had expended all fiscal year 2002 funds in the P accounts,
and 22 had expended over 90 percent. Three jurisdictions, Delaware, the
District of Columbia, and Massachusetts, had expended less than half of
their funds. (See fig. 1 for information on the third budget period's
fiscal year 2002 funds expended as of August 30, 2004. App. II provides
additional data.)

Jurisdictions continued, as authorized, to expend the third budget
period's fiscal year 2002 P account funds over the course of the following
budget period to pay for obligations incurred during the third budget
period, such as contracts that extended beyond August 2003. Although
jurisdictions had expended only 56 percent of the third budget period's
fiscal year 2002 P account funds by the end of that budget period, they
had expended 85 percent of the funds as of August 30, 2004, the end of the
fourth budget period. No jurisdiction had expended all its fiscal year
2002 P account funds by the end of the third budget period-individual
expenditure rates ranged from 4 percent to 87 percent. (See fig. 1 for
information on the third budget period's fiscal year 2002 funds expended
from the P accounts as of August 30, 2003. App. II provides additional
data.)

18The fiscal year 2002 funds in the P accounts make up 92 percent of funds
awarded to jurisdictions during the Bioterrorism program's third budget
period-August 31, 2001, to August 30, 2003. When funds carried over from
periods prior to August 31, 2001, are included, the P accounts make up 91
percent of all funds awarded to jurisdictions for that period.

Figure 1: Expenditure Rates of the Third Budget Period's Fiscal Year 2002
Bioterrorism Program Funds from P Accounts, by Jurisdiction, as of August
30, 2003, and August 30, 2004

Note: Data from the PMS P accounts do not include all funds awarded to
jurisdictions through the Bioterrorism program. For example, while the
program's third budget period was a 24-month period, extending from August
31, 2001, to August 30, 2003, and using funds from both fiscal year 2001
and fiscal year 2002, these expenditure rates reflect only fiscal year
2002 funds. In addition, the P accounts do not include funds for the
Strategic National Stockpile awarded after fiscal year 2002, funds carried
over from budget periods prior to the third budget period, or funds
provided to jurisdictions as direct assistance.

Over Half of 2003 As of August 30, 2004-the end of the fourth budget
period-jurisdictions Bioterrorism Funds Were had expended 53 percent of
the fiscal year 2003 bioterrorism funds Expended over the Course awarded
through the P accounts for that period.19 As with fiscal year 2002

funds awarded during the third budget period, there is variation inof the
Fourth Budget individual jurisdictions' rates of expenditure, which ranged
from 93Period percent to zero. While expenditure rates varied, 15
jurisdictions had

19The fiscal year 2003 funds in the P accounts make up 93 percent of funds
awarded to jurisdictions during the Bioterrorism program's fourth budget
period-August 31, 2003, to August 30, 2004. When funds carried over from
periods prior to August 31, 2003, are included, the P accounts make up 85
percent of all funds awarded to jurisdictions for that period.

expended at least two-thirds of the 2003 funds awarded through the P
accounts for the fourth budget period. (See fig. 2 for information on the
fourth budget period's funds expended from the P accounts. App. III
provides additional data.) While slightly over half of the fourth budget
period's funds in the P accounts had been expended as of August 30, 2004,
jurisdictions have continued to expend these funds during the current
budget period-August 31, 2004, to August 30, 2005. The pattern of
expenditure for budget period four funds was similar to that of budget
period three; in both cases, jurisdictions expended just over half their
funds during the budget period and continued to expend the funds during
the next budget period.

Figure 2: Expenditure Rates of the Fourth Budget Period's Fiscal Year 2003
Bioterrorism Program Funds from P Accounts, by Jurisdiction, as of August
30, 2004

Source: GAO analysis of HHS's Division of Payment Services Payment
Management System data.

Note: The program's fourth budget period was a 12-month period, extending
from August 31, 2003, to August 30, 2004, and using fiscal year 2003
funds. However, data in the PMS P accounts do not include all funds
awarded to the jurisdictions through the Bioterrorism program. For
example, the P accounts do not include funds for the Strategic National
Stockpile awarded after fiscal year 2002 or funds carried over from budget
periods prior to the emergency supplemental appropriation issued in fiscal
year 2002. In addition, the PMS P accounts do not include funds provided
to jurisdictions as direct assistance.

At the end of the Bioterrorism program's third budget period,
jurisdictions reported that less than one-sixth of fiscal year 2001 and
2002 funds awarded for that period remained unobligated. Similarly, as of
August 1, 2004, jurisdictions estimated that approximately one-fifth of
fiscal year 2003 funds awarded for the program's fourth budget period
would remain unobligated as of August 30, 2004, the end of that period.

Few Bioterrorism Funds Remained Unobligated, According to Jurisdiction
Reports

Jurisdiction Reports Indicate That Less Than One-Sixth of Third Budget
Period Funds Remained Unobligated

According to the jurisdictions' annual FSRs and NCAs, as of the end of the
third budget period (August 31, 2001, to August 30, 2003),20 14 percent of
all bioterrorism funds awarded for that period remained unobligated.21 As
with expenditure rates, individual jurisdictions' rates of unobligated
funds varied, ranging from none to over three-fifths of the awarded funds.
Seven jurisdictions reported that all their funds from that period had
been obligated, and 44 jurisdictions reported that less than one-quarter
of their third budget period funds remained unobligated. Two
jurisdictions, the District of Columbia and Massachusetts, reported the
highest levels of unobligated third budget period funds-62 percent and 51
percent, respectively. (See fig. 3 for more information on
jurisdiction-reported unobligated Bioterrorism funds. App. IV provides
additional data.)

20Jurisdictions are required to submit final FSRs no more than 90 days
after the end of the budget period-November 30. However, many
jurisdictions continued to submit final FSRs after that point. CDC uses
the FSRs to collect annual data on unobligated funds from all
jurisdictions. However, while CDC reviews the obligation data, it has not
taken steps to verify the data's reliability, and many jurisdictions also
do not verify the reliability of obligation data.

21This does not include funds awarded as direct assistance, but does
include funds awarded in fiscal years 2001 and 2002, funds carried over
from previous years, and funds related to the Strategic National
Stockpile. With approval from CDC, jurisdictions can carry forward funds
that were not obligated during the budget period for use during the next
budget period. Data from New York City were not comparable to those from
other jurisdictions. Because of this, the jurisdiction was excluded from
our budget period three obligations analysis, which we conducted using
data from the remaining 53 jurisdictions.

Figure 3: Unobligated Third and Fourth Budget Period Bioterrorism Funds
Reported by Jurisdictions (percentage)

Note: The total funding awarded includes all funding provided to
jurisdictions as financial assistance through the cooperative agreement,
including funds related to the Strategic National Stockpile and all funds
carried over from prior fiscal years. These data do not include funds
provided as direct assistance.

aThe program's third budget period was a 24-month period, extending from
August 31, 2001, to August 30, 2003, and encompassing both fiscal year
2001 and fiscal year 2002 funds. Data on unobligated balances for this
period are based on the FSRs submitted after the end of the budget period.

bThe program's fourth budget period was a 12-month period, extending from
August 31, 2003, to August 30, 2004, and using fiscal year 2003 funds.
Data on unobligated balances for this period are based on the estimated
FSRs submitted prior to the end of the budget period.

Jurisdiction Estimates Indicated That One-Fifth of Fourth Budget Period
Funds Remained Unobligated

According to jurisdiction estimates as of August 1, 2004, approximately 20
percent of all Bioterrorism funds awarded for the program's fourth budget
period (August 31, 2003, to August 30, 2004) would remain unobligated as
of August 30, 2004.22 Jurisdictions' individual estimated unobligated
balances varied greatly, ranging from none to almost threequarters of the
awarded funds. Five jurisdictions estimated that all their fourth budget
period's funds would be obligated by the end of the period, and 31
jurisdictions estimated that less than one-quarter of their fourth budget
period's funds would remain unobligated. Three jurisdictions, Chicago, New
Mexico, and Delaware, estimated that over half of the Bioterrorism funds
awarded to them for the fourth budget period would remain unobligated as
of August 30, 2004. (See fig. 3 for more information on
jurisdiction-reported unobligated Bioterrorism funds. App. IV provides
additional data.)

Jurisdictions Identified Administrative Processes and Other Challenges to
Obligation and Expenditure, and Some Jurisdictions Described Solutions

Many jurisdictions faced challenges, partly related to state and local
administrative processes, that slowed the pace of their obligation and
expenditure of bioterrorism funds. Reported challenges included workforce
issues, contracting and procurement processes to ensure the prudent use of
public funds, and problems stemming from lengthy information technology
upgrades. Some jurisdictions have developed ways to streamline these
administrative processes, facilitating the obligation and expenditure of
funds.

22This does not include funds awarded as direct assistance, but does
include fiscal year 2003 funds, as well as funds carried over from
previous years and funds related to the Strategic National Stockpile. In
early August 2004, jurisdictions provided CDC with an estimate of what
their unobligated fourth budget period funds would be as of August 30,
2004, the end of the budget period. Jurisdictions were not required to
provide these estimates if they did not anticipate requesting that funds
remaining unobligated as of August 30 be carried forward into the next
budget period. Eight jurisdictions did not submit estimated FSRs: Alaska,
Los Angeles County, Illinois, Kansas, Maine, Maryland, Nebraska, and
Washington. In addition, data comparable to other jurisdictions were not
available for New York City. These jurisdictions were excluded from our
budget period four obligation analysis, which we conducted using data from
the remaining 45 jurisdictions.

Jurisdictions Reported Challenges to Obligation and Expenditure

Workforce

State and municipal officials told us that the obligation and expenditure
of funds were delayed during the Bioterrorism program's third and fourth
budget periods for a variety of reasons, including issues related to the
workforce, contracting and procurement, and information technology
upgrades.

Officials in 16 of 19 jurisdictions we contacted cited workforce issues
related to recruitment and retention and complex staffing processes as
challenges to timely obligation and expenditure of bioterrorism funds.
According to the Association of State and Territorial Health Officials, 75
to 80 percent of bioterrorism funds have been used for personnel
expenditures.

Seven jurisdiction officials we contacted reported difficulties in
recruiting staff, and some officials reported staff retention problems. As
we previously reported,23 such barriers included noncompetitive salaries
and a general shortage of people with the necessary skills. Officials told
us they had difficulty finding qualified workers, particularly
epidemiologists and laboratory technicians, and two officials indicated
that problems related to recruiting have delayed the expenditure of funds.
In one of those jurisdictions, the public health laboratory had so many
vacancies that there were not enough staff to fully implement a new
bioterrorism and emergency preparedness initiative. Officials indicated
that, within their jurisdictions, skilled workers could find better-paying
positions with other organizations. In one case, a municipality had to
persuade a job candidate to take a significant pay cut to work on the
program. In another instance, the salaries offered by a federal agency
within a state were about 25 percent higher than those offered by the
state. The same state reported that competition from the private sector
and other agencies has resulted not only in a shortage of qualified
applicants for positions, but also in the loss of highly qualified
personnel who had gained extensive experience and expertise working for
the state.

Hiring freezes and complex staffing processes were also cited as delaying
the obligation and expenditure of funds. According to jurisdiction
officials with whom we spoke, as well as officials from the National
Association of County and City Health Officials, program officials in some
jurisdictions

23See Bioterrorism: Preparedness Varied across State and Local
Jurisdictions (GAO-03-373, Apr. 7, 2003), and HHS Bioterrorism
Preparedness Programs: States Reported Progress but Fell Short of Program
Goals for 2002 (GAO-04-360R, Feb. 10, 2004).

were not permitted to hire staff during an across-the-board freeze,
regardless of the federal funding available. Moreover, jurisdiction
officials reported that in some cases the release of a hiring freeze
inundated the hiring process, lengthening it in one state to as long as 10
months. Jurisdiction officials stated that other staffing constraints also
hindered their hiring process. One state mandated mass layoffs in December
2002, which resulted in the loss of approximately 60 health agency
employees, including the entire unit that was handling bioterrorism
contracts. This was followed in early 2003 by an early retirement plan
that resulted in the loss of support staff for the cooperative agreement.
The layoffs and early retirement program delayed bioterrorism contract
payments. Moreover, employees who had been laid off had contractual rights
to placement in new positions, which resulted in the placement into
bioterrorism program positions of some employees with little or no
background in public health. Some fiscal support positions remained
unfilled for several months as a result of the layoffs and early
retirement program, which in turn affected the state's ability to process
bioterrorism program payments.

Because expenditures related to contracting for services and procuring
equipment can occur after the end of a given budget period, program
officials stressed the importance of being able to expend obligated funds
up to 12 months beyond the budget period, as CDC allows for in this
program. To illustrate the importance of such an allowance, one official
gave the example of a contract for $100,000 that began in June 2003,
during the third budget period. Under the terms of the contract, the
contractor would bill the program quarterly. The state in question would
draw down funds for the contract from PMS on a quarterly basis.24 If the
program received the first bill of $25,000 in September 2003, the first
drawdown related to this contract would occur in December 2003 and
subsequent drawdowns would occur in March 2004, June 2004, and September
2004, all within the next budget period.

Jurisdiction officials provided a number of examples of the complexity of
their jurisdictions' contracting processes and the resulting effect on
obligations and expenditures.25 An official in one state reported that the

                          Contracting and Procurement

24The schedule for drawing down funds is determined by each jurisdiction
and varies across jurisdictions. For example, another jurisdiction draws
funds on a weekly basis.

25Issues related to lengthy contracting and procurement requirements are
not limited to this cooperative agreement. For more information on other
domestic preparedness activities affected, see U.S. GAO, Emergency
Preparedness: Federal Funds for First Responders, GAO-04-788T (Washington,
D.C.: May 13, 2004).

Information Technology Upgrades

state had to negotiate and develop contracts with over 100 local health
agencies after it received an influx of funding during the Bioterrorism
program's third budget period. After the local health contracts were
developed, they needed approval by the municipalities or health district
boards, a process that in some cases took several months. Another state
indicated that its contracting process takes a minimum of 2 months. Yet
another stated that the process could take from 3 to 6 months, depending
on which complexities arise. In addition, officials reported that the
request for proposals (RFP) process and bidding requirements delayed their
ability to create contracts and orders for services and equipment. In one
state, the RFP process takes 4 to 7 months, while in another the process
can take as long as 9 months.

The necessity of developing large infrastructure projects related to the
bioterrorism preparedness cooperative agreement has also had an effect on
obligations and expenditures in a number of jurisdictions. These projects,
such as setting up a syndromic surveillance26 system, require the
assistance and expertise of a limited number of national contractors. A
state official informed us that since many of the jurisdictions began
these projects at the same time-after the influx of fiscal year 2002 funds
during the third budget period-some jurisdictions have had to wait for
these contractors to become available. Therefore, some jurisdictions have
had to wait to receive services and equipment, in effect delaying both
obligations and expenditures. In addition, jurisdictions indicated that
effective planning or the development of RFPs for these large projects
required extended periods of time. One official told us the state health
department went through a careful planning process in order to ensure the
proper use of funds, consequently delaying the obligation and expenditure
of funds.

Several jurisdictions reported that their efforts to upgrade their
information technology-a focus area of the Bioterrorism program- delayed
program expenditures. Officials in four jurisdictions noted that it took
time to plan and implement improvements in information technology

26The term "syndromic surveillance" applies to surveillance using
health-related data that precede diagnosis and signal a sufficient
probability of a case or an outbreak to warrant further public health
response. For example, in 1993, Milwaukee public health officials
discovered that the Cryptosporidium parasite, found in tainted water, had
infected some 400,000 people, after they became aware that there were
increased purchases of an antidiarrheal agent from pharmacies. Public
health officials are increasingly exploring the utility of syndromic
surveillance for detecting outbreaks associated with bioterrorism. See
U.S. GAO, Emerging Infectious Diseases: Review of State and Federal
Disease Surveillance Efforts, GAO-04-877 (Washington, D.C.: Sept. 30,
2004).

systems and equipment. For example, in one state, the installation of each
piece of equipment, including new computer systems and videoconferencing
equipment, required a site survey by the state's Department of General
Services to assess the feasibility of the proposed location to house the
equipment. These site surveys could take anywhere from 2 to 12 months to
complete.

In another state, an official reported that funds were designated to
support the state's Internet connectivity to provide local public health
agencies and their public health partners with continuous, high-speed
Internet access. Because significant areas of the state did not have
access to highspeed Internet services, the state conducted engineering
studies, which delayed distribution of funds to local public health
agencies.

Some Jurisdictions Have Streamlined Administrative Processes to Facilitate
Obligation and Expenditure of Funds

While officials described challenges to quickly obligating and expending
bioterrorism funds, some also described techniques they had developed to
address workforce and procurement issues. Officials in three jurisdictions
indicated that being exempted from hiring freezes expedited the obligation
of funds. In one case the jurisdiction exempted bioterrorism positions
from hiring freezes and also gave these positions the highest priority for
hiring. According to another state official, many of the program staff
were hired as contractual or "at will" employees, to bypass the state's
lengthy hiring process. Another state, which was reluctant to hire
permanent fulltime program staff because of concern about the
sustainability of federal funding,27 employed temporary staff instead.

Some officials also described techniques they had developed to address
challenges related to procurement issues. Prior to receiving fiscal year
2002 funds during the program's third budget period, one jurisdiction's
program elected to use a nonprofit fiscal and administrative intermediary
to reduce the delays caused by the municipality's regulations. A program
official told us that using the intermediary also allowed the program to
expedite the routine processes of recruitment, contracting, purchasing,
and ensuring fiscal accountability. According to the official, the
intermediary has a long history of collaborating with that health agency
to quickly and successfully implement new initiatives and is experienced
in grant management. The official stated that the intermediary has reduced
the time that it takes to implement program procedures because it does

27Our previous work has also reported this concern. See GAO-03-373.

not have to follow the municipality's normal requirements.28 For instance,
unlike the health agency, the intermediary is not subject to certain
municipal contracting and procurement requirements. Consequently, it is
able to use statewide general services contracts that can have as little
as a 2-day turnaround. In addition, the intermediary has reduced the
municipality's RFP process from the usual 6 months to 2 months.

One state official indicated that the state health agency had made a
concerted effort to streamline its procurement process. Prior to this
effort, the procurement process had taken as long as 18 months, including
time for the development and distribution of an RFP and for appeals. The
official said that one of the major improvements involved compiling a list
of preapproved contractors, which enables bioterrorism program officials
to purchase directly from those contractors without going through the
time-consuming RFP process.

Another official told us that the health agency staff can place orders and
contracts more rapidly than usual if they designate them as "sole source"
and "single source" procurement, meaning that the needed equipment or
service is available from only one vendor. The official indicated that the
state's bioterrorism program uses this designation whenever they can
demonstrate that only one vendor can provide the equipment or service.
Additionally, the state has "master price" agreements with some vendors
for certain goods and services that are commonly needed by the various
agencies in the state. The official said that staff can quickly place
orders for goods and services that fall under the master price agreement
and receive these items in 2 to 4 days.

Concluding 	After the terrorist events of 2001, HHS's funding to help
jurisdictions prepare for and defend against a possible bioterrorism
attack greatly

Observations 	increased. In 2004, HHS expressed concern that jurisdictions
had not moved quickly enough to use these funds. However, jurisdictions
expended and obligated a substantial amount of program funds as of August
30, 2004. In assessing the pace at which jurisdictions are spending these
funds, it is useful to consider that prudent use of public funds-
particularly for new programs-requires careful and often time-consuming
planning. Once plans have been developed, obligating and expending the

28Officials in this municipality indicated that the intermediary follows
all federal regulations, but has the authority to bypass some municipal
regulations.

funds to implement them takes additional time. It is also important to
recognize that because some expenditures, such as those for contracts,
take place over a period of time rather than as one lump sum early in the
budget period, it may take longer than the program's budget period to
expend these funds. Furthermore, jurisdictions face additional challenges
to quickly obligating and expending funds, partly related to various
administrative processes, although some jurisdictions have found ways to
streamline certain processes.

Agency Comments 	We provided a draft of this report to HHS for comment,
and the agency informed us it had no comments on the draft report.
However, HHS provided technical comments, which we incorporated into the
report as appropriate.

As we arranged with your office, unless you publicly announce its
contents earlier, we plan no further distribution of this report until 30
days
after its issue date. At that time, we will send copies to the Secretary
of
Health and Human Services, the Director of the Centers for Disease
Control and Prevention, appropriate congressional committees, and other
interested parties. We will also make copies available to others who are
interested upon request. In addition, the report will be available at no
charge on the GAO Web site at http://www.gao.gov.

If you or your staffs have any questions about this report, please call
Marjorie Kanof at (202) 512-7114. Major contributors to this report are
listed in appendix V.

Janet Heinrich
Director, Health Care-Public Health Issues

                       Appendix I: Scope and Methodology

For the Department of Health and Human Services (HHS) Centers for
Disease Control and Prevention's (CDC) Public Health Preparedness and
Response for Bioterrorism program cooperative agreement, we provide
information on the extent to which jurisdictions had expended fiscal year
2002 funds awarded for the third budget period as of August 30, 2003, and
August 30, 2004, and had expended fiscal year 2003 funds awarded for the
fourth budget period as of August 30, 2004. We also provide information
on the extent to which fiscal year 2001, 2002, and 2003 Bioterrorism funds
awarded for the program's third and fourth budget periods were obligated,
and challenges jurisdictions have faced when attempting to expend or
obligate the Bioterrorism funds. To provide information on the
expenditure and obligation of Bioterrorism program funds awarded to
jurisdictions, we analyzed documents and interviewed officials from HHS's
Office of the Secretary, CDC, Division of Payment Management (DPM),
and Office of the Inspector General (OIG). In addition, we reviewed
documents and interviewed officials from the Association of State and
Territorial Health Officials and the National Association of County and
City Health Officials, two national associations representing state and
local health officials. We also interviewed jurisdiction audit and
Bioterrorism program officials to obtain information on program
obligations and to determine challenges faced by jurisdictions in
expending and obligating funds, and reviewed documents from the
Congressional Research Service, the Association of Public Health
Laboratories, and other organizations.

To determine expenditures as of August 30, 2003, and August 30, 2004, we
analyzed expenditure data from DPM's Payment Management System
(PMS). We obtained and reviewed data from both the public assistance
(P) accounts and the general (G) accounts.1 Funds accounted for in the
P accounts are specific to certain grants or agreements, while G accounts
merge funds from grants and agreements made to one grantee into one
overall account. While over 90 percent of funds awarded to jurisdictions
through the Bioterrorism program are tracked in P accounts,2 some funds

1All Bioterrorism program funds awarded are accounted for in one of these
two accounts. PMS data do not account for any funds provided to a
jurisdiction as direct assistance and we did not include direct assistance
in our analysis.

2The funds in the P accounts make up approximately 92 percent of
bioterrorism funds awarded to jurisdictions for the third budget
period-August 31, 2001, to August 30, 2003- and approximately 93 percent
of funds awarded for the fourth budget period-August 31, 2003, to August
30, 2004. When funds carried over from prior periods are included, the P
accounts make up 91 percent of all funds awarded during the third budget
period and 85 percent of all funds awarded during the fourth budget
period.

Appendix I: Scope and Methodology

are tracked in the G accounts, including all unexpended funds from budget
periods prior to the fiscal year 2002 funds awarded during the third
budget period and funds related to the Strategic National Stockpile before
and after fiscal year 2002.3 Because expenditures from the G accounts
related to a specific grant or agreement cannot be linked to funds from
specific budget periods, we are not able to describe the rates of
expenditure of Bioterrorism funds tracked in the G accounts. Moreover,
because all funds awarded to jurisdictions prior to the fiscal year 2002
funds are tracked in the G accounts, we are not able to account for all
expenditures during the program's third budget period-August 31, 2001, to
August 30, 2003. Rather, we are able to track expenditures for only the
second portion of that budget period, starting with the fiscal year 2002
emergency supplemental appropriation.4 Expenditure data provided in this
report were obtained from PMS's P accounts and include only funds awarded
as financial assistance beginning with the fiscal year 2002 emergency
supplemental appropriation.5 (See table 2 for information on funding
included in the data sources reviewed.) The OIG annually contracts for an
audit that provides reasonable assurance about the design of controls
included in DPM's PMS, including controls for recording award
authorizations, processing awardee requests for funds, and reporting
payment and recipient disbursement information to the awarding agency.6 We
did not conduct a review to determine the appropriateness of any
jurisdiction expenditure.

3Prior to the fiscal year 2002 emergency supplemental appropriation, all
funds for the Bioterrorism program were tracked in G accounts. At CDC's
request, starting with the 2002 emergency supplemental appropriation, DPM
placed almost all program funding into P accounts in order to better track
expenditures.

4Department of Defense and Emergency Supplemental Appropriation for
Recovery from and Response to Terrorist Attacks on the United States Act,
Pub. L.107-117, 115 Stat. 2230 (2002).

5In 10 jurisdictions, funding provided for smallpox activities in May 2003
was credited to the jurisdiction's fiscal year 2003 period. In these
cases, the funds should have been credited to the fiscal year 2001/2002
period, and the P account data in this report reflect the corrected
funding levels. These jurisdictions were Arkansas, California,
Connecticut, Georgia, Los Angeles County, Maine, Minnesota, Ohio,
Washington, and Wyoming.

6See HHS OIG, Report on Department of Health and Human Services, Program
Support Center, Division of Payment Management's Controls Placed in
Operation and Tests of Operating Effectiveness, A-17-03-000009
(Washington, D.C.: Oct. 6, 2003), and HHS, HHS FY 2004 Performance and
Accountability Report (Washington, D.C.: Dec. 13, 2004).

Appendix I: Scope and Methodology

Table 2: Funds Included in Sources of Bioterrorism Expenditure and
Obligation Data

Bioterrorism funds Bioterrorism Bioterrorism tracked through funds tracked
funds tracked the notices of through the through the cooperative financial
status PMS P accounts agreement reports

                            Fiscal year 2001 funds             X            X 
                            Fiscal year 2002 funds    X        X            X 
                            Fiscal year 2003 funds    X        X            X 
                             Funds carried forward             X            X 
                         from budget periods prior                   
                               to fiscal year 2001                   
                             Funds carried forward             X            X 
                            from fiscal year 2001a                   
                                Strategic National    b        X            X 
                                   Stockpile funds                   

Source: GAO analysis of HHS documents.

Note: The Notice of Cooperative Agreement also includes data on funds
awarded as direct assistance. We did not include those funds in our
analysis.

aData on funds carried forward from fiscal year 2001 are only included in
the Notices of Cooperative Agreement and the Financial Status Reports from
the fourth budget period forward.

bFiscal year 2002 Strategic National Stockpile Funds are tracked through
the P accounts.

To determine obligation data, we reviewed the financial status reports
(FSR) jurisdictions were required to submit to CDC at the end of the third
budget period (August 31, 2001, to August 30, 2003) and the estimated FSRs
for the fourth budget period (August 31, 2003, to August 30, 2004) that
jurisdictions were requested to submit by August 1, 2004. Unlike PMS's P
account data, the FSRs include information on all Bioterrorism funds
awarded as financial assistance, including both fiscal year 2001 and 2002
funds awarded during the third budget period, funds carried over from
prior periods, and funds related to the Strategic National Stockpile.
Along with FSRs for the entire third budget period, CDC asked
jurisdictions to submit FSRs reflecting only the fiscal year 2002
emergency supplemental appropriation funds. However, because few
jurisdictions submitted such emergency supplemental FSRs, we were unable
to use these FSRs. Because of this, we are reporting on obligation data
obtained from the FSRs for the entire third budget period, encompassing
both fiscal year 2001 and 2002 funds; this is a different period from that
used for the expenditure data provided in this report, which describe only
expenditures of the third budget period's fiscal year 2002 funds. Final
FSRs for the fourth budget period were not available in sufficient time to

Appendix I: Scope and Methodology

be used in our work. For this period, we used the estimated FSRs
jurisdictions were asked to submit prior to the end of the budget period.
While the unobligated amounts reported on the final FSR may vary from the
estimates, CDC determined that these estimates were sufficiently accurate
to use for planning purposes. Seven jurisdictions did not submit an
estimated FSR, but did provide information in their application for budget
period five funds on estimated unobligated balances as of August 30, 2004.
Eight jurisdictions did not provide any information on estimated
unobligated balances and were excluded from our analysis.7

In addition to reviewing jurisdictions' FSRs, we also reviewed the Notices
of Cooperative Agreement (NCA), which are provided by CDC to jurisdictions
and provide information on total Bioterrorism program funds awarded to
them for a budget period. Unlike the PMS P account data, the NCAs include
information on all funds awarded for the program's entire third budget
period, including funds from both fiscal years 2001 and 2002, and
information on funds carried over from previous periods, funds related to
the Strategic National Stockpile, and funds awarded as direct assistance.8
To determine obligation rates, we compared the information on total funds
awarded obtained from the NCAs and FSRs to obligation data that
jurisdictions reported in the third budget period FSRs and estimated in
the fourth budget period FSRs.

We interviewed CDC staff to resolve any inconsistencies between the
information provided on the FSRs and information provided in the NCAs and
modified data as appropriate. In addition, because the data related to
obligation are self-reported by jurisdictions to CDC, we interviewed
officials at CDC and HHS's OIG to obtain information on any work done to
determine the reliability of these data. We also contacted the
jurisdiction audit agencies in all the jurisdictions by e-mail or
telephone to determine whether they had performed any work to determine
the reliability of the obligation data. Data for the third budget period
from 18 jurisdictions and for the fourth budget period from 1 jurisdiction
can be considered reliable

7These jurisdictions were Alaska, Illinois, Kansas, Los Angeles County,
Maine, Maryland, Nebraska, and Washington. In addition, data from New York
City were not comparable to those from other jurisdictions. Because of
this, this jurisdiction was excluded from our obligations analysis.

8Because the NCAs include awarded funds not included in the P accounts,
they could not be used to describe expenditure rates for specific budget
periods. In addition, we did not include data on direct assistance in our
analysis.

Appendix I: Scope and Methodology

based on the work of OIG and jurisdiction audit agencies.9 However, in
many cases, insufficient work had been done to assess the reliability of
the obligation data reported by jurisdictions. In these cases, the
information presented is as reported by the jurisdictions, and we cannot
attest to its reliability. In addition, we did not conduct a review to
determine the appropriateness of any obligations reported by jurisdictions
to CDC.

To describe factors that jurisdictions say contributed to delays in
obligating and expending funds and actions some jurisdictions took to
address those factors, we contacted selected jurisdictions via e-mail in
two phases. Initially, the team contacted 10 jurisdictions to gather
information on why they may have had unobligated Bioterrorism funds.10 We
analyzed the obligation and expenditure data to identify jurisdictions
with high and low rates of unobligated and unexpended Bioterrorism funds,
for both the third and fourth budget periods. Jurisdictions were
categorized as those with (1) reported high unobligated balances, (2)
reported low unobligated balances, or (3) reported low unobligated
balances and high levels of unexpended funds. We then selected
jurisdictions from each of the groups, taking into account diversity in
geographic location, population size, urban and rural status, and their
expenditure and obligation patterns. We e-mailed each jurisdiction, and we
followed up by telephone to obtain any necessary clarification on
responses.

For phase 2, we e-mailed 3 jurisdictions from the phase 1 group and 9
additional jurisdictions. These 12 jurisdictions had expended from 50 to
87 percent of their third budget period funds by August 30, 2003, the end
of that period, but had expended 100 percent of those funds by August 30,
2004.11 We followed up by telephone and e-mail to obtain any necessary
clarification on responses.

9OIG determined that the third budget period obligation data reported by
Chicago, the District of Columbia, Florida, Georgia, Illinois, Los Angeles
County, Maryland, Massachusetts, Michigan, New Jersey, New York, New York
City, North Carolina, Ohio, Pennsylvania, Texas, and Virginia were
reliable. In addition, our interviews with jurisdiction audit bodies
identified work performed to determine the reliability of Connecticut's
third and fourth budget period obligation data.

10These jurisdictions were Chicago, Connecticut, Delaware, Georgia, Los
Angeles County, Maryland, Massachusetts, Michigan, New York City, and
North Dakota.

11These jurisdictions were Alaska, Kansas, Louisiana, Minnesota, Missouri,
New Mexico, Rhode Island, Tennessee, Texas, and three jurisdictions also
included in the first e-mail phase-Chicago, Maryland, and New York City.

Appendix II: Bioterrorism Program's Budget Period Three Expenditures

Table 3: Public Health Preparedness and Response for Bioterrorism
Program's Budget Period Three Fiscal Year 2002 Funds Expended from P
Accounts, by Jurisdiction, as of August 30, 2003, and August 30, 2004

                                          Percentage of P     Percentage of P 
                                              account                 account 
                                         funds expended as  funds expended as 
                                                of                         of 
       Jurisdiction     P account funds     August 30, 2003   August 30, 2004 
         Alabama            $14,900,443                  70 
          Alaska              6,350,514                  61 
         Arizona             16,422,170                  56 
         Arkansas            11,425,317                  55 
       Californiaa           56,806,825                  56 
         Colorado            14,475,766                  62 
       Connecticut           10,366,586                  56 
         Chicago             11,447,312                  65 
         Delaware             6,744,505                  30 
District of Columbia      11,273,558                  20 
         Florida             40,581,081                  76 
         Georgia             24,045,179                  26 
          Hawaii              7,546,593                  57 
          Idaho               7,880,688                  63 
        Illinoisa            26,101,381                  63 
         Indiana             18,491,799                  25 
           Iowa              11,110,544                  62                98 
          Kansas             10,985,143                  87               100 
         Kentucky            13,937,647                  47                62 
    Los Angeles County       24,511,171                  20                52 
        Louisiana            14,949,145                  65               100 
          Maine               8,203,236                  48                65 
         Maryland            16,791,405                  56               100 
      Massachusetts          19,134,801                   4                27 
         Michigan            27,125,655                  64                89 
        Minnesota            16,525,446                  82                97 
       Mississippi           11,332,975                  54                59 
         Missouri            17,456,448                  72               100 
         Montana              7,008,529                  61                95 
         Nebraska             8,809,733                  45                91 
          Nevada              9,448,659                  49                86 
      New Hampshire           7,451,193                  33                68 

Appendix II: Bioterrorism Program's Budget Period Three Expenditures

                                     Percentage of P          Percentage of P 
                                         account                      account 
                                   funds expended as of  funds expended as of 
    Jurisdiction  P account funds        August 30, 2003      August 30, 2004 
     New Jersey        23,732,611                     16 
     New Mexico         9,049,686                     68 
     New Yorka         29,418,122                     55 
New York City       20,274,180                     70 
North Carolina      22,919,940                     60 
    North Dakota        6,429,710                     35 
        Ohio           30,803,150                     67 
      Oklahoma         12,682,086                     61 
       Oregon          12,616,956                     48 
    Pennsylvania       32,340,936                     56 
    Rhode Island        7,333,840                     50 
South Carolina      13,931,820                     71 
    South Dakota        6,680,486                     62 
     Tennessee         16,581,744                     72 
       Texas           51,421,771                     56 
        Utah            9,447,160                     59 
      Vermont           6,355,413                     60 

           Virginia               20,758,682             61                82 
          Washington              20,190,120             56                87 
        West Virginia              8,980,655             76                86 
          Wisconsin               16,940,986             81                91 
           Wyoming                 6,430,629             55                67 
            Total                $894,962,130            56                85 

Source: GAO analysis of Department of Health and Human Services Division
of Payment Services Payment Management System data.

Note: These data do not include all funds awarded to jurisdictions through
the Bioterrorism program.
While the program's third budget period was a 24-month period, extending
from August 31, 2001, to
August 30, 2003, and using funds from both fiscal years 2001 and 2002,
these expenditure data
reflect only fiscal year 2002 funds. In addition, the public assistance
(P) accounts do not include funds
awarded for the Strategic National Stockpile awarded after fiscal year
2002. Those funds are tracked
in general (G) accounts, and cannot be tracked by a specific budget
period. The
P accounts also do not include funds provided to jurisdictions as direct
assistance.

aData on funds awarded to California, Illinois, and New York do not
include funds awarded to
Los Angeles County, Chicago, or New York City.

Appendix III: Bioterrorism Program's Budget Period Four Expenditures

Table 4: Public Health Preparedness and Response for Bioterrorism
Program's Budget Period Four Funds Expended from P Accounts, by
Jurisdiction, as of August 30, 2004

                                                      Percentage of P account 
                                                         funds expended as of 
                    Jurisdiction    P account funds           August 30, 2004 
                         Alabama        $15,138,887 
                          Alaska          6,041,857 
                         Arizona         17,586,381 
                        Arkansas         10,664,828 
                     Californiaa         61,994,981 
                         Chicago         11,378,246 
                        Colorado         15,048,945 
                     Connecticut         12,450,843 
                        Delaware          6,429,371 
            District of Columbia         10,877,012 
                         Florida         43,372,308 
                         Georgia         23,655,673 
                          Hawaii          7,450,193 
                           Idaho          7,639,590 
                       Illinoisa         27,855,766 
                         Indiana         18,869,769 
                            Iowa         11,493,758                        44 
                          Kansas         10,948,648                        72 
                        Kentucky         13,766,539                        59 
              Los Angeles County         27,263,067                        30 
                       Louisiana         15,137,245                        41 
                           Maine          7,474,025                        66 
                        Maryland         17,314,106                        64 
                   Massachusetts         19,721,554                        76 
                        Michigan         28,981,577                        79 
                       Minnesota         15,788,416                        93 
                     Mississippi         11,322,442                        59 
                        Missouri         17,908,941                        74 
                         Montana          7,147,269                        63 
                        Nebraska          8,624,463                        27 
                          Nevada          9,490,029                        55 

Appendix III: Bioterrorism Program's Budget Period Four Expenditures

                                                      Percentage of P account 
                                                         funds expended as of 
                Jurisdiction      P account funds             August 30, 2004 
               New Hampshire            7,164,384 
                  New Jersey           24,725,667 
                  New Mexico            9,342,376 
                   New Yorka           31,675,789 
               New York City           23,024,362 
              North Carolina           24,002,282 
                North Dakota            6,257,186 
                        Ohio           31,484,830 
                    Oklahoma           13,228,697 
                      Oregon           13,237,862 
                Pennsylvania           33,719,067 
                Rhode Island            7,305,761 
              South Carolina           14,174,122 
                South Dakota            6,338,591 
                   Tennessee           18,175,779 
                       Texas           55,225,049 
                        Utah            9,914,452 

               Vermont                   6,246,379                      62 
               Virginia                 22,068,328                      66 
              Washington                16,389,229                      59 
            West Virginia                8,811,416                      65 
              Wisconsin                 17,361,226                      60 
               Wyoming                   5,839,684                      48 
                Total                  $925,110,907                     53 

Source: GAO analysis of Department of Health and Human Services Division
of Payment Services Payment Management System data.

Note: The program's fourth budget period was a 12-month period, extending
from August 31, 2003, to August 30, 2004, using fiscal year 2003 funds.
The Payment Management System's public assistance (P) accounts do not
include funds for the Strategic National Stockpile awarded after fiscal
year 2002 or funds carried over from budget periods prior to the emergency
supplemental appropriation issued in February 2002. In addition, the P
accounts do not include funds provided to jurisdictions as direct
assistance.

aFunds awarded to California, Illinois, and New York do not include funds
awarded to Los Angeles County, Chicago, or New York City.

Appendix IV: Unobligated Bioterrorism Program Funds Reported by
Jurisdictions

Table 5: Unobligated Public Health Preparedness and Response for
Bioterrorism Program Funds Reported by Jurisdictions, as of the End of
Each Budget Period

Budget period threea Budget period fourb

                               Percentage of awarded    Percentage of awarded 
                                      funds reported           funds reported 
         Jurisdiction       Total awardc unobligated Total awardc unobligated 
           dAlabama                    $16,559,338 7       $16,786,043        
           Alaskad                       7,738,197 0                      e e 
           Arizonaf                     17,998,231 9        20,377,936        
          Arkansasf                    12,612,579 16        13,032,389        
         Californiag                   62,166,027 14        70,101,613        
         Chicagod, h                    12,627,939 4        11,977,908        
          fColorado                    16,531,912 11        17,896,688        
         Connecticuti                  11,864,756 18        14,196,592        
           Delaware                     8,054,596 41        9,881,459         
District of Columbiaf, h            12,705,295 62        16,953,474        
           Floridah                     43,649,932 2        46,997,742        
          Georgia h                    26,817,366 33        34,365,094        
            Hawaii                      8,929,643 12        8,801,780         
            Idaho                       8,515,356 17        9,366,998         
       Illinoisd, g, h                  27,849,480 2                      e e 

Indiana 19,243,012 25 26,971,704 0

Iowaf 11,823,150 5 12,726,247 16 e e

Kansas 12,384,717 0

Kentuckyd 14,025,286 35 18,169,281 12 e e

Los Angeles Countyh 25,726,260 3
Louisiana 16,811,200 5 17,009,305 36

e e

Maine 8,894,028 37

e e

Marylandd, h 18,607,520 0
Massachusettsh, j 22,124,540 51 32,377,306 23
Michigand, h 30,104,203 7 35,271,511 8
Minnesota 18,534,985 7 18,182,765 2
Mississippi 12,197,005 42 17,112,807 40
Missourif 19,060,349 1 19,160,450 3
Montana 8,292,560 10 7,380,744 16

e e

Nebraska 9,526,033 3
Nevada 10,886,894 16 10,953,790 30

Appendix IV: Unobligated Bioterrorism Program Funds Reported by
Jurisdictions

Budget period threea Budget period fourb

                             Percentage of awarded      Percentage of awarded 
                                    funds reported             funds reported 
      Jurisdiction        Total awardc unobligated   Total awardc unobligated 
      New Hampshire                   8,426,601 15         8,725,305          
       New Jerseyh                   26,367,685 22         30,660,360         
       New Mexico                    12,546,177 20         13,319,379         
      New Yorkg, h                    33,962,894 1         35,863,566         
      New York City                            k k                        k k 
    North Carolina h                  24,548,953 2         26,020,533         
      North Dakota                     6,747,355 0         6,423,043          
          Ohioh                      32,724,507 21         35,368,314         
        Oklahoma                     13,322,159 17         16,248,592         
         Oregon                      14,667,495 18         17,039,499         
     Pennsylvania h                  33,209,653 15         38,212,027         
      Rhode Island                     8,634,168 0         7,545,070          
     fSouth Carolina                 14,954,089 24         15,077,330         
      South Dakota                     7,134,836 7         6,975,546          
        Tennessee                     17,231,897 0         19,452,073         
         Texas h                     54,035,277 14         68,858,586         

           Utah            11,821,907         0        10,423,316           2 
         Vermont            7,704,711        20        7,973,690           32 
       Virginiad, h        24,026,543        19        29,313,295           0 
        Washington         22,116,478        11            e                e 
      West Virginia        10,316,254        17        10,007,010           5 
        Wisconsin          18,846,878        11        20,255,129          11 
         Wyoming            7,362,222        25        5,953,862           12 

Total $987,149,159 14 $957,787,150 19

Source: GAO analysis of jurisdiction Financial Status Reports (FSR) and
annual program applications.

aThe program's third budget period was a 24-month period, extending from
August 31, 2001, to August 30, 2003, and encompassing both fiscal year
2001 and 2002 funds. Obligation data for this period are based on the FSR
submitted after the end of the budget period.

bThe program's fourth budget period was a 12-month period, extending from
August 31, 2003, to August 30, 2004, and encompassing fiscal year 2003
funds. Obligation data for this period are based on the estimated FSR
submitted prior to the end of the budget period.

cTotal funding awarded to jurisdictions as financial assistance through
the cooperative agreement, including all funds carried over from prior
budget periods.

dData on awarded funds were not consistent between jurisdiction FSRs and
the Notices of Cooperative Agreement. Based on information provided by
officials at the Centers for Disease Control and Prevention, we determined
the correct award amounts. In no case did the difference account for more
than 4 percent of the total awarded funds.

Appendix IV: Unobligated Bioterrorism Program Funds Reported by
Jurisdictions

eNo data fiscal year 2003 data were available for these jurisdictions.

fThese jurisdictions did not submit estimated FSRs for the fourth budget
period, but did provide information in their application on estimated
unobligated balances as of August 30, 2004.

gData on funds awarded to California, Illinois, and New York do not
include funds awarded to Los Angeles County, Chicago, and New York City.

hData for the third budget period have been determined to be reliable.

iData for the third and fourth budget period have been determined to be
reliable.

jData on funds awarded to Massachusetts were not consistent between the
jurisdiction FSR and the Notice of Cooperative Agreement. The jurisdiction
did not account for $6,682,740 carried over from prior budget periods in
its fourth budget period estimated FSR.

kData comparable to other jurisdictions were not available.

Appendix V: GAO Contact and Staff Acknowledgments

GAO Contact Marjorie Kanof, (202) 512-7114

Acknowledgments 	In addition to the person named above, key contributors
to this report were Helene Toiv, Emily Gamble Gardiner, Lucia P. Fort,
Roseanne Price, and Jessica Cobert.

Related GAO Products

HHS Bioterrorism Preparedness Programs: States Reported Progress but Fell
Short of Program Goals for 2002. GAO-04-350R. Washington, D.C.: February
10, 2004.

Bioterrorism: Public Health Response to Anthrax Incidents of 2001.
GAO-04-152. Washington, D.C.: October 15, 2003.

Emerging Infectious Diseases: Review of State and Federal Disease
Surveillance Efforts. GAO-04-877. Washington, D.C.: September 30, 2004.

Emergency Preparedness: Federal Funds for First Responders. GAO-04788T.
Washington, D.C.: May 13, 2004.

Bioterrorism: Preparedness Varied across State and Local Jurisdictions.
GAO-03-373. Washington, D.C.: April 7, 2003.

Bioterrorism: The Centers for Disease Control and Prevention's Role in
Public Health Protection. GAO-02-235T. Washington, D.C.: November 15,
2001.

Bioterrorism: Review of Public Health Preparedness Programs. GAO-02149T.
Washington, D.C.: October 10, 2001.

Bioterrorism: Public Health and Medical Preparedness. GAO-02-141T.
Washington, D.C.: October 9, 2001.

Bioterrorism: Coordination and Preparedness. GAO-02-129T. Washington,
D.C.: October 5, 2001.

Bioterrorism: Federal Research and Preparedness Activities. GAO-01915.
Washington, D.C.: September 28, 2001.

Combating Terrorism: Observations on Biological Terrorism and Public
Health Initiatives. GAO/T-NSIAD-99-112. Washington, D.C.: March 16, 1999.

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