Insurance Commissioner disagrees with part of audit of volunteer fire dept. grants

RALEIGH — A state audit of volunteer fire department grants issued by the N.C. Department of Insurance has cited problems with the way the grants were distributed.

The audit included $56.2 million in grants distributed by the N.C. Department of Insurance (DOI) spanning Jan. 1, 2021, through Oct. 31, 2022.

According to the press release by the State Auditor’s office, “As of Nov. 30, 2022, $41.1 million (73%) was disbursed to volunteer fire departments.”

Two findings were included in the audit made claims that the grants were made with “limited verification” the departments were eligible to either receive funds or had “the greatest need” of the funds and also that DOI “did not disburse Fire Grants to volunteer fire departments in accordance with DOI policy.”

“DOI management stated it did not verify all self-reported information used to determine whether volunteer fire departments were eligible to receive grants and were most in need because it did not have adequate staff to verify recipient self-reported information nor did they reassign other DOI staff,” the audit states. “Instead, DOI required the volunteer fire departments to attest that their information was correct as part of the application process.”

The audit also stated, “According to DOI management, some Fire Grants were disbursed without documentation that supported the volunteer fire department’s reported expenditures because of an increase in the number of grants DOI was required to administer.”

The audit made several recommendations based on its findings, such as DOI independently verifying information reported to DOI by a volunteer fire department, DOI making sure it has the staff to verify the information, and making sure the grants are given out “in accordance with DOI policy.”

DOI’s response agreed with the first point of the audit but disagreed with the second. 

“The Department of Insurance appreciates the work the Office of the State Auditor does and its report on the Office of State Fire Marshal grants,” Insurance Commissioner and State Fire Marshal Mike Causey said in an emailed statement to North State Journal. “Our department is always looking for ways to optimize and enhance our processes in the awarding of grants. We believe that we were administering the grants in accordance with the applicable statutes and rules, although we understand that the State Auditor disagrees.

“In future grant programs, we will require that county finance managers review and verify financial data before a grant application is submitted to the Department,” wrote Causey. “While we continue to examine each of the issues outlined in the audit, including our own self-reporting mechanism structure, our office is fully resolved to support the professional work our staff does to enhance volunteer fire departments through the Office of State Fire Marshal.”

The Volunteer Fire Department Fund was established in 1987 to provide grants to pay for equipment and capital improvements. Under state statute, DOI is responsible for the issuance of the grants in four areas that include fire grants, base allocation grants, supplemental grants and emergency reserve grants.

Fire grants cover equipment purchases and capital improvements to ensure fire protection services.
DOI awarded $18.5 million of fire grant funds to 968 volunteer fire departments for an average of $19,082 per volunteer fire department during the period covered by the audit. As of Nov. 30, 2022, “$13.0 million (70%) was disbursed to 779 volunteer fire departments for an average of $16,678 per volunteer fire department,” according to the audit report.

Base allocation grants cover mitigation of the financial impact of the COVID-19 pandemic, including a volunteer fire department’s ability to fundraise for additional money. DOI awarded $8.0 million of base allocation grant funds to 798 volunteer fire departments for an average of $10,000 per volunteer fire department during the months covered by the audit, which notes that 100% of those funds had been distributed as of Nov. 30, 2022.

Supplemental grants are awarded to volunteer fire departments, rescue or emergency medical services (EMS) units for operations and functions uses. According to the audit, DOI awarded $29.8 million of supplemental grant funds to 851 recipients for an average of $35,000 per recipient and as of Nov. 30, 2022, $20.1 million (68%) had been disbursed.

Emergency reserve grants are awarded to volunteer fire departments for buying equipment or other capital needs in the event of an emergency. The audit reported no grants of this nature were disbursed as of Oct. 31, 2022.

By A.P. Dillon

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