Order Code RS22349
Updated July 28, 2006
CRS Report for Congress
Received through the CRS Web
FY2006 Homeland Security Grant Distribution
Formulas: Issues for the 109th Congress
Analyst in American National Government
Government and Finance Division
In FY2003 and FY2004, the Department of Homeland Security (DHS) allocated
State Homeland Security Grant Program (SHSGP) and Law Enforcement Terrorism
Prevention Program (LETPP) funding based on a formula that consisted of guaranteeing
each state a 0.75% amount of total program appropriations. The Department of
Homeland Security chose to allocate the remainder of appropriations based on the state’s
population percentage of the national population. In FY2005, Congress required the
Department of Homeland Security to allocate funding in the same manner as in FY2004.
Congress, in P.L. 109-90 (FY2006 Department of Homeland Security appropriations),
legislated similar allocation guidance as in the FY2003 and FY2004 appropriations.
In FY2006, DHS decided it will allocate funding to states based on risk and need, rather
than on population.
This report summarizes the distribution method the Department of Homeland
Security expects to use in allocating FY2006 state and local homeland security grant
funding. Additionally, it discusses some potential issues associated with the
department’s new grant allocation guidance. The report does not discuss administrative
changes to the department’s homeland security programs beyond the changes to the
This report will be updated when congressional- or executive-branch actions
In FY2003 and FY2004, Congress required the Department of Homeland Security
(DHS) to allocate 0.75%1 of total appropriations for homeland security programs2 to each
P.L. 107-56 (USA PATRIOT Act), Section 1014.
For information on FY2006 appropriations for DHS homeland security programs, see CRS
Report RS22050, FY2006 Appropriations for State and Local Homeland Security, by Shawn
Congressional Research Service ˜ The Library of Congress
state with remainder of total appropriations at the discretion of DHS.3 DHS chose to use
the state’s population percentage of the national population as the basis for this secondary
distribution, and to distribute a base amount of 0.25% to U.S. insular areas. Congress
required DHS to allocate FY2005 homeland security grants in the same manner as
FY2004.4 In FY2006 DHS alters the distribution funding formula by substituting
population with a risk- and needs-based formula.
FY2006 Distribution Method
In October 2005, Congress appropriated $550 million for the State Homeland
Security Grant Program (SHSGP), $400 million for the Law Enforcement Terrorism
Prevention Program (LETPP), $740 million for high-threat, high-risk urban areas — part
of $1.2 billion for the Urban Area Security Initiative (UASI) — and amounts for other
state and local homeland security assistance programs.5 Congress required DHS to
allocate a base amount of 0.75% of total funds appropriated for SHSGP and LETPP to
each state. The distribution method for the remainder of appropriations for SHSGP and
LETPP was at the discretion of DHS. Additionally, Congress authorized the allocation
of UASI funding to be at the discretion of DHS.6 On December 2, 2005, DHS issued its
Fiscal Year 2006 Homeland Security Grant Program: Program Guidance and
Application Kit to provide information and guidance on state and local homeland security
The FY2006 guidance states that DHS elected to provide the 0.75% of total
appropriations as a base (instead of as a minimum) to states under SHSGP and LETPP.7
Additionally, DHS has chosen to allocate the remainder of total appropriations based on
risk and need. The guidance also states that UASI funds will be allocated based on risk
and need — in FY2003, FY2004, and FY2005 UASI funds were allocated based on risk
State and local risk will be determined by DHS using a risk formula developed by
the Office of Grants and Training (G&T) — formerly the Office for State and Local
Government Coordination and Preparedness — in conjunction with other DHS and
federal entities. This formula, however, is not publicly available at this time, and may not
be available in the future due to its possible security classification.
P.L. 108-7, P.L. 108-11, and P.L. 108-90.
P.L. 108-334, Title III.
P.L. 109-90 (FY2006 DHS appropriations), Title III. Other grant programs include Assistance
to Firefighters, Emergency Management Performance Grants, and Citizen Corps.
For a discussion of the difference between a base and minimum, see CRS Report RL33050,
Risk-Based Funding in Homeland Security Legislation: Issues for the 109th Congress, by Shawn
U.S. Department of Homeland Security, Office of Grants and Training, Fiscal Year 2006
Homeland Security Grant Program: Program Guidance and Application Kit (Washington: Dec.
2005), p. 52.
Table 1. State Homeland Security Grant Program and Law
Enforcement Terrorism Prevention Program Base Allocations:
FY2005 and Estimated FY2006
(amounts in millions)
States and U.S. Insular areas
Each state, DC, and Puerto Rico
U.S. Virgin Islands, American Samoa,
Guam, and the Northern Mariana Islands
Total base amount
Source: Amounts based on CRS calculations of FY2005 (P.L. 108-334) and FY2006 (P.L. 109-90) DHS
appropriations and for SHSGP and LETPP.
Risk. As defined by DHS, its risk calculations are based upon:
the consequences of a specified attack on a particular asset;
the vulnerability of that asset to that particular threat; and
threat to that asset.9
The DHS risk formula is to consist of two risk calculations:
asset-based risk, which uses threat values derived from U.S. intelligence
community assessment of threats to specific critical infrastructure; and
geographic-based risk, which uses values based on inherent risks
associated to geographical areas (i.e., states or urban areas), taking into
account such factors as international borders, terrorism reporting and
investigations, and population density.
The risk associated with assets combined with geographical areas will produce a state and
locality terrorism risk score.10
Need. Coupled with the DHS risk formula, state and local homeland security needs
will be assessed through a capability review, which is currently underway. This review
is an effort to help states determine their own homeland security capabilities — identified
and explained in the National Preparedness Goal11 — through an evaluation of each
state’s homeland security program and the state’s ability to address those needs.12
Following this review, states are to submit a Program and Capability Enhancement Plan
and an Investment Justification with their FY2006 Homeland Security Grant Program
For information on the National Preparedness Goal, see CRS Report RL32803, The National
Preparedness System: Issues for the 109th Congress, by Keith Bea.
Fiscal Year 2006 Homeland Security Grant Program: Program Guidance and Application Kit,
The enhancement plan is a multi-year management plan that identifies state
homeland security objectives that are additional to G&T homeland security program
objectives and funding. The investment justification is to identify specific homeland
security needs from the enhancement plan that states wish to address using FY2006
HSGP funds. Additionally, the investment justification is to outline implementation plans
that will assist the states in enhancing and developing their homeland security
State applications will be evaluated and scored through a peer review process based
on the effectiveness of each state’s enhancement plan to address its needs and the plan’s
reduction of the state’s overall risk. States will be notified of their total risk- and needsbased funding allocation at the time of award.14
In August 2004, the National Commission on Terrorist Attacks Upon the United
States (9/11 Commission) criticized the allocation of federal homeland security assistance
and recommended that the distribution not “remain a program for general revenue
sharing.”15 The former members of the 9/11 Commission, acting as private citizens
conducting the 9/11 Public Discourse Project, gave Congress and DHS, in its final report
dated December 5, 2005, a failing grade on distribution of homeland security funding to
Congress has still not changed the underlying statutory authority for homeland
security grants, or benchmarks to insure that funds are used wisely. As a result,
homeland security funds continue to be distributed without regard for risk,
vulnerability, or the consequences of an attack, diluting the national security benefits
of this important program.16
Almost immediately after DHS announced the FY2006 allocations, some states,
urban areas, and their congressional delegations complained about reductions in grants
as compared to FY2005.17 Members of Congress raised questions about the suitability of
the methods DHS used to allocate the grants, and they pursued those questions in
congressional oversight hearings.18
National Commission on Terrorist Attacks Upon the United States, The 9/11 Commission
Report (Washington: GPO, July 2004), p. 396.
9/11 Public Discourse Project, Final Report on 9/11 Commission Recommendations, p. 1,
available at [http://www.9-11pdp.org], visited Dec. 8, 2005.
See as examples “Lieberman Assails Homeland Security Grant Distribution,” States News
Service, May 31, 2006; and Lara Jakes Jordan, “N.Y., D.C. Get Less Counterterror Funds,”
Associated Press, May 31, 2006;
Two hearings have been held since DHS announced state and urban area grant allocations on
May 31, 2006 — House Committee on Government Reform hearing on grants for the National
Capital Region, June 15, 2006; and the House Committee on Homeland Security hearing on DHS
Given this criticism, DHS’s development of a risk- and needs-based formula and its
determination to allocate a guaranteed base to states raise some policy questions that
Congress may wish to address through oversight of DHS’s administration of FY2006
HSGP grants. Some of the issues include:
guaranteed minimum vs. guaranteed base;
risks vs. needs; and
delayed awarding of state allocations.
Minimum Versus Base.19 DHS has elected to provide a guaranteed base to every
state and U.S. insular area from SHSGP and LETPP funding. Congress authorized DHS
discretion in determining if the 0.75% of total appropriations guaranteed to states is to be
either a minimum or a base.20
If DHS were to use a 100% risk-based formula in determining state allocations, a
minimum is the smallest amount each state would receive following risk-based state
allocations. Were the risk-based calculations to result in any state allocation less than the
statutorily defined minimum, allocations of states receiving more than the minimum
would be reduced proportionally, so that all states would receive at least the minimum.
A base is an amount guaranteed to each state without regard to risk or need. After
allocation of base amounts, states might receive further funding based on risk and needs.
Policy options for the method of grant allocation could include a guaranteed base,
guaranteed minimum, or neither. That is, policymakers may choose to decide whether to
(1) provide every state with the same amount of base funding, and then allocate the
remainder of total appropriations based on risk and need; (2) to allocate total
appropriations based on risk and need, and then if a state does not receive a certain
amount or percentage (minimum), provide additional funding to the state to meet this
amount or percentage, with a proportional reduction of funding to the other states; or (3)
to allocate funding to states based 100% on risk and need.
Risk Versus Need. DHS has elected not to use a 100% risk-based formula for
allocating the remainder of total appropriations following the distribution of state base
amounts. Instead, DHS has developed a two-part approach to determining state
allocations. This approach consists of a DHS risk assessment and a state’s justification
of need for funding. DHS has not informed states, through its FY2006 guidance, what
percentage of remaining funds will be allocated based on risk and what percentage of
remaining funds will be allocated based on need, or if the two will be combined into a
grants, June 21, 2006.
For an in-depth discussion on minimum versus base, see CRS Report RL33050, Risk-Based
Funding in Homeland Security Grant Legislation: Issues for the 109th Congress, by Shawn
P.L. 109-90, Title III.
One could argue that by not allocating strictly on risk, DHS has not addressed the
critics, such as the 9/11 Commission, in its 2004 report, who advocate a purely risk-based
allocation of homeland security funding. By coupling needs with risk, DHS might be
providing funding to states that do not have a high risk of terrorism. Conversely, by
allocating funding based on both risk and needs, DHS is arguably addressing not only
terrorism risks, but also a state’s capability to address those terrorism risks.
Congress may wish to address the issue of risk- and needs-based funding by
reviewing FY2006 state allocations, once they have been announced by DHS at a later
date, and determining if the new distribution formula meets the homeland security needs
of the nation as a whole. If Congress were to determine that this new distribution method
does not address the national needs, it might consider imposition of a distribution method
beyond the present statutory requirement of a guaranteed amount of 0.75% to every state.
This distribution method might include risk criteria and benchmarks for determining
national homeland security needs.
Delayed Awarding of State Allocations. In FY2003-FY2005, states were
informed of their homeland security grant allocation early in the fiscal year.21 States have
been notified of their FY2006 base allocation (approximately $7.13 million); however,
because of DHS’s decision to wait until states complete their enhancement plan and
investment justification, states will not be notified of their total grant allocation until
sometime in the spring of 2006.
It is possible that states, lacking an indication of how much funding they will receive,
will not know how to accurately plan or develop homeland security activities for FY2006.
It is possible that a state will develop an enhancement plan and investment justification
that relies on a certain amount of federal homeland security funding, and then be notified
— following DHS’s risk and needs assessment — that it will not be receiving the desired
amount of funding or any funding beyond its base allocation. This in turn might result
in the state having to adjust or rework its homeland security planning and implementation
activities. Additionally, by delaying the announcement of state allocations, localities
could be further delayed in being informed by states of any FY2006 funding they might
Conversely, by delaying the announcement of state allocations, DHS may be
afforded an extended period for more accurately determining state homeland security risks
and needs. DHS’s requirement for an enhancement plan and investment justification
could also result in states more accurately determining their risks, capabilities, and needs,
which could facilitate DHS’s overall national risk and needs assessment.
In FY2003, state allocations were announced in Jan. 2003; in FY2004, state allocations were
announced in Dec. 2003; and in FY2005, state allocations were announced in Nov. 2004.