Finance and Administration Cabinet Inspector General: Privately Donated Relief Funds Managed Properly, Sped Millions in Relief to Natural Disaster Survivors

December 05, 2023

Auditor of Public Accounts also issued a report Tuesday

FRANKFORT, KY. (Dec. 5, 2023) – Today, the Office of the Inspector General of the Kentucky Finance and Administration Cabinet issued an independent review of the state’s two privately donated disaster relief funds totaling more than $65.7 million and found that the funds have been managed properly and helped survivors of the 2021 tornadoes and the 2022 floods. The inspector general also issued two recommendations to support any future payments.

The office began its independent review in August, after the state auditor announced his office would conduct a special examination for the Team Western Kentucky Tornado Relief Fund and the Team Eastern Kentucky Flood Relief Fund. Both funds are administered by the Public Protection Cabinet, which had prior success in managing relief funds.

The inspector general found the Team Eastern Kentucky Flood Relief Fund had a 0% error rate and the Team Western Kentucky Tornado Relief Fund had a 0.14555% error rate on total dollars paid. For comparison, the White House Office of Management and Budget recently released its annual data on improper payments from federal programs and cited an improper and insufficient documentation payment rate at 5.43% for Fiscal Year 2023.

“The Governor and the cabinet acted quickly to raise the donated funds and help Kentuckians in desperate need after the 2021 tornadoes in Western Kentucky and the 2022 flooding in Eastern Kentucky,” said Geri Grigsby, inspector general. “After a nearly four-month review, we found that the funds were managed with complete transparency and in accordance with the law. Staff exhibited strong segregation of duties across all of the fund programs and had strong or overall effective internal controls to guard against waste, fraud or abuse of funds.”

Over the course of now nearly two years, the Public Protection Cabinet received $52,384,713.06 in private donations to the Team Western Kentucky Tornado Relief Fund. The funds first paid $810,000 to pay for the funeral expenses of the 81 Kentuckians who perished. As of the November monthly report, $47,944,436.37 had been disbursed from the fund to help victims of the tornadoes rebuild their lives and homes.

The Team Eastern Kentucky Flood Relief Fund received $13,409,511.83 in private donations. The fund first paid $440,000 to cover the funeral expenses of the 44 Kentuckians lost during the flooding. As of the November monthly report, $5,592,648 had been paid to assist victims of the floods recover and rebuild. The remaining funds are being used to support the construction and rehabilitation of homes.

Each allotment of the privately donated funds were announced publicly by the Governor and posted online.

The Office of Inspector General did recommend that the Public Protection Cabinet formalize its internal review and approval process, and also recommended that the cabinet continue to refine the data analytics and review process to prevent future payment errors.

This recommendation follows the cabinet’s discovery of 53 payments issued in error in the Team Western Kentucky Tornado Relief Fund, attributing 38 of those payments to its data analytics not catching inconsistencies in the data because of the way the data was delivered to the cabinet by insurance companies. Overall, the payments made in error represent 0.2645% of total number of payments and 0.14555% of total dollars paid from the Team Western Kentucky Tornado Relief Fund.

In the home building and repair programs for each fund, the office recommends that the Public Protection Cabinet strive for greater consistency in monitoring the progress of the nonprofit builders’ efforts, and also recommends that the cabinet develop more universal forms for the unmet needs program.

The Office of the Inspector General is established by KRS 42.0147 and serves as the investigatory arm of the Finance and Administration Cabinet and is responsible for conducting various investigations within the executive branch under KRS 45.131.

The Office of the Auditor of Public Accounts also released its report today and stated that the Public Protection Cabinet was aware of its oversight responsibilities and implemented controls to ensure funds went only to eligible individuals or entities assisting in the recovery and rebuilding process. The auditor’s report states the cabinet had authority to accept donations and that the executive branch considered whether collecting donations was appropriate.

The auditor’s report states that the Team Eastern Kentucky Flood Relief Fund had no errors but lists an error rate of 0.57% for the Team Western Kentucky Tornado Relief Fund, which the Public Protection Cabinet clarified, saying it relied on verified data from the Federal Emergency Management Administration to send payments to survivors in declared disaster counties and therefore does not consider these payments to be an error.