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LEPC warns deletion of operating funds risks making federal grants unallowable; seeks restoration in FY2026
Summary
The Law Enforcement Planning Commission told a Senate budget committee that a 2025 appropriation cut to its 'other services' operating line has forced LEPC into a compliance risk: shifting those recurring local costs onto DOJ grants would meet the federal definition of 'supplanting' and could make some federal spending unallowable.
The Law Enforcement Planning Commission (LEPC), which serves as the territory's State Administering Agency for multiple U.S. Department of Justice grants, told the Senate Committee on Budget, Appropriations and Finance on Aug. 13 that a prior deletion of its non‑personnel operating funds creates a federal compliance risk.
"This action meets the definition of supplanting, which is strictly prohibited," LEPC Executive Director Melito A. Smith Jr. told the committee, describing the 2025 appropriation change that removed funds for rent, utilities, telephones and janitorial services with the stated legislative intent that federal grants cover those costs.
Why it matters: Federal grant rules require that federal funds supplement, not replace, state or local funds for routine operational costs. LEPC said the FY2025 appropriation removed all other‑services funding outside payroll and left those necessary operating costs where federal grants could not lawfully pay them without risk of audit disallowances.
What LEPC told senators - Legal authority and role: Smith summarized LEPC's statutory authority under Virgin Islands Code Title 3 and its role as the State Administering Agency for DOJ grants including JAG, VOCA, VAWA, RSAT and others. He detailed LEPC's subaward activity, compliance work, and the commission's role as a fiscal agent for programs such as Project Safe Neighborhoods. - Supplanting and practical effects: Smith said the Senate's FY2025 deletion of other services effectively shifted rent, telephone and janitorial costs to federal grants and explained DOJ guidance places the burden on the recipient to document that federal funds were not used to supplant local funds. "No justifiable documentation exists other than the senate's intent to remove all other costs outside of personnel," Smith said, adding, "As a result LEPC has been unable to pay costs associated with rent, utilities, janitorial services, telephones." - Resulting program impacts and remedies: LEPC reported that an Office of Management and Budget appropriation request is in process to cover FY2025 operating shortfalls and asked the Legislature to reinstate other‑services funding in the FY2026 appropriation. Smith also asked for support resolving outstanding single‑audit submissions for FY2022 and FY2023, which DOJ has identified as a condition to release or continue certain victim‑services and VAWA funds.
LEPC workload and grants status Smith told the committee LEPC administers 10 federal grant programs and had made recent subawards and closeouts across multiple years; some federal awards are on reimbursement years and require subrecipient invoicing to reflect as expenditure in federal reports. He said LEPC has established a triannual Virgin Islands Criminal Justice Stakeholders Meeting and is developing a criminal justice data warehouse and behavioral health interventions, and that technical assistance from the National Criminal Justice Association has supported subcommittee work.
Senators' questions and LEPC responses Senators pressed LEPC on the amount deleted and on indirect/administrative cost recovery. LEPC fiscal director Avril Charles said the deleted other‑services amount was about $2,000,000 and that LEPC currently does not claim indirect costs on its federal grants. LEPC staff said they are seeking advice and technical assistance from DOJ and OMB and have requested the reinstatement of other‑services funding for FY2026.
Ending note: LEPC asked the committee to restore a modest amount in other services for FY2026 to avoid a repeat of the supplanting problem and to allow continued subaward activity and federal compliance. The agency asked the Legislature for close cooperation with OMB to ensure single audits and other federal filing obligations are submitted so the territory can access funds already awarded.
