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Homeland Security warns of knowledge loss as FEMA-funded contractors leave; LFC urges house-keeping before major expansions
Summary
Department of Homeland Security & Emergency Management officials warned the committee that a large portion of institutional knowledge resides with contractors whose noncompete clauses prevent rehiring; LFC held the budget flat pending FY27 housekeeping and accounting fixes.
Department of Homeland Security and Emergency Management (DHSEM) leaders told the House Appropriations & Finance subcommittee they face a continuity risk when FEMA and emergency-order contractor funding ends in FY27 and warned that institutional knowledge could depart with those contractors.
Diego Jimenez, the DFA executive analyst, said the executive recommendation included funding (about $666,000 for the continuity plan and other amounts) to transition some contractors into state positions; LFC elected to hold general-fund spending flat, citing prior-year reversions and the need to demonstrate capacity to manage additional general-fund increases.
Major General Miguel Aguilar, acting secretary for DHSEM, emphasized that many of the agency's operational capacities rely on contractors and that several noncompete clauses prevent rehiring those individuals directly into state positions. "When 27 comes and they leave, they take it all with them," he said, urging a phased build to retain knowledge and maintain response and recovery operations.
The state fire marshal, Randy Varela, outlined staffing pressures in the marshal's office and argued for additional code-enforcement and prevention staff to address growth and rising construction activity across the state. DHSEM staff acknowledged FY25 operating reversions of roughly $703,000 and described ongoing accounting and audit remediation work.
LFC and committee members recommended a period of "housekeeping" in FY27 to stabilize finances and staffing and asked staff to return with a plan for phased hiring and clearer financial controls before approving broader expansion funding.
