The intrepid Joe Malchow is providing excellent commentary on how New Jersey is distributing its state-wide money for homeland security improvements. The short answer: along political lines.
The lowdown on the state funds boondoggle: the districts in question are state legislative districts. New Jersey has forty of them. Each elects one senator and two assemblymen. By a simple majority makeup of these three offices, 17 districts are controlled by Republicans and 23 by Democrats. 58% of districts are thus Democratic, while 93% of homeland security funding is going to Democrat districts.
Read these two posts for more. What is surprising is that there is not more evidence of this type of behavior within executive branches around the country, given the amount of control legislatures have ceded to them in disbursing funds.