Insurance News

‘Disasters’ strain FEMA’s resources

Posted on: October 29, 2011

Months before Tropical Storm Irene soaked Vermont in September, a spring storm flooded part of the state, washing out roads and bridges. The cost of the damage was relatively minor — $794,000, the Federal Emergency Management Agency found.

On July 8, President Obama declared Vermont’s situation a “major disaster.”

That entitled Vermont to millions of dollars in federal disaster aid at a time when FEMA was warning that its money for such aid was running out. Obama approved Vermont for disaster relief even though federal regulations set “a minimum $1 million threshold” in public damage for states seeking disaster funds.

FEMA says the declaration was allowed because its “threshold” is only a guideline the agency uses in weighing whether aid is merited. FEMA also found 225 homes damaged and 25 destroyed by the flooding.

Obama’s action illustrates how the federal government is turning hundreds of relatively low-cost storms into federal disasters — draining billions of dollars in scarce FEMA aid and tying up millions more for years.

Those factors have helped to deplete the federal disaster-relief fund six times since 2003, stopping thousands of reconstruction projects for months until Congress allocated more money.

In addition, former FEMA leaders and government reports say, the soaring number of declared disasters has diverted FEMA from preparing for a Katrina-like catastrophe and has made states overly reliant on the federal government.

“The problem is, nobody ever turns them down,” says Joe Allbaugh, FEMA chief from 2001 to 2003, referring to governors who seek disaster aid. “We can’t say ‘yes’ all the time. And if we do, we’re just setting ourselves up for no one to take responsibility except FEMA. There is no ability for individual states or local communities to enhance their own capabilities and personnel if you automatically always turn to FEMA.”

Questions about FEMA spending

Since 1993, FEMA has “been called upon to support many routine natural disasters that historically would have been handled entirely by state and local governments,” the inspector general of the Homeland Security Department said last year.

“As more disasters are declared,” the report said, “more FEMA staff resources are diverted from planning and preparedness efforts.” The inspector general found that FEMA, a part of Homeland Security, had made moderate progress since 2006 in preparing for a catastrophe.

Presidents make all disaster declarations, after governors request them. Most disaster aid helps rebuild infrastructure such as streets and schools. A smaller portion helps people whose homes were damaged.

Obama’s Vermont declaration was the 50th declared disaster of 2011 with the year just half over. That’s more disasters than were declared in all of 2005, the year of hurricanes Katrina, Rita and Wilma. There have now been 89 declared disasters in 2011, a single-year record and nearly four times the average annual number in the 1980s.

In late August, FEMA’s cash supply fell to such a low level that the agency suspended $550 million in funding for thousands of long-term recovery projects nationwide, threatening to stall rebuilding in parts of Katrina-ravaged Louisiana, in areas of Miami still recovering from a November 2000 storm and in hundreds of other communities.

FEMA’s ability to respond to an extraordinary event also was in jeopardy. “Our balances got to such a point that it was a concern of mine. What would have happened if an earthquake or a large-scale event had occurred?” FEMA Administrator Craig Fugate told a Capitol Hill hearing Oct. 12.

A dispute in Congress over whether to offset extra money for FEMA with budget cuts elsewhere nearly led to a government shutdown in late September. FEMA got more cash on Oct. 1 and resumed funding the suspended projects. But Fugate warned at the hearing that without even more money, FEMA will have to cut off long-term recovery projects yet again.

“It’s frustrating,” Mississippi Emergency Management Agency chief Mike Womack says of the funding disruptions. “When people ask, ‘Why does it take so long to rebuild communities after disasters?’ this is one of the reasons.”

In Smithville, Miss., still devastated by an April tornado that also flattened a wide swath of nearby Tuscaloosa, Ala., the cutoff of FEMA funding set back reconstruction by a month, says Mayor Gregg Kennedy, who works out of a trailer because town hall was destroyed.

“When you’ve lost everything and you’re trying to rebuild everything, a month is a long time,” he says. The federal government “FEMA should have been more conservative in the amount they were spending on the not-so-devastating storms this year.” Some state officials say the growth in disasters — and the depletion of disaster funds — is the result of unusually severe weather that, this year alone, caused widespread flooding along the Mississippi River, spawned two devastating tornadoes and sent Hurricane Irene plowing through the East Coast, causing separate disasters in 14 states and a 15th declaration in Puerto Rico.

“We don’t manufacture the disaster,” says Washington State emergency management chief Jim Mullen, who is president of the National Emergency Management Association. “I don’t think people just dive into the declaration game. We go into it when we feel we have a justification under (federal law) and we feel we have a need that can’t be filled in any other way.”

Although major events get the most attention, smaller storms account for most disaster declarations. Roughly half of the disasters declared since October 2007 have had projected damage of less than $10 million, including a January storm near Seattle that FEMA estimated caused $8.7 million in damage from floods, mudslides and landslides.

“That might seem like a trivial amount and a trivial situation, but that’s on top of the other costs associated with running government,” Mullen says. “We used a very appropriate step to avoid additional strain on our budgets.”

For governors seeking FEMA aid, the motivation “is not because they’re trying to have a handout,” says Mark Merritt, who was FEMA’s deputy chief of staff during the Clinton administration and now president of disaster consultants Witt Associates, run by Clinton FEMA chief James Lee Witt. Rather, Merritt says, “it’s the nature of politics in this country and the fact that there is so much media coverage of disasters these days that not doing so is looked at as being a failure.”

Political pressure makes governors’ requests hard to reject, says David Paulison, FEMA chief from 2005 to 2009 and now an emergency-management consultant. “You get a million phone calls from every congressional member in that area,” he says.

At the same time, presidents and members of Congress have made disaster aid easier to get, particularly for smaller incidents. USA TODAY analyzed records of thousands of disasters declared as long ago as 1953 and found several factors contributing to increased spending on smaller disasters:

•Presidents Obama, Clinton and George W. Bush dramatically increased the use of “emergency declarations,” which allow presidents to give states disaster aid after incidents that cause too little damage to qualify as disasters.

There were 173 emergency declarations from 1999 to 2009, compared with 114 in the preceding quarter-century. The 173 emergencies drained $1.6 billion from the federal disaster-relief fund, FEMA records show.

Paulison says emergency declarations are flawed because the standards are so loose. Under federal law, a president can declare an incident an emergency simply after finding that “effective response is beyond the capabilities” of a state and its local jurisdictions, without any guidelines concerning the cost of recovering from the incident.

“We need to tighten that up,” Paulison says, suggesting clearer criteria for declaring an emergency.

New York state has had the most emergency declarations since 1999 — 13 — and most of the money offset costs of snowstorms.

•FEMA has reimbursed states $484 million in snow-removal costs since 1998, even though the agency once vowed to tightly restrict such payments, saying snow removal is the “responsibility of the state and local and governments” and that “there is no permanent damage to facilities resulting from snow.”

State officials objected to FEMA’s plan in 1996 to pay only for clearing one lane on snow-emergency routes and on roads leading to critical facilities such as hospitals. FEMA now pays 75% of snow-removal costs, and the payments usually come months after a snowstorm, when snow already has been removed or has melted.

“I don’t think we have blizzards that are so catastrophic that they overwhelm state and local capabilities,” says Matt Mayer, a former Homeland Security legal counsel who now criticizes department spending as a visiting fellow at the conservative Heritage Foundation. “It’s really about shifting the cost from one state to the other 49 states.”

In late 2009, FEMA tightened its standards for reimbursing snow-removal costs.

•A few members of Congress, using the same “earmark” technique that secures special projects for their areas, have forced FEMA to divert $150million in additional disaster aid to their states since 2007 even though those states did not meet FEMA’s criteria for getting the extra aid.

The lawmakers used earmarks to bypass federal regulations that say FEMA will pay 75% of disaster recovery unless the total costs exceed a threshold. The threshold this year is $125 for each resident of a state where a disaster occurred.

In Kentucky, that means the cost of a single disaster must exceed about $500 million for FEMA to pay more than 75% of recovery costs. House Appropriations Committee Chairman Hal Rogers, R-Ky., forced FEMA to pay 90% to 100% of recovery from two recent storms that have cost $35 million and $22 million.

“I make no apologies for helping those I represent,” Rogers said in an e-mail.

Witt, the former FEMA director who is now a business consultant, says disaster relief has become “a game.”

“We have allowed FEMA to become a funding agent,” he said. “It’s a mechanism where members of Congress will put in language to fund a special project and then come around and beat up the (FEMA) director and say, ‘Why haven’t you funded my project?'”

Delays in settling relief cases

One consequence of the increasing number of disasters is that FEMA is taking longer to close the books on each disaster, which leaves hundreds of millions of dollars tied up and unavailable to be spent on new disasters.

When a disaster is declared, FEMA sets money aside after consulting with a state to pay estimated recovery costs. That money remains committed to an individual disaster until FEMA “closes” the disaster by certifying that all recovery work is finished and all spending is accounted for. When a disaster is closed, FEMA can reclaim unspent money and apply it to other disasters.

But disasters now take on average 10 years to close, FEMA records show, even though the agency says it typically takes four to five years for recovery work to be completed. Before 1990, disasters took an average of five years to close, records show.

The longer time period means that more money is likely to be sitting in old disaster accounts, waiting to be reclaimed for other disasters if FEMA could conclude the accounting.

Last year, just before dwindling disaster funds led FEMA to cut off funding for long-term recovery projects for five months, the Homeland Security inspector general found $500 million sitting unspent in disaster accounts that were at least a decade old.

That money could be “made available for use in other disaster relief activities,” the inspector general found. But the process of closing disasters was slowed by “the volume, frequency and types of newly declared disasters.”

FEMA has since made it a priority to close older disasters and reclaim unspent money. Now, only $5.1 million is sitting in disaster accounts that are more than a decade old, FEMA says. Nearly $135million is in accounts of disasters that occurred before Hurricane Katrina hit in August 2005.

Just two months after Vermont’s spring floods were declared a disaster, the state and 13 others were slammed by Hurricane Irene. Damage is estimated at more than $340 million — $18 million in Vermont alone. And with no money in FEMA’s 2012 budget to pay for repairing Irene’s damage, Fugate, the administrator, warned at the recent hearing about a familiar outcome: “We may risk having to go back to (emergency-needs funding) and suspending permanent work on all open disasters.”

© 2011 USA TODAY, a division of Gannett Co. Inc.

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