Most Declarations for Severe Storms, Highest in Southeast and Central Midwest

The President received requests from governors during fiscal years 2004  through 2011 for 629 disaster declarations and approved 539 of them, or  86 percent, as shown in table 1. Through January 31, 2012, FEMA obligated $80.3 billion, or an average  of about $10 billion a year, from the DRF for 539 disasters declared  during fiscal years 2004 through 2011; and FEMA anticipates that when  all 539 declarations are closed, obligations will be about $91.5 billion. Almost half of the $80.3 billion in obligations was for Hurricane  Katrina. Excluding obligations of $39.7 billion for Hurricane Katrina, FEMA  obligated $40.6 billion for the other disaster declarations during fiscal  years 2004 through 2011, or an average of about $5 billion a year. In fiscal year 2012, the per capita indicator is $1.35. FEMA’s Per Capita Indicator Used to Assess Eligibility Is Artificially Low

Because FEMA’s current per capita indicator does not reflect the rise in  (1) per capita personal income since it was created in 1986 or (2) inflation  from 1986 to 1999, the indicator is artificially low. Had  the indicator been adjusted for inflation beginning when FEMA started  using it in 1986, the indicator would have risen more than 100 percent,  from $1.00 to $2.07 in 2012. FEMA’s Eligibility Process Does Not Comprehensively Assess a Jurisdiction’s Capability to Respond and Recover

Reliance on the PA per capita indicator to determine a jurisdiction’s  eligibility for federal assistance—whether the indicator is artificially low or  adjusted for increases in personal income or inflation—does not provide  an accurate measure of a jurisdiction’s capability to respond to or recover  from a disaster without federal assistance. FEMA could also use other measures of fiscal capacity, such  as state personal income or gross state product, to more accurately  determine a jurisdiction’s ability to pay for damages to public structures  without federal assistance. FEMA Does Not Have Specific Criteria to Evaluate Some Cost Share Adjustment Requests and Does Not Track Additional Costs for All Adjustments

According to the Stafford Act, the usual cost share arrangement for  disaster declarations calls for the federal government to pay not less than  75 percent of the eligible PA costs of a disaster and nonfederal entities  (that is, state and local governments) to pay the remaining 25 percent; at  a governor’s request, the President can adjust this cost share. FEMA  has specific criteria to evaluate a request to adjust the federal share from  75 percent to 90 percent, but does not have specific criteria to evaluate a  request to adjust the federal share to 100 percent. As shown in  table 6, 109 of the 150 requests, or 73 percent, were approved during this  period. Specifically, FEMA may recommend to the  President that the federal cost share be increased up to 90 percent when  a disaster is so extraordinary that actual federal obligations, excluding  FEMA administrative costs, meet or exceed a qualifying threshold. Further, relying on professional judgment only, FEMA is at  risk of making inconsistent, and potentially inequitable, recommendations  to the President about whether to grant 100 percent cost share  adjustments. Because FEMA does not track the costs  associated with cost share adjustments, FEMA does not know the  financial impact of its recommendations to the President on whether to  increase the federal cost share for PA. Understanding the financial impact  of FEMA’s recommendations to the President for cost share adjustments  would enable FEMA to make more informed recommendations and  estimate the impact of the adjustments on available DRF balances. The agency is working on  three short- and long-term initiatives to deliver disaster assistance in a  more efficient manner. Administrative Cost Percentages Often Exceeded FEMA’s Targets and Have Doubled since Fiscal Year 1989

Our analysis of the 539 disaster declarations during fiscal years 2004  through 2011 shows that 37 percent of the declarations exceeded  administrative cost percentage targets established in guidance prepared  by FEMA in 2010. Since fiscal year  1989, the average administrative cost percentage for the 1,221 disaster  declarations doubled from 9 percent in the 1989-to-1995 period to 18  percent in the 2004-to-2011 period as shown in table 7. Because FEMA’s current approach  of comparing the amount of disaster damage with the PA per capita  indicator does not accurately reflect whether a jurisdiction has the  capabilities to respond to and recover from a disaster without federal  assistance, developing a methodology that provides a more  comprehensive assessment of jurisdictions’ response and recovery  capabilities, including a jurisdiction’s fiscal capacity, could provide FEMA  with data that are more specific to the jurisdiction requesting assistance. 2. 3. 4. DHS partially concurred with the fourth recommendation, to implement  goals for administrative cost percentages and monitor performance to  achieve these goals. However, DHS stated that it plans to conduct a review to  better understand and describe its current measures. The number of major disaster declarations and total obligations varied  among FEMA regions during fiscal years 2004 through 2011. FEMA obligates funds from the Disaster Relief Fund (DRF) to help  jurisdictions respond to and recover from declared disasters. To determine the criteria that FEMA used to recommend to the President  that a disaster declaration was warranted for PA, and to what extent  FEMA assessed whether an effective response to a disaster was beyond  the capabilities of jurisdictions, such as state and local governments, we  examined FEMA policies, regulations, and other documents related to the  disaster declarations process.
Why GAO Did This Study

The growing number of disaster declarations--a record 98 in fiscal year 2011 compared with 65 in 2004--has contributed to increased federal disaster costs. FEMA leads federal efforts to respond to and recover from disasters and makes recommendations to the President, who decides whether to declare a disaster and increase the usual federal cost share of 75 percent. This report addresses (1) the number of declarations requested and approved from fiscal years 2004-2011 and associated DRF obligations; (2) the criteria FEMA used to recommend a declaration for PA, and the extent that FEMA assessed whether an effective response to a disaster was beyond the capabilities of state and local governments; (3) how FEMA determined whether to recommend cost share adjustments, and their costs; and (4) FEMA's administrative cost percentages for declarations. GAO reviewed declaration data for fiscal years 2004-2011 and conducted site visits in 2011 to the two FEMA regions with the highest DRF obligations. The results are not generalizable, but provide insights.

What GAO Found

During fiscal years 2004-2011, the President received governors' requests for 629 disaster declarations and approved 539, or 86 percent, of which the Federal Emergency Management Agency (FEMA) reported 71 percent were for severe storms. For these 539 declarations, FEMA obligated $80.3 billion, or an average of about $10 billion a year, from the Disaster Relief Fund (DRF), as of January 31, 2012. Almost half of the obligations were for Hurricane Katrina; excluding obligations for Hurricane Katrina, FEMA obligated $40.6 billion, or an average of about $5 billion a year. As of January 31, 2012, FEMA anticipated that when all 539 declarations are closed, total DRF obligations will be about $91.5 billion. GAO's analysis shows that FEMA primarily relied on a single criterion, the per capita damage indicator, to determine whether to recommend to the President that a jurisdiction receive public assistance (PA) funding. However, because FEMA's current per capita indicator, set at $1 in 1986, does not reflect the rise in (1) per capita personal income since it was created in 1986 or (2) inflation from 1986 to 1999, the indicator is artificially low. The indicator would be $3.57 in 2011 had it been adjusted for increases in per capita income and $2.07 in 2012 had it been adjusted for inflation from 1986 to 1999, rather than its current $1.35. GAO's analysis of FEMA's anticipated obligations for 508 declarations with PA during fiscal years 2004-2011 shows that 44 percent and 25 percent would not have met the indicator if it had been adjusted for increases in personal income and inflation, respectively, since 1986. Further, the per capita indicator does not accurately reflect a jurisdiction's capability to respond to or recover from a disaster without federal assistance. GAO identified other measures of fiscal capacity, such as total taxable resources, that could be more useful in determining a jurisdiction's ability to pay for damages to public structures. Developing a methodology to more comprehensively assess state capabilities and reexamining the basis for the indicator could help FEMA more accurately determine a jurisdiction's capacity to respond without federal assistance. FEMA recommends raising the usual 75 percent federal share for PA to 90 percent when federal obligations, excluding FEMA administrative costs, meet a qualifying threshold. However, FEMA has no specific criteria for assessing requests to raise the federal share for emergency work to 100 percent, but relies on its professional judgment. For the 539 disaster declarations during fiscal years 2004-2011, governors made 150 requests to adjust the federal cost share to 90 or 100 percent; 109, or 73 percent, were approved or statutorily mandated, mostly for hurricanes. Without specific criteria for 100 percent cost share, FEMA risks making inconsistent or inequitable recommendations to the President. GAO's analysis of administrative costs for 539 disaster declarations during fiscal years 2004-2011 shows that administrative cost percentages frequently exceeded FEMA's targets, although FEMA does not require that they be met. GAO's analysis of 1,221 disaster declarations shows that average administrative costs doubled from 9 to 18 percent during fiscal years 1989-2011, the time period for which FEMA has data available. FEMA is working on short- and long-term actions to improve efficiencies in delivering disaster assistance, but the agency does not plan to set goals or track performance for administrative costs. Until this happens, it will be difficult for FEMA to ensure assistance is being delivered in an efficient manner.

What GAO Recommends

GAO recommends, among other things, that FEMA develop a methodology to more accurately assess a jurisdiction's capability to respond to and recover from a disaster without federal assistance, develop criteria for 100 percent cost adjustments, and implement goals for and track administrative costs. FEMA concurred with the first two, but partially concurred with the third, saying it would conduct a review before taking additional action.