IHP Assistance to Victims of Hurricanes Katrina and Rita Far Surpassed Assistance to Victims of 2003 and 2004 Hurricane Seasons

Because of the magnitude of the hurricanes and the extent of the resulting  damage, the total number of applications for, and benefits provided  through IHP in 2005 for Hurricanes Katrina and Rita far exceeded the  combined total of the 2 years since the program was established in 2003. Two categories of assistance—temporary housing assistance and  expedited assistance---- accounted for much of the significant increase in  IHP expenditures for Hurricanes Katrina and Rita as compared to prior  years. By comparison, about $59 million was approved for hurricanes  in 2004, while no expedited assistance was approved for hurricanes in  2003. However, it is too early to assess the success of these  initiatives. To provide benefits quickly to eligible  victims, communicate with about 2 million applicants scattered across the  country and conduct inspections, FEMA developed a number of new  approaches, as summarized in table 4. In terms of trained staff, FEMA lacked the surge capacity to effectively  manage the disaster assistance process. As we testified in June 2006, an estimated  16 percent, or approximately $1 billion, in FEMA IHP payments were  improper and potentially fraudulent due to invalid application data. Appendix I: Scope and Methodology

To evaluate the Federal Emergency Management Agency’s (FEMA)  disaster assistance provided in response to Hurricanes Katrina and Rita  through the Individuals and Households Program (IHP), we assessed (1)  how the types and amounts of assistance provided to victims of  Hurricanes Katrina and Rita compare to other recent hurricanes, (2) the  challenges posed by the magnitude of the requests for assistance following  Hurricanes Katrina and Rita, and FEMA’s response to these challenges,  and (3) the vulnerability of the IHP to fraud and abuse and management  issues in the wake of Hurricanes Katrina and Rita and FEMA’s reported  actions to address any identified problems. FEMA  provides direct (temporary housing units) and financial assistance  (grant funding for temporary housing and other disaster-related needs)  to individuals and households through the IHP to meet necessary  expenses and serious needs of eligible disaster victims who, as a direct  result of a major disaster, have uninsured or under insured necessary  expenses and serious needs and are unable to meet such needs through  other means. Hurricanes Katrina and Rita Disaster Relief: Improper and Potentially  Fraudulent Individual Assistance Payments Estimated to Be Between  $600 Million and $1.4 Billion.
Why GAO Did This Study

In 2005, Hurricanes Katrina and Rita caused unprecedented damage. The Federal Emergency Management Agency's (FEMA's) Individuals and Households Program (IHP), provides direct assistance (temporary housing units) and financial assistance (grant funding for temporary housing and other disaster-related needs) to eligible individuals affected by disasters. Our objectives were to (1) compare the types and amounts of IHP assistance provided to Hurricanes Katrina and Rita victims to other recent hurricanes, (2) describe the challenges FEMA faced by the magnitude of the requests for assistance following Hurricanes Katrina and Rita, and (3) determine the vulnerability of the IHP program to fraud and abuse. GAO determined the extent to which the program was vulnerability to fraud and abuse, by conducting statistical sampling, data mining and undercover operations.

What GAO Found

For Hurricanes Katrina and Rita, FEMA received more than 2.4 million applications for IHP assistance and distributed $7.0 billion as compared to the six hurricanes that hit the United States in the prior two years and totaled about 1.5 million applications and about $1.5 billion in assistance, respectively. Temporary housing assistance and expedited assistance accounted for much of the increase in IHP expenditures as compared to prior years. Overall, however, although the number of applications was much higher, the percentage approved for non-housing assistance was notably lower for Hurricanes Katrina and Rita than in 2003 and 2004. The magnitude of Hurricanes Katrina and Rita posed challenges in providing assistance to an unprecedented number of victims many of whom were widely dispersed across the country. To address these challenges, FEMA developed new approaches and adapted existing approaches to quickly provide assistance and improve communication with victims. Despite these efforts, management challenges in staffing and training and program restrictions limited the effectiveness and efficiency of the disaster assistance process. FEMA has proposed a number of initiatives to address these problems, but it is too early to determine whether these efforts will effectively address the problems identified. GAO identified the potential for significant fraud and abuse as a result of FEMA's management of the IHP in response to Hurricanes Katrina and Rita. Flaws in the registration process resulted in what GAO estimated to be between $600 million and $1.4 billion in improper and potentially fraudulent payments due to invalid registration data. In addition, duplicate payments were made and FEMA lacked accountability over $2,000 debit cards that were given to disaster victims.