[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]


 
                 FEMA'S GULF COAST REBUILDING EFFORTS: 
                            THE PATH FORWARD 

=======================================================================

                                HEARING

                               before the

                       SUBCOMMITTEE ON EMERGENCY
                     COMMUNICATIONS, PREPAREDNESS,
                              AND RESPONSE

                                 of the

                     COMMITTEE ON HOMELAND SECURITY
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 3, 2009

                               __________

                            Serial No. 111-2

                               __________

       Printed for the use of the Committee on Homeland Security
                                     
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                     COMMITTEE ON HOMELAND SECURITY

               BENNIE G. THOMPSON, Mississippi, Chairman

LORETTA SANCHEZ, California          PETER T. KING, New York
JANE HARMAN, California              LAMAR S. SMITH, Texas
PETER A. DeFAZIO, Oregon             MARK E. SOUDER, Indiana
ELEANOR HOLMES NORTON, District of   DANIEL E. LUNGREN, California
Columbia                             MIKE ROGERS, Alabama
ZOE LOFGREN, California              MICHAEL T. McCAUL, Texas
SHEILA JACKSON-LEE, Texas            CHARLES W. DENT, Pennsylvania
HENRY CUELLAR, Texas                 GUS M. BILIRAKIS, Florida
CHRISTOPHER P. CARNEY, Pennsylvania  PAUL C. BROUN, Georgia
YVETTE D. CLARKE, New York           CANDICE S. MILLER, Mississippi
LAURA RICHARDSON, California         PETE OLSON, Texas
ANN KIRKPATRICK, Arizona             ANH ``JOSEPH'' CAO, Louisiana
BEN RAY LUJAN, New Mexico            STEVE AUSTRIA, Ohio
BILL PASCRELL, JR., New Jersey
EMMANUEL CLEAVER, Missouri
AL GREEN, Texas
JAMES A. HIMES, Connecticut
MARY JO KILROY, Ohio
ERIE J.J. MASSA, New York
DINA TITUS, Nevada
VACANCY

                    I. Lanier Avant, Staff Director

                     Rosaline Cohen, Chief Counsel

                     Michael Twinchek, Chief Clerk

                Robert O'Conner, Minority Staff Director

                                 ______

  SUBCOMMITTEE ON EMERGENCY COMMUNICATIONS, PREPAREDNESS,AND RESPONSE

                     HENRY CUELLAR, Texas, Chairman

ELEANOR HOLMES NORTON, District of   MIKE ROGERS, Alabama
Columbia                             PETE OLSON, Texas
LAURA RICHARDSON, California         ANH ``JOSEPH'' CAO, Louisiana
BILL PASCRELL, JR., New Jersey       MICHAEL T. McCAUL, Texas
EMMANUEL CLEAVER, Missouri           PETER T. KING, New York (ex 
DINA TITUS, Nevada                   officio)
VACANCY
BENNIE G. THOMPSON, Mississippi, 
(ex officio)

               Veronique Pluviose-Fenton, Staff Director

                      Stephen Vina, Staff Director

                         Daniel Wilkins, Clerk

               Amanda Halpern, Minority Subcommittee Lead

                                  (ii)
















                            C O N T E N T S

                              ----------                              
                                                                   Page

                               STATEMENTS

The Honorable Henry Cuellar, a Representative in Congress from 
  the State of Texas, and Chairman, Subcommittee on Emergency 
  Communications, Preparedness, and Response.....................     1
The Honorable Mike Rogers, a Representative in Congress from the 
  State of Alabama, and Ranking Member, Subcommittee on Emergency 
  Communications, Preparedness, and Response.....................     3
The Honorable Bennie G. Thompson, a Representative in Congress 
  from the State of Mississippi, Chairman, Committee on Homeland 
  Security.......................................................     4
The Honorable Anh ``Joseph'' Cao, a Representative in Congress 
  from the State of Louisiana....................................    44
The Honorable Emmanuel Cleaver, a Representative in Congress from 
  the State of Missouri:
  Oral Statement.................................................    42
  Prepared Opening Statement.....................................    42
The Honorable Jackson-Lee, a Representative in Congress from the 
  State of Texas.................................................    50
The Honorable Pete Olson, a Representative in Congress from the 
  State of Texas:
  Oral Statement.................................................    40
  Prepared Opening Statement.....................................    40
The Honorable Laura Richardson, a Representative in Congress from 
  the State of California........................................    46
The Honorable Dina Titus, a Representative in Congress from the 
  State of Nevada................................................    49

                               Witnesses

Mr. David Garratt, Acting Deputy Administrator, FEMA's Disaster 
  Assistance Directorate, U.S. Department of Homeland Security
  Oral Statement.................................................     6
  Joint Prepared Statement.......................................     8

Accompanied by,
Mr. James Walke, Acting Assistant Administrator, FEMA's Disaster 
  Assistance Directorate, U.S. Department of Homeland Security:
  Oral Statement.................................................    34
Mr. Stanley J. Czerwinski, Director, Strategic Issues, U.S. 
  Government Accountability Office:
  Oral Statement.................................................    11
  Prepared Statement.............................................    13
Ms. Amy Liu, Deputy Director, Brookings Metropolitan Policy 
  Program, Brookings Institute:
  Oral Statement.................................................    26
  Prepared Statement.............................................    29
Ms. Lyda Ann Tomas, Mayor, City of Galveston:
  Oral Statement.................................................    19
  Prepared Statement.............................................    21


                      FEMA'S GULF COAST REBUILDING
                       EFFORTS: THE PATH FORWARD

                              ----------                              


                         Tuesday, March 3, 2009

             U.S. House of Representatives,
         Subcommittee on Emergency Communications, 
                         Preparedness and Response,
                            Committee on Homeland Security,
                                                   Washington, D.C.
    The subcommittee met, pursuant to call, at 10:02 a.m., in 
room 311, Cannon, Hon. Henry Cuellar [chairman of the 
subcommittee] presiding.
     Present: Representatives Cuellar, Thompson, Norton, 
Richardson, Cleaver, Titus, Rogers, Olson, and Cao.
    Also present: Representative Jackson-Lee.
    Mr. Cuellar. [Presiding.] The Subcommittee on Emergency 
Communications, Preparedness and Response will come to order.
    The subcommittee is meeting today to receive testimony 
regarding ``FEMA's Gulf Coast Rebuilding Efforts: The Path 
Forward.''
    Good morning, on behalf of the committee, on behalf of the 
members of this subcommittee. Let me welcome the witnesses from 
the Government Accountability Office, the GAO; the Federal 
Emergency Management Agency, FEMA; the city of Galveston, 
mayor; the Brookings Institution, also.
    And please let me note from the very beginning, members, 
that David Garratt, FEMA's acting deputy administrator, will 
testify in the place of James Stark of the FEMA's Gulf Coast 
Recovery Office. This is in light of an investigation into the 
recent allegations of fraud, nepotism and sexual abuse at 
FEMA's Recovery Office in Louisiana.
    Mr. Garratt is accompanied by Mr. James Walke, FEMA's 
acting assistant administrator of the Disaster Assistant 
Directory.
    I have been also made aware of the troubling allegations of 
keen interest to one of our newest members of the subcommittee, 
Mr. Cao--I believe he is on the way--weather-related--like we 
have other members, also. Mr. Cao--we know that the allegations 
are disturbing to all of us. And we can tell that to Mr. Cao--
to all of us, and the members of the subcommittee and the full 
committee, also.
    As such, I will inform the committee staff--is looking into 
this matter. Furthermore, Secretary Napolitano committed at 
last week's full-committee hearing, to the chairman, that she 
was looking into the matter and will report back to the 
committee on the department's finding.
    Now, on to the matter of the day. Today's hearing is 
entitled ``FEMA's Gulf Coast Rebuilding Efforts: The Path 
Forward.'' It is an opportunity to examine how the lessons 
learned from the past incidents can be leveraged to help state 
and local governments navigate the Federal maze to enhance our 
capacity to recover from future large-scale incidents.
    On August 29, 2005, Hurricane Katrina barreled toward the 
Gulf Coast in Louisiana, Mississippi and Alabama, and resulted 
in one of the largest natural-disaster relief-and-recovery 
operations in United States history.
    The public-health concerns, the environmental challenges, 
and communications failure have been well documented. But what 
is more seared in our minds, of the public, was the lack of 
preparation and response to assist the survivors of Hurricane 
Katrina, and the slowness of the recovery.
    Less than 1 month later, on September 24, 2005, Hurricane 
Rita slammed through parts of Louisiana and southeast Texas, 
and destroyed some coastal communities, and cost more than $10 
billion in damages, while leaving more than 2 million people 
without power and electricity. Several tornadoes on the 
Hurricane Rita's outer bands also damaged the state of 
Mississippi.
    More than 3 years after the 2005 hurricanes, the Gulf Coast 
embarked upon another recovery effort in the wake of the 2008 
Hurricane Gustav and Ike.
    With all of the storms, President George W. Bush issued a 
``major disaster'' declaration in accordance with the Robert T. 
Stafford Disaster Relief and Emergency Assistant Act, 
triggering assistance from the Federal Government.
    Today's hearing will provide members the opportunity to 
learn about the importance of the following: One, the need for 
creating a clear, implementable and timely recovery plan. Two, 
the application of public assistance to enhance state and local 
government capacity. Three, the benefit of implementing 
strategies for business recover. And, four, the importance of 
adopting a comprehensive approach to combating fraud, waste and 
abuse.
    Let me welcome Mr. Stanley Czerwinski, director of the 
Strategic Issues at GAO, who will explain how his examination 
of six of these major incidents, from 1989 through 2005--
ranging from Loma Prieta earthquake in northern California to 
Hurricanes Katrina and Rita, in the Gulf Coast--offer recovery 
lessons for the Gulf Coast region affected by Hurricane Ike and 
Gustav, and future disasters, in general.
    Next, the subcommittee will hear from Mr. David Garratt, 
acting deputy administrator of FEMA. Mr. Garratt will explain 
the public-assistance process, specifically as it relates to 
recent storms that have impacted the Gulf Coast. FEMA will also 
discuss how and why states differ in their drawing-down of 
public-assistance funds. And I believe there is a handout, 
members. You all should have a handout about the different 
states and how they are drawn down from those public-assistance 
funds.
    FEMA will also discuss the possible impediments, as well as 
opportunities for improvement in the recovery process.
    Our third witness is Ms. Lyda Ann Thomas, the mayor of the 
city of Galveston, in Texas. Mayor Thomas will detail to this 
committee the lessons that her city learned from the Hurricanes 
Katrina and Rita, as it struggles to recover from the 
Hurricanes Ike and Gustav.
    She will offer her experience with the public-assistance 
process, and her recommendations to FEMA and other 
jurisdictions which may face the major disaster in the future.
    Our final witness is Ms. Amy Liu, the deputy director of 
the Metropolitan Policy Program at the Brookings Institute. As 
someone who has been avidly monitoring the recovery of the Gulf 
Coast in the aftermath of Hurricane Katrina, Ms. Liu will 
explain what she learned from her assessment of the Katrina 
recovery process and the lessons they hold for other 
jurisdictions.
    As the committee receives testimony from the panel, I want 
to note that I am very much looking forward for the proposal 
from the witnesses that will help to eliminate the culture of 
``us versus them,'' and it is something we have been 
emphasizing. It all goes together. But there is--in the past, 
it has seemed it is us versus them. And we want to make sure 
that we eliminate that culture and work together as a team.
    The reality is that the impact of a terrorist attack or a 
major disaster is felt by all, regardless of one's political 
party, or whatever you are--a Federal official versus a state 
or local official. It is one team together.
    Therefore, I look forward to the testimony of our witnesses 
that highlight how we can work together--work together--I 
emphasize--to improve the recovery process, not finger-
pointing.
    The people of the Gulf Coast region have been badly served. 
We can do better. I know there has been instances how we have 
served well. But we can do better as a team. We should not 
allow the inefficiency, the bureaucracy or the scandals to 
further deprive the people of this region from a timely and 
effective recovery process.
    With that, I want to thank the witnesses for coming here 
today. And I look forward to a robust discussion centered on 
sound governance that promotes creative solutions and 
coordinated planning to rebuild the resilient Gulf Coast.
    The chair now recognizes the ranking member of the 
Subcommittee of the Emergency Communications, Preparedness and 
Response, the gentleman from Alabama, Mr. Rogers, for an 
opening statement.
    Mr. Rogers. Thank you, Mr. Chairman.
    And, first, I would like to thank all the witnesses for 
taking the time out of your schedules to be with us today. It 
is very helpful and important, and it is very much appreciated 
by us.
    As the chairman said, the hearing is being held today to 
discuss FEMA's efforts to facilitate Gulf Coast recovery and 
rebuilding after Hurricanes Katrina and Rita and the need to 
continue applying lessons learned from them, as well as Ike and 
Gustav, to future recovery efforts.
    I look forward to testimony from David Garratt, from the 
Office of Gulf Coast Recover, as well as Stan Czerwinski, from 
the GAO. I hope you will discuss the progress that FEMA has 
made in developing a strong Emergency Management System, 
particularly in the areas of disaster recovery and mitigation.
    We also look forward to hearing from Ms. Liu and Mayor 
Thomas, who can provide insight into the details of recovery 
underway, as well as the need to strengthen information sharing 
and coordination between FEMA and state and local governments.
    After Hurricanes Katrina and Rita struck the Gulf Coast, 
emergency-management officials in my home state of Alabama 
helped Alabama residents and displaced victims from Louisiana 
and Mississippi find emergency housing.
    Hurricanes Katrina and Rita, and more recently, Ike and 
Gustav, have taught us all to appreciate the state and local 
partnerships that become crucial during times of disaster 
response and recovery.
    I feel strongly that while more work remains to be done, 
FEMA has made significant progress in the last 2 years and 
would lose valuable resources and suffer a major setback if it 
was pulled out of DHS.
    We all know that this nation cannot afford to be distracted 
or unprepared to respond when a natural disaster or terrorist 
attack occurs on our soil. This hearing presents an opportunity 
to look at what should be done to improve response and recovery 
efforts in going forward.
    And I yield back, Mr. Chairman.
    Mr. Cuellar. OK, Mr. Rogers.
    And, again, just for the record, Mr. Rogers and I have sat 
down before. And we have talked about how we can work this 
committee in a bipartisan way. And I appreciate his input--his 
vast input, working with our committee staff, also.
    At this time, the chair now recognizes the chairman of the 
Committee of Homeland Security, the gentlemen from Mississippi, 
Mr. Thompson, for an opening statement.
    Mr. Chairman?
    Mr. Thompson. Thank you very much, Chairman Cuellar.
    First, let me thank our panel for being here today. We all 
are aware of the destructions caused by Hurricane Katrina and 
Rita in 2005, and Gustav and Ike in 2008. What we need to 
understand, though, is how we move ahead with the recovery 
process.
    As you know, I have been very vocal with my displeasure 
with the pace in which the Gulf States are drawing down and 
spending disaster-relief funds provided by FEMA and other 
Federal agencies. In particular, I am bothered by the lethargic 
pace that FEMA, Mississippi and Louisiana are spending the 
public-assistance grants from Katrina and Rita. These funds, 
which are intended to restore critical infrastructure in the 
region, are vital to a full recovery.\1\
---------------------------------------------------------------------------
    \1\ See committee file.
---------------------------------------------------------------------------
    We cannot afford to fail in effectively leveraging these 
funds. Mississippi has been awarded $2.9 billion by FEMA. But 
about $1.3 billion of these funds still have not been spent. 
Louisiana was awarded $7.5 billion, but the state has yet to 
disperse $3.4 billion.
    We are 31/2 years removed from the 2005 hurricanes, and we 
still have nearly $5 billion sitting there, waiting to be used. 
Meanwhile, as of February 1st, Texas has roughly 85 percent of 
the funds FEMA has obligated to them as a result of 2005 and 
2008 hurricanes.
    And I am concerned that the governors of Mississippi and 
Louisiana are going to develop a reputation for being poor 
stewards of taxpayers' money. Let me be clear, though. I don't 
think it is entirely a problem with the states.
    FEMA's inflexible funding structure and a lack of quick 
resolution during disputes is also delaying the speed of 
recovery. I hope we can get someone here today to agree on what 
the problems are and hopefully start a conversation that will 
help streamline these funds to get them to the people who need 
them.
    At a full-committee hearing last week, Homeland Security 
Secretary Napolitano agreed that post-disaster funds need to be 
streamlined. However, I was concerned to find out that Mr. 
Garratt was testifying at the same time, before another 
committee, that the public-assistance appeal process is meant 
to be a thoughtful, deliberative process, not a quick 
resolution.
    I understand Mr. Garratt's position of protecting 
taxpayers' funds from fraud, waste and abuse. But I am 
convinced that we can improve accountability of the funds and 
streamlines to build credit where it is safe.
    It is important that FEMA and the states work together to 
find a quick and effective way to distribute these funds. 
Unfortunately, most of the stories we are hearing are about 
disagreements between FEMA and the states.
    For example, after Katrina, New Orleans claimed that the 
majority of damage to the city's sewer system was from the 
storm, but FEMA claimed that most of the damage was due to poor 
maintenance. Because of this dispute, FEMA did not even begin 
an in-depth damage assessment of the sewer system until July 
2007, nearly 2 years after the storm--just an example of the 
``us versus them'' mentality that has greatly hampered the 
recovery in the Gulf.
    I am hoping today that we can find common ground, that we 
can put the ``us versus them'' mentality behind us and find a 
way for all parties to work together toward the common goals of 
a complete recovery in the Gulf.
    To accomplish this, we must identify and learn from our 
past mistakes. I look forward to your testimony. And, again, 
thank you for being here.void
    Mr. Cuellar. Thank you. Thank you, Mr. Chairman. Thank you.
    All the members of the subcommittee are reminded that under 
the committee rules, opening statements may--may be submitted 
for the record.
    At this time, we will go ahead and move on to the 
witnesses' statements. Again, I certainly want to welcome the 
panels and, again, members. I have given you the names of the 
first witnesses.
    Our first witness will be Mr. Stanley Czerwinski, the 
director of Strategic Issues of the U.S. Government 
Accountability Office. Our second witness will be Mr. David 
Garratt, who is the acting deputy administrator of the Federal 
Emergency Management Agency.
    Our third witness is Ms. Lyda Ann Thomas, the mayor of 
Galveston, Texas. And our final witness is Amy Liu, from the 
Brookings Institute--deputy director there.
    Again, we appreciate it. And without objection, the 
witnesses' full statements will be inserted into the record. 
And I will ask each witness to summarize his or her statement 
for 5 minutes, beginning with Mr. Garratt.
    Members--I am sorry. Before we get started--I handed a copy 
to members. They should be in your notebook--hand it over--that 
has the assistance. And the grants have gone down to the poor 
states--and what has been obligated, what has been drawn down. 
So that will give you an idea of the overall picture, per 
state.
    So at this time, we can start off with the first witness.

STATEMENT OF DAVID GARRATT, ACTING DEPUTY ADMINISTRATOR, FEMA'S 
    DISASTER ASSISTANCE DIRECTORATE, DEPARTMENT OF HOMELAND 
                            SECURITY

    Mr. Garratt. Thank you, and good morning, Chairman Cuellar, 
Ranking Member Rogers and other distinguished members of the 
committee.
    It is a privilege to appear before you today on behalf of 
the Department of Homeland Security and the Federal Emergency 
Management Agency. As always, we welcome your interest in, and 
appreciate your continued support of the challenging Emergency 
Management mission.
    I am joined at the table today by James Walke, the acting 
assistant administrator of the Disaster Assistance Directorate 
at FEMA. Mr. Walke is the agency's premier authority on public 
assistance. And we look forward to some productive dialogue on 
the subject.
    FEMA's public-assistance program is, with rare exceptions, 
a fundamentally critical element of any major disaster 
recovery. Through public assistance, grants are provided to 
states, local governments, and certain private nonprofits to 
reimburse for the removal of debris, for emergency protective 
measures and temporary relocation of certain services or 
functions, and the repair and replacement of infrastructure 
damaged or destroyed by a disaster event.
    The repair or replacement of infrastructure can include 
public roads, bridges, drainage structures, water-control 
facilities, public buildings, public utilities, parks and other 
facilities.
    Though funded through FEMA, the public-assistance program 
is administered and managed by states. Local governments and 
other eligible applicants receive their funding through the 
states. The state controls the pace of such disbursements.
    Federal regulations authorize states to disperse funds for 
small projects up-front, if state regulations allow such 
payment. For large projects, Federal regulations authorize 
states to disperse funds to applicants on a reimbursable basis. 
However, in an effort to meet the financial challenges of local 
applicants, the states of Louisiana and Mississippi have both 
established policies to provide advanced funding to begin 
design work and construction.
    To date, the Louisiana Governor's Office of Homeland 
Security and Emergency Preparedness has dispersed $4.1 billion 
of the $7.5 billion FEMA has obligated to applicants.
    The Mississippi Emergency Management Agency has dispersed 
$1.6 billion of the $2.9 billion FEMA has obligated to 
applicants.
    There are, sometimes, disagreements between FEMA and 
applicants about the extent of disaster-related damages to 
facilities that were not well maintained prior to the disaster. 
The Stafford Act authorizes FEMA to reimburse applicants to 
repair disaster-related damages, but not damage attributed to 
deferred maintenance, neglect or other causes.
    Applicants who disagree with the FEMA determination have 
the right to appeal, and have 60 days from the written 
determination to file a first appeal with the appropriate FEMA 
regional office. If the regional administrator denies the first 
appeal, the applicant has 60 days to file a second appeal to 
FEMA headquarters.
    The recently enacted American Recovery and Reinvestment Act 
of 2009 contains a provision that directs the president to 
establish an arbitration panel to expedite recover efforts in 
the Gulf Coast for Hurricanes Katrina and Rita, and FEMA and 
the department are developing procedures to implement this new 
requirement.
    In the meantime, FEMA will continue to work with the states 
and applicants to resolve disputes.
    Recognizing that the scale of devastation demanded maximum 
flexibility within the public-assistance program, FEMA 
developed a number of innovative strategies consistent with the 
authorities of the Stafford Act, and designed to address some 
of the unique challenges of recovering from Hurricanes Katrina 
and Rita.
    FEMA will continue to adapt its policies wherever possible 
to expedite the recovery process.
    We have made, I believe, significant progress in promoting 
recovery in the Gulf Coast. To date, FEMA has obligated over 
$10.5 billion in public-assistance funding to the Gulf Coast 
states. FEMA has taken aggressive steps to speed the provision 
of funds to the states, and to encourage the states to provide 
funds to local applicants.
    While FEMA has obligated the majority of public-assistance 
funds to the states, it is important to recognize that the 
approval of projects and the obligation of funds is just the 
beginning of the rebuilding process. Local jurisdictions 
continue to confront a lengthy and challenging rebuilding 
period.
    Nevertheless, FEMA will remain on the ground, shoulder-to-
shoulder with our state and local partners, as they undertake 
these major repair and construction projects to the roads, 
bridges, schools, utilities and other public facilities.
    As brick-and-mortar projects are begun, we will continue to 
identify additional eligible work as it emerges or is 
identified, and continue to reimburse actual costs for any 
eligible work.
    Repairing and rebuilding damaged and destroyed 
infrastructure has been, and will continue to be, a challenge. 
But FEMA's public-assistance presence and support can be 
counted on until that challenge is met.
    Thank you. We are prepared to address any questions you may 
have.
    [The joint statement of Mr. Garratt and Mr. Walke follows:]

                              Statement of

                             David Garratt

                      Acting Deputy Administrator

                                  and

                              James Walke

                     Acting Assistant Administrator

                    Disaster Assistance Directorate

                  Federal Emergency Management Agency

                    Department of Homeland Security

                ``FEMA's Gulf Coast Rebuilding Efforts:

                           The Path Forward''

    Before theHouse Committee on Homeland Security's Subcommittee on

          Emergency Communications, Preparedness and Response

                     U.S. House of Representatives

                             Washington, DC

                             March 3, 2009

Introduction
    Good morning, Chairman Cuellar, Ranking Member Rogers and other 
distinguished members of the Committee. It is a privilege to appear 
before you today on behalf of the Department of Homeland Security (DHS) 
and the Federal Emergency Management Agency (FEMA). As always, we 
appreciate your interest in, and continued support of emergency 
management, specifically FEMA's response and recovery efforts in the 
wake of disaster events.
    I am joined today by James Walke, Acting Assistant Administrator 
for the Disaster Assistance Directorate at FEMA. We are pleased to be 
here with you today to update you on our Public Assistance (PA) efforts 
from hurricanes Katrina and Rita throughout the Gulf Coast.

Public Assistance Overview
    FEMA's PA program is a vital and visible part of the recovery 
process. FEMA has been extremely active in working with the States and 
local governments to repair, restore, or rebuild public services and 
facilities. FEMA's PA program provides grants to States, local 
governments and certain private non-profits to reimburse for the 
removal of debris, for emergency protective measures and temporary 
relocation of certain services or functions, and the repair and 
replacement of infrastructure damaged or destroyed by a disaster event. 
The repair or replacement of infrastructure can include public roads, 
bridges, drainage structures, water control facilities, public 
buildings, public utilities, parks and other facilities.
    Though funded by FEMA, the State administers the PA program. Local 
governments and other eligible applicants receive their funding through 
the States. When State and local governments identify eligible 
projects, FEMA, along with the State and applicant, prepares a project 
worksheet to document the disaster damage to the facility and estimate 
the cost to repair the damage. FEMA enters the completed project 
worksheet into NEMIS, our management information system, to begin the 
funding process. A project worksheet has been prepared for every 
project that the State and local governments have identified to FEMA. 
There are occasions when the PW has to amend an obligated project 
worksheet to adjust the eligible scope of work or cost estimate for a 
project to ensure that funding is provided to eligible applicants, for 
eligible work and for eligible costs.
    FEMA staff works very closely with the State and the eligible 
applicant to complete the project worksheets and obligate the federal 
share of assistance. FEMA, State and public/private nonprofit 
applicants jointly prepare project worksheets. Preparing project 
worksheets and reaching agreement on the eligible scope of work and 
cost estimates is a collaborative process that takes time to complete.
    Once FEMA approves and obligates a project worksheet, the State 
receives the funds to disburse to the applicant. As of February 20, 
2009, FEMA has obligated over $10.5 billion in public assistance 
funding to the Gulf Coast states (including $7.5 billion to Louisiana 
and $2.9 billion to Mississippi).
    The State controls the pace of such disbursements. Federal 
regulations authorize States to disburse funds for small projects 
(projects that cost less than $55,500) to applicants up front, if state 
regulations allow such payment. For large projects (projects that cost 
more than $55,500), Federal regulations authorize States to disburse 
funds to applicants on a reimbursement basis. In other words, 
applicants must have incurred costs before they can request funds from 
the State. However, in an effort to meet the financial challenges of 
local applicants, the States of Louisiana and Mississippi have both 
established policies to provide advance funding to begin design work 
and construction. To date, the Louisiana Governor's Office of Homeland 
Security and Emergency Preparedness (GOHSEP) has disbursed $4.1 billion 
of the $7.5 billion FEMA has obligated to applicants. The Mississippi 
Emergency Management Agency (MEMA) has disbursed $1.6 billion of the 
$2.9 billion FEMA has obligated to applicants.
    In some cases, FEMA must amend or prepare an alternate version of a 
PW to revise the scope of work to reflect newly identified damage, or 
revise the cost estimate after the applicant finalizes design of the 
project or awards construction contracts. FEMA estimates that 
approximately 1,400 project worksheets in Louisiana may require an 
amendment or version update. While we have had many challenges, we 
believe that FEMA and the State of Louisiana have developed a process 
to systematically and efficiently evaluate applicants' requests to 
amend project worksheets.
    In Mississippi, there have been significantly fewer requests to 
amend or prepare alternate versions to obligated project worksheets. 
Typically, FEMA has amended or prepared versions of project worksheets 
after the applicant completes the work and FEMA and the State reconcile 
project costs.
    There are sometimes disagreements between FEMA and applicants about 
the extent of disaster-related damages to facilities that were not 
well-maintained prior to the disaster. The Stafford Act authorizes FEMA 
to reimburse applicants to repair disaster-related damages. Based on 
assessments by FEMA Public Assistance staff, some of the facilities 
damaged by Katrina and Rita also suffered from deferred maintenance. 
Although FEMA has prepared project worksheets to document what we 
believe to be the disaster-related damages, applicants have not 
initiated repairs to the facilities or submitted formal appeals. If an 
applicant does not agree with a scope of work in an approved PW, FEMA 
regulations (44 CFR 206.206) provide an applicant 60 days to file a 
first appeal with the appropriate FEMA regional office. If the Regional 
Administrator denies the first appeal, the applicant has 60 days to 
file a second appeal with the Assistant Administrator at FEMA 
Headquarters.
    The American Recovery and Reinvestment Act of 2009 contains a 
provision that directs the President to establish an arbitration panel 
to expedite recovery efforts in the Gulf Coast for Hurricanes Katrina 
and Rita. The Administration is developing procedures to implement this 
new requirement. In the meantime, FEMA will continue to work with the 
States and applicants to resolve disputes.

Public Assistance Innovations
    We have made, I believe, significant progress in promoting recovery 
in the Gulf Coast. As of February 13, 2009, FEMA has obligated over 
$10.5 billion in public assistance funding to the Gulf Coast states 
(Louisiana and Mississippi). In recognition of the extraordinary level 
of devastation to the area, FEMA developed innovative strategies, 
within the authorities of the Stafford Act, to help Louisiana deal with 
the challenges of recovering from Hurricanes Katrina and Rita. These 
innovations included:
         Alternative arrangements: All FEMA funded projects 
        must comply with the National Environmental Policy Act. 
        Traditionally, FEMA would assess the environmental impact of 
        each new facility. To accelerate the environmental review 
        process, FEMA developed a process to evaluate environmental 
        impacts that decreases the amount of time usually required for 
        environmental reviews, approvals, and comment periods, but 
        still meets the requirements of the National Environmental 
        Policy Act. This has allowed us to approve and obligate funds 
        for new projects quicker.
         Building contents: Traditionally, FEMA requires 
        applicants to use their reimbursements to replace damaged 
        contents on a piece-by-piece basis. Following Hurricanes 
        Katrina and Rita, FEMA provided applicants with the flexibility 
        to combine all of their grant monies for contents into one 
        grant and use that money toward broad contents categories, such 
        as furniture, publications, and information technology. This 
        flexibility allows applicants to maximize their funding and 
        adjust it to their specific content needs instead of forcing 
        them to purchase pencil-for-pencil or book-for-book.
        Consolidation projects: FEMA has allowed applicants the option 
        of combining multiple facilities and their functions into one 
        facility or multiple facilities at one location without a 
        reduction in eligible funding. This initiative is called 
        project consolidation. This allows applicants the flexibility 
        to use monies to rebuild smarter in implementing their recovery 
        plans. For example, a county/parish may decide it needs fewer 
        fire stations in one area but bigger fire stations in another 
        area to best serve population shifts. The county/parish can 
        make that decision without losing any FEMA funding.
         Project management fees: Applicants have the option to 
        receive project management fees upfront and lumped together in 
        one project worksheet for all of their projects, so they can 
        use those funds to employ architectural and engineering (A&E) 
        firms to begin designs for facility repair/rebuilding. This 
        allows applicants the flexibility to begin work on priority 
        projects and funnel monies toward the design of those projects 
        so rebuilding can begin.
         Vehicle replacement: Traditionally, FEMA reimburses an 
        applicant for each damaged or destroyed vehicle and require 
        applicants to replace them in-kind. FEMA has adjusted its 
        policy for the replacement of vehicles. Applicants have the 
        flexibility to take funds for the replacement of storm-damaged 
        vehicles and use them to purchase a smaller number of alternate 
        vehicles with the same function.
    FEMA continues to adapt its policies, where possible, on other 
issues that will expedite the recovery process.

Public Assistance Challenges
    While progress has been made in streamlining and expediting funds 
to the State and local governments, a number of unique and significant 
hurdles remain facing the State and local governments.
         Grant funds are limited to actual costs and applicants 
        are struggling with funding shortfalls as they address real 
        needs in repairing and replacing facilities. These issues 
        include both cash flow problems and the applicants' efforts to 
        address non-disaster related improvements and expansions not 
        eligible for PA funding.
         Louisiana and Mississippi still have not made 
        decisions regarding accepting the current level of funding 
        proposed by FEMA, and subsequently, this has hindered decisions 
        regarding what building projects they intend to repair, 
        rebuild, consolidate or relocate. This is reflected in the 
        small number of construction projects actually underway. This 
        indecision on the part of the States has not hindered FEMA, 
        however, from obligating these funds to the State to begin work 
        on these projects. Additionally, because states have not drawn 
        down these funds, and not filed formal appeals to request 
        additional funding, funds remain unspent in the State's 
        account.
         FEMA accommodated the State of Louisiana's request to 
        create updated project worksheet versions each time a 
        significant change was made to the scope of work, costs, etc, 
        during the life of the project. However, this accommodation has 
        significantly increased the number of project worksheet 
        versions in Louisiana and disputes.
    FEMA anticipates working closely with State and local governments 
to resolve these issues.

Looking Ahead
    FEMA has taken aggressive steps to speed the provision of funds to 
the States and to encourage the States to provide funds to local 
applicants. While FEMA has obligated the majority of public assistance 
funds to the States, it is important to recognize that the approval of 
projects and the obligation of funds is just the beginning of the 
rebuilding process. Local jurisdictions are now entering what will be a 
lengthy and challenging rebuilding effort. A construction project for 
just one school is a significant undertaking for a local community--the 
repair and rebuilding of entire communities will continue to challenge 
and stretch local capabilities.
    FEMA will remain on the ground, committed to supporting our State 
and local partners, as they undertake major repair and construction 
projects to their roads, bridges, schools, utilities, and other public 
facilities. As the brick and mortar projects are executed, we will 
continue to identify additional eligible work that was not originally 
anticipated. The PA program is a reimbursements program and FEMA will 
pay actual costs for eligible work.

Conclusion
    Throughout the Gulf Coast, we have piloted many new initiatives 
that have contributed not only to the recovery of the Gulf Coast but 
have also contributed to the retooling and improvement of FEMA. These 
initiatives and our lessons learned will help to improve the 
effectiveness of FEMA's programs in future disasters.
    While repairing damaged and destroyed infrastructure has been, and 
will continue to be a challenge, FEMA remains committed to providing 
and coordinating continued assistance to the victims of hurricanes 
Katrina and Rita.
    Thank you again. We are prepared to address any questions you may 
have.

    Mr. Cuellar. Mr. James Walke, who is FEMA's acting 
assistant administrator for the Disaster Assistant Director, is 
also present to answer any particular questions that you all 
might have.
    At this time, I would like to recognize Mr. Czerwinski to 
summarize his statement for 5 minutes.

STATEMENT OF STANLEY J. CZERWINSKI, DIRECTOR, STRATEGIC ISSUES, 
             U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Czerwinski. Mr. Chairman, members of the subcommittee, 
thank you for inviting us here today to testify on lessons 
about better rebuilding after disasters, particularly in the 
Gulf Coast.
    And I need to thank you, Mr. Chairman, because you actually 
summarized part of my statement, including my overriding 
message. And that is, ``We are all in it together--Federal, 
state and local governments.'' And they have to be partners for 
this to work.
    And as Mr. Garratt pointed out, in the Stafford Act, the 
primary responsibility for doing the rebuilding is at the state 
and local level--at--but the money, the paper building, is from 
the Federal Government.
    And this works best when the state and local governments 
are empowered and capable to do the work, and the Federal 
Government delivers the funds as simply as possible.
    As you know, there are several phases to disaster 
assistance. There is preparedness. There is responding to the 
emergency needs and immediate aftermath, and there are 
rebuilding after disasters.
    Frankly, the disaster community tends to focus on the 
preparedness and on the immediate response. You have exercises 
to enhance capacity, to be prepared. You have a national 
response plan that has been around for years that lays out 
detailed roles and responsibilities for the Federal, state and 
local level.
    We don't have the structure for rebuilding. So in the wake 
of hurricanes Katrina, Ivan and Gustav, and the Midwest floods, 
we felt that--that state and local governments, and the Federal 
Government, could benefit from some lessons that we learned 
from looking at past disasters.
    And as you mentioned, Mr. Chairman, we went back and 
visited sites and talked to people involved in the response and 
the rebuilding, from Katrina and Rita in the Gulf Coast, 
Andrew, in Florida, the Red River floods in North Dakota and 
Minnesota, the earthquakes in California--both Northridge and 
Loma Prieta--and we even sent a team to Japan to look at how 
they did things after Kobe.
    And we also did a review of the public-assistance program. 
And, as Mr. Garratt points out, public assistance is a very 
procedural-process intensive program. And we have some ideas 
about how it might go better.
    Today, I want to share a few simple lessons for you. And we 
got these from our examples. The first lesson that we have is 
you have got to have a plan, and you have to have that plan as 
soon as possible. I will give you an example.
    After Loma Prieta, in northern California, there were two 
communities that were nearby, similarly affected--Santa Cruz 
and Watsonville. And in Santa Cruz, they had a vision. They had 
a strategy for what they wanted to do. They wanted to maintain 
their local businesses.
    In the immediate aftermath of disaster, they set up 
pavilions where their businesses, right next to downtown, were 
able to reconstitute. They kept their businesses open. The Loma 
Prieta earthquake was in late October. It was going into the 
Christmas season--Vital to small businesses. These people 
stayed in business. And they went through the holiday season. 
And when they rebuilt, they were back in Santa Cruz.
    Watsonville did not have a plan. It did not have a 
strategy. And their businesses went. They went out to the strip 
malls around the area. They never did come back.
    And, today, if you look at Santa Cruz, they have a thriving 
downtown. If you look at Watsonville, just about 10-15 miles 
away, they are struggling with unemployment, and they have a 
stagnant economy that goes beyond the current recession.
    The second lesson that I want to talk about is that it 
takes money to spend money. And a good example of that is that 
the FEMA public-assistance program requires state and local 
governments to front the money for their projects.
    There is a reason for this. The idea is if they wanted to 
stay--go--they have to have skin in the game. They want to have 
some accountability--that we are not going to projects that are 
too expensive, or that we don't want to do. It also has a 
choking effect.
    You are talking about local governments and state 
governments that have been devastated--just had a disaster. 
Their infrastructure has been torn apart. Their lives have been 
torn apart. And on top of that, their finances are decimated.
    They don't have the revenue streams. They don't have the 
economic basis. And, yet, they have to come up with the up-
front money.
    There have been some creative ways that we have seen to 
handle this. One was in Mississippi. The state went out and 
quoted a $200 billion--a $200 million--and in this current 
environment today, with the stimulus, we could have millions 
and billions all mixed up. This is $200 million bond issue.
    This was, then, used for the three Gulf Coast communities 
to provide the money up front. And downside to not having the 
money up front is that it does two things to local governments. 
And I am sure the mayor can talk about this much better than I 
can.
    But it inhibits the ability to do the up-front planning and 
the up-front design work that you need for your projects. What 
it also does is it limits who you can contract with. You can 
only contract with contractors who can wait to be paid. And if 
you are waiting to be paid, well, that is going to close on a 
lot of the smaller businesses.
    What it is also going to do is it puts the contractor in 
the position of strength in the negotiation, because they know 
you need them. And they will wait for the money. And, believe 
me, there will be a carrying cost when that contract is 
actually consummated.
    The final lesson that I want to talk a little bit about--
and this is the GAO--we wouldn't be here if we didn't talk 
about fraud, waste and abuse--and that is there is a 
vulnerability that is inherent in a disaster area after it 
occurs. And it is a vulnerability to fraud, waste and abuse.
    There is a lot of money flowing in. There are people in 
need. And sometimes the people in need don't know who the good 
contractors are and who the bad contractors are.
    We saw a really good example of how to deal with this up 
in--after the Red River floods in North Dakota. The city of 
Grand Forks brought together what they called the ``one-stop 
shopping'' credentialing operation.
    Any contractor who wanted to do business there had to go in 
there. And they were covered by the Bureau of Licensing, the 
Criminal Investigations inside their state. They did background 
checks. They did criminal checks. They did financial checks.
    They, then, looked at bonding and licensing, and issued 
photo IDs that these contractors had to carry with them. 
Therefore, if you were a homeowner and looking to have your 
home rebuilt, if that contractor did not have that kind of 
licensing approval, you didn't want to deal with them.
    So that was as simple idea. And what we saw was after the 
recent Midwest floods, the city of Cedar Rapids, Iowa adopted 
that same idea.
    With that, what I would like to do is just close off by 
saying there is a lot of other lessons that we have learned. 
And we would be happy to talk to you about them during the 
question-and-answer, if you are interested.
    That concludes my statement, Mr. Chairman. Thanks for 
asking us to testify.
    [The statement of Mr. Czerwinski follows:]

              Prepared Statement of Stanley J. Czerwinski

    Mr. Chairman and Members of the Subcommittee:
    Recovery from major disasters is a complex undertaking that 
involves the combined efforts of all levels of government in order to 
succeed. While the federal government provides a significant amount of 
financial and technical assistance for recovery, state and local 
jurisdictions work closely with federal agencies to secure and make use 
of those resources. With this in mind and as requested, my testimony 
today describes a number of lessons and insights that we have 
identified from our work on past disasters that may be useful to inform 
the actions of federal, state, and local government as they work to 
meet the challenging process of recovering after Hurricanes Ike and 
Gustav as well as other disasters yet to come.
    My statement is primarily based on two recently released reports 
that are part of a body of work GAO has developed regarding disaster 
recovery.\1\ In September 2008, we identified lessons from the 
experiences of communities that have recovered from previous major 
disasters in order to help inform recovery efforts in the wake of 
Hurricanes Ike and Gustav as well as the 2008 Midwest floods.\2\ This 
past December, we examined the implementation of the Federal Emergency 
Management Agency's (FEMA) Public Assistance grant program after the 
2005 Gulf Coast hurricanes \3\ and identified several actions that the 
Department of Homeland Security can take to improve the operations of 
the program.\4\ In commenting on a draft of that report, the department 
generally agreed with our recommendations.
---------------------------------------------------------------------------
    \1\ See app. I of GAO, Disaster Recovery: Past Experiences Offer 
Insights for Recovering from Hurricanes Ike and Gustav and Other Recent 
Natural Disasters, GAO-08-1120 (Washington, D.C.: Sept. 26, 2008) for a 
partial listing of GAO products on disaster recovery.
    \2\ See GAO-08-1120. For this review, we examined recovery 
experiences following these six major disaster events: (1) the 1989 
Loma Prieta earthquake in northern California; (2) Hurricane Andrew, 
which struck southern Florida in 1992; (3) the 1994 Northridge 
earthquake in Los Angeles, California; (4) the 1995 Kobe earthquake in 
Japan; (5) the 1997 Grand Forks/Red River flood in North Dakota and 
Minnesota; and (6) the 2005 Gulf Coast hurricanes.
    \3\ For the purposes of this testimony, ``2005 Gulf Coast 
hurricanes'' refers to Hurricanes Katrina and Rita and is treated 
collectively as a single disaster event.
    \4\ GAO, Disaster Recovery: FEMA's Public Assistance Grant Program 
Experienced Challenges with Gulf Coast Rebuilding, GAO-09-129 
(Washington, D.C.: Dec. 18, 2008).
---------------------------------------------------------------------------
    We conducted our reviews in accordance with generally accepted 
government auditing standards. Those standards require that we plan and 
perform the audit to obtain sufficient, appropriate evidence to provide 
a reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a reasonable 
basis for our findings and conclusions based on our audit objectives.

    Past Disasters Offer Recovery Insights for State and Local 
Governments
    While the federal government provides significant financial 
assistance after major disasters, state and local governments play the 
lead role in disaster recovery. Experiences from past disasters can 
provide states and local communities with potential good practices to 
consider. These practices are creating a recovery plan; building state 
and local capacity to use federal disaster assistance programs; 
supporting business recovery; and combating fraud, waste, and abuse of 
government programs. Because each disaster is distinctive and the 
resources and capacities of every community differ, each jurisdiction 
will need to consider whether and how to apply these insights to its 
own specific circumstances.
    Create a Clear, Implementable, and Timely Recovery Plan
    A recovery plan can provide state and local governments with a 
valuable tool to document and communicate recovery goals, decisions, 
and priorities--in effect, they can provide a roadmap for the recovery 
process. Just as important, the very process of developing these plans 
provides an opportunity for recovering jurisdictions to involve the 
community in identifying recovery goals and priorities. In our review 
of recovery plans created after past disasters, we have identified 
certain characteristics that facilitated the recovery process.
    Identify clear goals for recovery. A plan containing clear goals 
can provide direction and specific objectives for a recovering 
community to focus on and strive for. Clear goals can also help state 
and local governments prioritize projects, allocate resources, and 
establish a basis for subsequent evaluations about the recovery. After 
the 1995 earthquake in Kobe, Japan, jurisdictions identified specific 
recovery goals in their plans, such as the rebuilding of all damaged 
housing units in 3 years and removing all temporary housing within 5 
years. These goals were critical for helping to coordinate the wide 
range of participants involved in recovery. Additionally, these goals 
allowed the government to communicate its recovery progress with the 
public. Each month, information on progress made toward achieving those 
goals was provided to the public online and to the media at press 
conferences. Finally, these goals provided a basis for evaluations 
conducted by local governments, which enabled policymakers to measure 
the region's progress toward recovery, identify needed changes to 
existing policies, and learn lessons for future disasters.
    Include detailed information to facilitate implementation. 
Including detailed implementation information in recovery plans can 
help communities realize recovery goals. Implementable recovery plans 
specify objectives and tasks, clarify roles and responsibilities, and 
identify potential funding sources. Accordingly, the recovery plan 
created by the City of Grand Forks, North Dakota, after the 1997 Red 
River flood contained these elements. First, the plan outlined broad 
recovery goals, which were linked to a number of objectives and tasks 
that would help to realize those broad goals. The plan also identified 
a target completion date for each task so the city could better manage 
related activities. Second, Grand Fork's plan assigned personnel to 
each task to carry out that activity. By clarifying the roles and 
responsibilities for those who would be involved in accomplishing 
specific tasks, the plan provided detailed information to facilitate 
implementation. Third, the Grand Forks plan identified funding sources 
for each recovery task. It also included a financing matrix, which 
presented various funding sources for each task along with target 
completion dates. A city evaluation found that these plan 
characteristics allowed the city to conceive and formulate projects in 
collaboration with the city council and other governmental 
representatives. It also helped Grand Forks meet its recovery goals as 
well as adhere to federal and state disaster assistance funding laws 
and regulations.
    Establish plans in a timely manner. The prompt completion of 
recovery plans help to facilitate the ensuing recovery process by 
providing a clear framework early on. Creating plans in a timely manner 
can be a challenge after disasters, as was the case in New Orleans 
after the 2005 hurricanes. However, jurisdictions affected by the Kobe 
earthquake devised a strategy to ensure that recovery plans were 
finalized promptly after the 1995 earthquake. These local jurisdictions 
had a relatively short amount of time in which to submit proposals for 
the national budget that would be considered for the coming year. 
Facing this deadline, officials developed a two-phase planning 
strategy. First, they completed a plan within 2 months of the 
earthquake that identified broad recovery goals to provide a basis for 
budget requests. Second, six months after the earthquake, local 
Japanese officials collaborated with citizens to develop more detailed 
recovery plans. This two-phase planning process enabled the 
jurisdictions to meet their tight national budget submission deadline 
while allowing additional time for communities to develop specific 
recovery strategies.

    Build State and Local Capacity for Implementing Federal Disaster 
Programs
    Given the lead role that state and local governments play in 
disaster recovery, their ability to act effectively directly affects 
recovery after a major disaster. While the federal government plays a 
key supporting role by providing financial assistance through a range 
of programs, state and local governments may need certain capacities--
such as having financial resources and technical know--how--to 
effectively take advantage of that assistance.
    Enhance financial capacity. The widespread destruction caused by 
major disasters can impose significant financial burdens on the state 
and local governments, such as creating unbudgeted expenses while at 
the same time decimating the local tax base. In addition, federal 
disaster programs often require state and local governments to match a 
portion of the assistance they receive. In the past, affected 
jurisdictions have used loans from a variety of sources to enhance 
local financial capacity. For example, after the 1997 Red River flood, 
the Bank of North Dakota provided a line of credit of over $44 million 
to the City of Grand Forks. The city used this loan to meet FEMA 
matching requirements, provide cash flow for the city government's 
operating expenses, and fund recovery projects that commenced before 
the arrival of financial assistance.
    Strengthen technical capacity. State and local governments face the 
challenge of implementing the wide range of federal disaster programs. 
Some of these federal programs require a certain amount of technical 
know-how to navigate. For example, FEMA's Public Assistance grant 
program has complicated paperwork requirements and multistage 
application processes that can place considerable demands on 
applicants. To strengthen their technical capacity to implement this 
program after the 2005 Gulf Coast hurricanes, FEMA and Mississippi 
state officials used federal funding to obtain an online accounting 
system that tracked and facilitated the sharing of operational 
documents. In doing so, FEMA and the state reduced the burden on 
applicants of meeting Public Assistance grant program requirements, 
gained immediate access to key documents that helped officials make 
project approvals, and relieved the documentation and resulting human 
capital responsibilities that applicants faced during project 
development.

    Implement Strategies for Business Recovery
    Business recovery is a key element of a community's recovery after 
a major disaster. Small businesses are vital to a community's economic 
health, yet are especially vulnerable to disasters because they often 
lack resources to sustain financial loss and have less capacity to 
withstand market changes. Federal, state, and local governments have 
developed strategies to facilitate business recovery, including several 
targeted at small businesses.
    Provide technical assistance to help businesses adapt to 
postdisaster market conditions. Major disasters can change communities 
in ways that require businesses to adapt. The ability of business 
owners to recognize change and adapt to the postdisaster market for 
goods and services can help those firms attain long-term viability 
after a disaster. Recognizing this after the 1994 Northridge 
earthquake, Los Angeles officials assisted neighborhood businesses in 
adapting to short--and long-term changes, using a combination of 
federal, state, and local funds. Specifically, a local nonprofit 
provided direct technical assistance to affected businesses such as 
counseling them on how to obtain government assistance and providing 
strategies for how to adapt to the changed business environment. This 
information was disseminated through door-to-door canvassing in 
affected areas to reach out to business owners and conferences to teach 
owners how to market their businesses given the changed demographics.
    Create strategies to minimize business relocation and the loss of 
customer base. Widespread business relocations after a disaster can 
hinder recovery. Local governments have devised strategies to retain 
businesses after past disasters. For example, after the Red River 
flood, the City of Grand Forks used the Department of Housing and Urban 
Development's Community Development Block Grant funds to provide $1.75 
million in loans to businesses. A feature of this program was that it 
forgave 40 percent of the loan principle of businesses that were still 
operating in the community for 3 years. According to a local official, 
over 70 percent of businesses that received this loan stayed in Grand 
Forks for 3 years. Another local strategy taken to minimize business 
relocation was implemented after the 1989 Loma Prieta earthquake. The 
City of Santa Cruz constructed large aluminum and fabric pavilions 
where local businesses that suffered damage relocated. City officials 
stated that these pavilions helped to mitigate the impact of the 
earthquake on small businesses by enabling them to continue operations 
and thereby maintain their customer base.
    Adopt a Comprehensive Approach to Combating Fraud, Waste, and Abuse
    A persistent challenge facing government at all levels is the risk 
of fraud, waste, and abuse of funds targeted for disaster assistance. 
The influx of financial assistance available after a major disaster 
provides increased opportunities for such activities. Both disaster 
victims and public funds are at risk. We identified two actions that 
state and local governments can take after major disasters to combat 
the issue of fraud, waste, and abuse.
    Create credentialing program to minimize instances of contractor 
fraud. Many disaster victims hire contractors to repair or rebuild 
their homes using government assistance. Residents are potential 
targets for fraud by unscrupulous contractors. To help protect its 
residents from contractor fraud after the 1997 Red River flood, the 
City of Grand Forks established a required credentialing program for 
contractors. This included a ``one-stop shop'' that served as a 
mandatory clearinghouse for contractors that wanted to do business with 
recovering residents. State and local officials staffing the 
clearinghouse carried out a variety of functions, including checking 
that contractors had appropriate licenses and insurance and did not 
have criminal records. After passing these checks and completing all 
the required applications, contractors were issued photo identification 
cards that they were required to carry at all times while working 
within city limits. In about 2 months, the city issued approximately 
500 new contractor licenses and 2,000 contractor identification cards 
through the one-stop shop. During that same period, officials arrested 
more than 20 individuals who had outstanding warrants. In an effort to 
minimize instances of contractor fraud after the 2008 Midwest floods, 
the City of Cedar Rapids, Iowa created a similar contractor 
certification program modeled after Grand Forks' program.
    Create comprehensive state framework to minimize fraud, waste, and 
abuse of federal programs. The need to quickly provide assistance to 
victims puts assistance payments at risk to fraudulent applicants who 
try to obtain benefits they are not entitled to. Our prior work on 
FEMA's Individuals and Households Program (IHP) payments and the 
Department of Homeland Security's purchase card program showed 
significant instances of fraud, waste, and abuse in the wake of the 
2005 hurricanes. We previously estimated improper and potentially 
fraudulent payments related to the IHP application process to be 
approximately $1 billion of the first $6 billion provided. 
Additionally, FEMA provided nearly $20 million in duplicate payments to 
individuals who registered and received assistance twice by using the 
same Social Security numbers and addresses.\5\ Because of the role 
state governments play in distributing and allocating this federal 
assistance, these known vulnerabilities call for states to establish 
effective controls to minimize opportunities for individual to defraud 
the government. We have previously testified on the need for fraud 
prevention controls, fraud detection, monitoring adherence to controls 
throughout the entire program life, collection of improper payments, 
and aggressive prosecution of individuals committing fraud.\6\ Without 
the creation of such a fraud protection framework--especially the 
adoption of fraud prevention controls--federal programs can end up 
losing millions or potentially billions of dollars to fraud, waste, and 
abuse.
---------------------------------------------------------------------------
    \5\ GAO Hurricanes Katrina and Rita Disaster Relief: Prevention Is 
the Key to Minimizing Fraud, Waste, and Abuse in Recovery Efforts, GAO-
07-418T (Washington, D.C.: Jan. 29, 2007).
    \6\ GAO-07-418T.

    Challenges with FEMA's Public Assistance Grant Program After the 
2005 Gulf Coast Hurricanes Provide Potential Lessons
    The Public Assistance grant program, administered by FEMA, is one 
of two key programs the federal government has used to provide federal 
rebuilding assistance to Gulf Coast states after the 2005 Gulf Coast 
hurricanes. Under this program the federal government provides funds on 
a project-by-project basis. We have previously reported that federal, 
state, and local officials reported experiencing a wide range of 
operational challenges, many of which were magnified because of the 
large number of rebuilding projects following the 2005 Gulf Coast 
hurricanes. Today, I would like to focus on two broad challenges we 
identified in that report--those associated with developing Public 
Assistance projects and those involving information sharing.

    Challenges Experienced in Developing Public Assistance Projects
    In our recent review of the Public Assistance grant program, we 
identified several challenges involving the process of developing 
projects that at times contributed to delays and increased costs, 
particularly for many large permanent work projects. These included 
using program flexibilities to rebuild to the postdisaster needs of 
grant applicants and determining the scope of projects.
    Limitations in using Public Assistance to rebuild to the 
postdisaster needs of grant applicants. Localities experienced 
difficulties using the Public Assistance grant program to rebuild in a 
way that met their postdisaster needs and conditions. This is because 
the program typically provides funds to restore buildings, equipment, 
or infrastructure back to the way they were before the disaster.\7\ For 
example when a community that was in the process of making 
infrastructure upgrades prior to the storms wanted to rebuild according 
to its updated plans, it experienced challenges using the program. 
Prior to the 2005 Gulf Coast hurricanes, local officials in St. Bernard 
Parish were beginning the process of consolidating the jurisdiction's 
seven separate wastewater and sewer treatment plants into a single 
facility in order to meet EPA compliance rules, among other things. The 
parish had already begun construction of the consolidated facilities 
and had issued a $50 million bond to fund the project. However, the 
storms flooded the entire sewer system and destroyed equipment in all 
seven treatment plants. When parish officials applied for Public 
Assistance funding to repair the facilities, they sought to structure 
the project to accomplish their previous construction goals rather than 
building a system that they planned to decommission. These officials 
reported experiencing challenges obtaining agreement from FEMA to build 
their project as a consolidated wastewater treatment plant instead of 
seven separate facilities. This challenge, along with other challenges 
in obtaining agreement on the scope and cost of the project, led to 
over 2 years of delays in starting rebuilding. During that time, heavy 
trucks were used to pump and haul sewage as an interim measure, 
resulting in a considerable cost as well as damage to the parish's 
roads. According to St. Bernard Parish officials, the temporary 
measures have cost the federal government more than $60 million. These 
officials estimated that had they been able to move ahead with their 
original plans, it would have taken about 11/2 years for the new 
consolidated facility to become operational. However, more than 2 years 
after the project was proposed, rebuilding had not yet begun.
---------------------------------------------------------------------------
    \7\ The program contains provisions--through the use of alternate 
or improved projects--that allow some changes, but this typically 
results in restrictions in funding.
---------------------------------------------------------------------------
    Local governments in the Gulf Coast also needed flexibility in 
rebuilding to address postdisaster needs when the population of their 
neighborhoods changed significantly from pre-Katrina levels. 
Consequently, it was important for their rebuilding projects to take 
into account new conditions. For example, in light of postdisaster 
population changes, Louisiana's Recovery School District sought 
flexibility in the size and location of the schools to be rebuilt. 
However, they experienced challenges with using the Public Assistance 
grant program to do this because the program is designed to restore 
infrastructure back to the condition, location, and function that 
existed before the disaster. FEMA and school district officials 
ultimately were able to work together to resolve their differences by 
moving toward a more flexible approach to rebuilding.
    Difficulties in accurately determining scope of projects. Federal, 
state, and local officials also experienced challenges with developing 
the scope of work of Gulf Coast recovery projects. During the process 
of developing the scope of Gulf Coast projects, officials had 
difficulty determining which damage was disaster related and therefore 
potentially eligible for coverage under the program. For example, in 
St. Bernard Parish, roughly 2 years passed before FEMA and parish field 
inspection teams completed identification of eligible damage to 
approximately 2,500 blocks of local streets. The parish had no records 
to document the condition of its streets prior to the 2005 Gulf Coast 
hurricanes, so according to state officials, FEMA conducted inspections 
of each street in an attempt to distinguish predisaster damage from 
what was caused directly as a result of the hurricanes. In contrast, 
nearby Jefferson Parish did not encounter similar challenges with 
distinguishing predisaster damage from damage directly related to the 
hurricanes. This is because the parish maintained a road repair-
management information system (including a road-maintenance plan) prior 
to the disaster that enabled the parish to identify preexisting road 
conditions to FEMA officials, thereby helping to expedite its road-
repair projects.
    FEMA plans to incorporate some project development flexibilities 
into its regular practices. For example, FEMA's Public Assistance 
Catastrophic Disaster Recovery Concept Plan, finalized in May 2008, 
recognizes the need for regulations to allow applicants to more easily 
tailor projects to meet postdisaster needs. In September 2008, FEMA 
officials informed us that policies to address this issue as well as a 
range of other initiatives related to the plan are in development and 
are expected to be complete by March 2009.

Challenges with, and Lessons for, Information Sharing
    Because the Public Assistance grant program is complex and requires 
collaboration among federal, state, and local officials, effective 
sharing of project information is especially important. We identified 
challenges to sharing project information among intergovernmental 
participants during project development. Federal, state, and local 
officials involved in the program in Louisiana reported facing 
challenges in effectively sharing critical operational information 
about projects including documents used to support scope and cost 
estimates, such as receipts, invoices, and facility assessments. For 
example, some applicants in Louisiana told us of the need to repeatedly 
resubmit key project documents because of the lack of an effective 
system to share such documentation. This situation was made worse 
because key federal and state officials responsible for reviewing and 
approving documentation were not primarily located in the same place. 
Although FEMA typically colocates with state grantees in order to 
facilitate information sharing, FEMA and Louisiana state officials 
conducted their work primarily from different cities--approximately 80 
miles away.
    In Mississippi, federal, state, and local officials adopted 
strategies that helped to facilitate the sharing of project 
information. For example, following the disaster, FEMA's Mississippi 
Transitional Recovery Office and the state grantee were located in the 
same office complex in Biloxi, Mississippi, and officials from these 
agencies were are also positioned together throughout the state. They 
told us that this colocation had multiple benefits for information 
sharing and exchange, including the timely sharing of critical 
documents and facilitation of daily meetings on project-development 
issues. Further, as previously mentioned, FEMA and Mississippi state 
officials used Public Assistance funding to secure an online accounting 
system that made operational documents associated with projects readily 
available to all parties. As a result, FEMA and the state had immediate 
access to key documents that helped them to make project approval 
decisions and relieve the documentation and resulting human capital 
burdens that applicants faced during project development.
    To help the Department of Homeland Security improve the operation 
of the Public Assistance grant program and build on some of the actions 
it has taken, our December 2008 report contained a number of 
recommendations, including that FEMA improve collaboration and 
information sharing within the Public Assistance process by identifying 
and disseminating practices that facilitate more effective 
communication among federal, state, and local entities communicating 
and tracking project information.\8\ In commenting on a draft of our 
report, the department generally agreed with our recommendations and 
noted that FEMA is making efforts to improve collaboration and 
information sharing within the Public Assistance process.
---------------------------------------------------------------------------
    \8\ GAO-09-129.

Conclusions
    The insights and lessons gained from the recovery experiences of 
past major disasters provide a potentially valuable source to all 
levels of government as they seek to meet the many challenges and 
complexities of recovering from a major disaster. While there is no one 
right way for state and local jurisdictions to manage recovery, the 
practices I have presented today provide a basic set of considerations 
and approaches for communities recovering from Hurricanes Ike and 
Gustav as well as disasters yet to come. For its part, the federal 
government has been an active partner in disaster recovery, spending 
tens of billions of dollars on efforts to recover from disasters over 
the last several years. Our work on one key federal recovery program--
FEMA's Public Assistance grant program--has identified several specific 
actions that can be taken to address the operational challenges that 
the program faced in the wake of the 2005 hurricanes. Opportunities 
exist for the federal government to take steps in the future to 
continue to refine this program to better address these challenges that 
could be faced again by Gulf Coast states recovering from Hurricanes 
Ike and Gustav, and in advance of future disasters.
    Mr. Chairman and members of the subcommittee, this concludes my 
statement. I would be happy to respond to any questions you may have at 
this time.

    Mr. Cuellar. Let me ask you before I move on: Could you 
provide us a little checklist of the lessons learned? I am sure 
you have got a report----
    Mr. Czerwinski. Oh, sure.
    Mr. Cuellar. ----but if we could have a checklist, we would 
appreciate it.
    Mr. Czerwinski. We would be delighted to.
    Mr. Cuellar. Thank you.
    All right; thanks again for your testimony.
    At this time, I would like to recognize Mayor Thomas to 
summarize her statement for 5 minutes.

 STATEMENT OF LYDA ANN THOMAS, MAYOR, CITY OF GALVESTON, TEXAS

    Ms. Thomas. Thank you--the subject of the hearing is 
``FEMA's Gulf Coast Rebuilding Efforts: The Path Forward.''
    Response and recovery from a devastating--the most 
devastating a hurricane as Ike, with its catastrophic 12 to 20-
foot surge--has presented not only challenges, but 
opportunities for positive changes as Galveston rebuilds and 
moves into the future.
    Galveston was as prepared as we could be for Ike. We had 
Katrina and Rita in our rear-view mirror, and the state and 
FEMA by our side. Using our own resources, having built a 
reserve to support city operations for 3 months out, partnering 
with the state to care for our citizens through pre-conditioned 
contracts and inter-local agreements, securing legislation and 
enabling the cities to borrow emergency funds, and arranging 
that with local banks, partnering with the University of Texas 
Medical Branch to swiftly and safely evacuate citizens 
dependent on medical assistance and public transportation, the 
city was prepared.
    So was the business community, having arranged, in advance, 
for loan capacity for our businesses. Had it not been for our 
sea wall, Galveston would have looked, after Ike, like it did 
after the 1900 storm, which killed 8,000 Galvestonians.
    Ike flooded over 75 percent of our homes and businesses, 
displaced and dispossessed an estimated 15,000 to 20,000 of our 
residents, reducing our population almost a third. Galveston 
was in shambles.
    We, literally, looked to FEMA as our lifeline. FEMA 
personnel were positive and helpful, meeting high standards of 
performance.
    However, the blanket practice of reassigning personnel 
every 4 to 6 weeks is disconcerting and discouraging for our 
city staff, our citizens, as well as myself. From top to 
bottom, and all sections in between, there often seems to be a 
willingness, but an inability to act positively.
    Precious time is lost as inquiries flow up all the way to 
Washington, and wait for instructions to flow down. This can 
take weeks. Deadlines for assistance and temporary housing were 
set and then routinely changed at the last minute.
    As much as FEMA made itself available to the public, the 
inherent difficulties met within the application process for 
assistance were then compounded by requirements for citizens to 
reapply for their housing vouchers every 2 weeks. A month to 90 
days would be far more humane, considering the upheaval in 
people's lives.
    A sense of urgency must continue to motivate as weeks 
stretch into months and months stretch into years. FEMA must 
reevaluate the funding process. We need to have pre-assessment 
tools and personnel, as well as advanced funding mechanisms 
that the state can activate as soon as the governor and the 
city declare a major disaster.
    For pre-qualified cities, 100 percent reimbursement, or 50 
percent prepayment is not out of the question. I definitely 
think that FEMA's path forward leaves through Galveston; that 
lessons learned and experience shared along the way from New 
Orleans to my historic city should be heeded, and 
recommendations implemented where possible, as soon as 
possible.
    Some changes may take time. But the time to start is now.
    My greatest hope is shoreline protection for my city, our 
entire Gulf Coast region, including the ports of Galveston, 
Houston, Texas City, Freeport, Port Arthur, the Houston Ship 
Channel, Galveston Bay, the Intracoastal Waterway; a region 
embracing major fishing, petrochemical industries, ecologically 
significant wetlands and millions of people, representing a 
healthy chunk of the gross national product.
    My request is a personal response to the legacy left by my 
grandfather, Isaac H. Kempner, called ``Ike,'' when he helped 
Galveston recover from the 1900 storm, and led in funding for 
the sea wall to protect the island from future storms.
    Certainly, I, his granddaughter, in response to a hurricane 
ironically called Ike, could do no less than seek to save our 
city and distinguished institutions as the University of Texas 
Medical Branch and Shriners' Burns Hospital for Children, by 
asking Congress and FEMA to begin this long-term solution to an 
age-old problem.
    I ask FEMA, working with other Federal and state agencies, 
to take the necessary steps to build a front line of defense, 
behind which an entire region can move forward with greater 
confidence.
    FEMA is efficient when it comes to supplying generators and 
heavy equipment. Its PODs did help people boost their morale. 
But they are gone. And, soon, the hotels will be empty of our 
citizens. And Galveston will need to find homes on the island 
for them. And we will need to find jobs so they can feed their 
families.
    The path forward, ladies and gentlemen, may not be rosy. 
But with FEMA's assistance and your help, and that of the 
Congress, Galveston and all communities that have been 
destroyed by these horrific events, will reclaim their future.
    Thank you very much.
    [The statement of Ms. Thomas follows:]

              Prepared Statement of Mayor Lyda Ann Thomas

City of Galveston Finance and Cash Flow Challenges
    Immediately after Hurricane Ike hit Galveston, revenues to operate 
the city plummeted. Citizens were not on the island and therefore water 
consumption dropped dramatically. Five months after the storm water 
consumption has somewhat stabilized to a level that is 40% less than 
pre-storm levels, a level that could remain relatively constant for 
many years. Additionally, almost every business in town was closed, and 
5 months after the storm only 35% of the businesses have reopened. 
Sales tax revenue took a significant dive. Although sales tax has 
rebounded with the rebuilding effort, long term our projections are for 
such revenues to remain at far less than pre-storm levels for an 
extended period of time.
    Despite these challenges, the city must continue meeting payroll 
and operational expenses after the storm. On top of that we are 
expected to pay in advance for the clean up, response and repairs of 
all our systems and then seek reimbursement from FEMA that will not 
come for many months, and as experience has taught us in the past it 
can sometimes be years.
    The City has to cover the 25% non-federal cost-share for FEMA 
assistance. Unto themselves these cost-share expenses are far greater 
than our normal annual operating budget, at a time when revenues are 
significantly depressed and both workload and other expenses that must 
be borne by the City are far greater than before the storm. The City of 
Galveston was very well prepared financially going into this storm with 
all of our reserves above target levels as well as a pre-negotiated 
loan agreement in place. We have reduced our budget by 15% which 
included reducing salary's to every employee as well. We have lost 
about 10% of the workforce and are still faced with having to layoff 
employees at a time when we need their help. These financial 
challenges, and the loss of critical personnel that result, threaten 
the pace and success of our recovery.

    Recommendations:
    FEMA needs to develop a funding mechanism based upon a community's 
fiscal responsibility and typical operating budget and advance an 
appropriate level of funding to help to carry them for a sustained 
period of time to allow for adequate recovery and rebuilding. Galveston 
was the only community to receive a cash advance for debris only, which 
was appreciated but only scratches the surface of what is needed.
    FEMA should also work with Congress to develop the ability to 
provide upward adjustments for cost-share for catastrophically-impacted 
areas like Galveston, irrespective of the situation and resources 
available elsewhere in the state. For areas hurt as badly as Galveston, 
the normal rules for recovery are often insufficient, and the resource 
needs that can be absorbed by communities experiencing ``garden 
variety'' disasters can cripple a catastrophically-impacted 
jurisdiction like ours.
Extensions of Funding Assistance Challenges
    Category A (Debris) 100% funding was extended in advance through 
October 26, 2008. It was not until a few weeks after the expiration of 
100% Category A funding that the City received an extension through 
April 26, 2009. This time of uncertainty of whether we could get 100% 
reimbursement or just 75% reimbursement caused the City to have a great 
deal of stress due to the extreme cost of debris removal relative to 
our city's budget. We appreciate the extension of Category A at 100% 
through April 26th; however, we need another extension, and we need to 
know whether we will get it or not, sooner rather than later.
    Unlike essentially every other storm we have studied, Category B 
(Emergency Protective Measures) 100% funding has not been extended and 
we have only been assured of 75% reimbursement for the bulk of our 
recovery. We need extension of Category B work at 100% to be granted 
and to be extended as requested for Category A. We are experiencing 
continual latent defects in our infrastructure that require continual 
expansion of Category B work.

Recommendation:
    Categories A and B should be set for an extended period of time 
immediately after the storm based upon the severity of the event. Every 
community should have enough time to properly recover without having to 
worry about these two most critical areas of recovery. Again, this 
should be somehow codified in the Stafford Act or in regulation, to 
provide communities like Galveston predictability and surety of 
resources for their recovery.

Additional After Storm Assistance Challenges
    The FEMA first responders did very well in their assistance to us. 
Where we could have used additional help is from FEMA Public Assistance 
Staff immediately after the storm to proactively assist the city is 
making certain the paperwork the city is creating to substantiate its 
reimbursement claims will be satisfactory months later, rather than 
have to argue with staff members regarding documentation exceptions. 
FEMA rules indicate that if another Federal Agency has funding 
responsibility for a particular item, a city must work with that agency 
for assistance. In many instances, the other agency has a totally 
separate set of rules and timelines for assistance, and may not even 
have any funding available under the responsible program to fund the 
project. An example is traffic signals. Of our 116 traffic signals, it 
turns out that FEMA can only assist us with 1. The Federal Highway 
Administration must assist with the other 115.

Recommendations:
    Provide more public assistance help immediately after the storm so 
that we are ahead of the game, instead of behind.
    FEMA's Rule of Other Federal Agencies funding first needs 
modification to be more inclusive. An integrated approach through FEMA 
would be helpful and would lessen the confusion. It would be helpful if 
FEMA could fund the repair effort when another agency's programs have 
insufficient funding or cannot provide the assistance within normal 
recovery timelines, and then seek reimbursement from the responsible 
agency as appropriate.

Sheltering and Transitional Housing Challenges
    More than 75% of the housing stock in the City of Galveston 
sustained damages resulting from hurricane Ike. Residents either 
evacuated prior to the storm or were evacuated after the storm. In 
order for citizens to return to their jobs, check on their 
uninhabitable homes, cleanout their houses, pack their belongings, and 
meet with FEMA representatives and/or insurance agents, citizens needed 
to be able to stay close to the City. Hotel accommodations were scarce 
and where there were accommodations, they were often filled with Red 
Cross, Salvation Army, or FEMA representatives.
    As much as FEMA made itself available to the public, the 
difficulties met with in the application process for assistance were 
compounded by requirements for citizens to reapply for their vouchers 
every two weeks.
    Also, FEMA's rule that prohibits the placement of temporary housing 
in coastal V-zones has made it nearly impossible to place sufficient 
housing stock to meet community and business needs.

Recommendations:
    It would be helpful if these major national entities came with self 
contained living accommodations, or committed to stay in housing and 
hotels away from catastrophically impacted areas like Galveston, in the 
immediate aftermath of a disaster until such time sufficient housing is 
available to serve both displaced residents and others.
    Vouchers should be issued for no less than 30 days.
    FEMA should consider providing waivers to their policies related to 
the placement of temporary housing in V-zones when there are 
insufficient options available to get people back to their communities. 
Said housing, however, should be engineered to withstand strong winds 
and elevated on temporary foundations, to better protect from loss in 
future events, and require evacuation planning (and resident 
commitments to evacuate when orders are given) in the event another 
hurricane approaches during the temporary housing period.

Shelter Operations Challenges
    The City has a contract with the Red Cross to operate a shelter 
following a disaster. However, the Red Cross came prepared only to 
operate a shelter in one of several schools. There were no undamaged 
schools that could house a shelter. There was confusion between FEMA 
and the Red Cross as to who could authorize a tent shelter. After a 
week of debate, the Red Cross hired the contractor then was told by 
FEMA that they would not be reimbursed and that the City needed to 
contract with the Vendor. In the end, the City signed the agreement 
with the Vendor after the vendor had been here for six weeks. The 
vendor took all directions from the Red Cross who were operating the 
shelter. However, the City holds a bill for $3 million with supporting 
documentation held by the Red Cross and no clear solution as to how to 
get this bill paid.

Recommendation:
    That the Red Cross negotiate with vendors in advance, so that when 
this type of facility is required and that FEMA reimburse the Red Cross 
directly. Further, FEMA should utilize the flexibility it has in the 
Stafford Act to address unique situations like this quickly and to 
simply pay the bill because it was necessary, is allowable and is the 
right thing to do.

FEMA Program for Homeowners vs. Renters Challenges
    Galveston has a large (over 60%) population of renters. FEMA has 
very good programs set up for homeowners with adequate insurance and 
also for homeowners with no insurance. Although the process is very 
tedious, if you follow all the steps the program works. However, there 
is minimal assistance for renters. It would be helpful, if there were 
assistance for owners of rental property to get them back in operation. 
In addition, when apartments were placed back in operation, FEMA set a 
rental rate which created an increase in the cost of living for 
renters. FEMA rental rates were in many cases 10--30% higher than was 
being charged for the same property prior to the storm.
    When insufficient housing exists to handle displaced residents, the 
pace of recovery for rental properties directly impacts how quickly 
people can return to Galveston and support both their personal as well 
as community recovery efforts. This creates a public-sector imperative 
to assist rental property owners, so that people can get out of FEMA 
trailers and government-provided housing and back into their 
communities.

Recommendation:
    Develop FEMA's pilot program that assists apartment owners to fix 
their property for the purpose of housing displaced homeowners and 
renters. Look at variable rental rate schedule. Not a flat rate based 
on the number in the household.

Volunteer Housing Challenges
    We had many faith based volunteer groups and also many civic groups 
from around the country that came to assist with the cleanup of 
community. There were no churches in Galveston able to house volunteers 
after the storm since most had been seriously damaged. We finally 
arranged to use a vacant school to house volunteers, however, the city 
was asked on numerous occasions to assist with operating costs and also 
staffing costs of the facility which is being run by volunteers. We 
were told on several occasions that there was funding available through 
FEMA for this type of operation. However, by going through the chain of 
command that was necessary, none of the intermediary levels knew 
anything about the program. Volunteer efforts have been and will 
continue to be a key to clean up the community and also to restore 
homeowner property to its pre-IKE state. This is particularly true with 
senior citizens, handicapped, and single parent families many of whom 
were underinsured or had no insurance.

Recommendation:
    Develop or make available through FEMA some type of funding for 
volunteer housing, as was done in Louisiana after Hurricane Katrina. 
The availability of this assistance should be codified, so that delays 
and disagreements do not impact communities impacted by future 
disasters.

Individual Assistance/Federal Assistance Challenges
    FEMA assessments process leaves homeowners in limbo. Despite 
repeated requests by the City, the FEMA Assessment Team did not come to 
the City until 4 to 6 weeks after Ike, causing citizens to pay rent and 
mortgages, simultaneously when they could have been in their homes. 
Assessment Team members were poorly trained, inexperienced and 
inconsistent in their assessments. Homeowners did not know for weeks 
whether their homes had to be demolished, rehabilitated or elevated. 
Some are still waiting for a final decision. FEMA seems to have an 
unwritten policy that a large number of people are initially turned 
down and then told to reapply or appeal, not once but two or three 
times.
    The Residential Substantial Damage Estimate (RSDE) process 
(determination of 50% or more damage, triggering elevation of 
structures) is an entirely separate process from the National Flood 
Insurance Program estimates of damage through Flood Insurance. In 
several instances, this yielded very different results to the property 
owner's detriment. An example would be a situation where the RSDE 
process caused a home to be considered substantially damaged; where the 
NFIP process indicated it was not. This split process does not make 
much sense to the homeowner.
    Similarly, the estimates of whether a structure that's eligible for 
assistance under the Public Assistance Program is 50% or more damaged 
(and thus eligible for replacement) is not done consistently with 
substantial damage determinations under the NFIP. This again can result 
in serious problems, with some buildings being required to be elevated 
under NFIP (thus increasing reconstruction costs dramatically), but 
those costs are not considered when determining whether the damages are 
sufficient to allow for building replacement.
Recommendations:
    Federal Assistance needs a more integrated approach through FEMA as 
the overall coordinator.
    This entire program needs to be revamped so that FEMA can come in 
immediately after the storm with a much simpler, less cumbersome 
program that will give citizens and communities answers to their 
personnel situation so that they can determine what they should do. 
Consistency should be the goal for determining damage estimates or in 
the evaluation of whether the 50% threshold is met.
    In addition, RSDE teams that are trained in advance, in adequate 
numbers to handle a regional disaster, should be pre-positioned.

FEMA VOAID Program Challenges
    The FEMA VOAID representative was only authorized to communicate 
with public service agencies. Unfortunately, the local public service 
agencies--Salvation Army, Red Cross, Food Bank, Catholic Charities, 
Family Services, and local agencies were unable to function after the 
storm due to loss of facilities, lack of communication, and undefined 
roles. The City took on this operation because of the large number of 
volunteers coming into the area and also the amount of donations. The 
City was coordinating volunteers, donations, and citizen concerns with 
assistance from Americorp volunteers who were under the direction of 
the FEMA VOAID.

Recommendation:
    The City would have willingly released the responsibility for these 
programs to another agency; however, there was none. It would have been 
helpful if the VOAID had been a little more flexible to recognize all 
parties participating in the process to initiate recovery of the 
community.

Hazard Mitigation Grant Program (HMGP) Funds (Section 404) Challenges 
for Coastal Communities:
    The rules for use of HMGP funds typically require the calculation 
of a benefit/cost analysis in strict accordance with FEMA guidelines. 
One available program is for buying homes. The guidelines are such as 
to promote the removal of homes from river or creek floodplains and 
floodways, and actually provide a waiver of the need for benefit/cost 
calculation if the home is determined through the RSDE process to be 
Substantially Damaged. Such a waiver does not exist in coastal 
communities such as Galveston, which have coastal floodplains and not 
riverine floodplains, and have no floodways at all.
    Given the high costs to coastal communities nationwide from severe 
storms and hurricanes, this makes no sense. The only way to break the 
cycle of damage is to encourage the elevation of homes along the coast 
when future storms are predicted, as in the case of Galveston.
    Unfortunately, the normal benefit-cost calculations do not help a 
community like Galveston, which faces significant future risk but which 
has experienced few storms of any consequence over the past 50+ years. 
Because of the extremely limited flooding history during that period, 
coastal community homes that are Substantially Damaged need to be 
elevated but cannot meet the b/c calculation. In our case, none of our 
Substantially Damaged neighborhood homes qualify for elevation, which 
has left over 1,000 of our homes ineligible for funding under this 
program. The City was left with a choice of assisting the individual 
citizen with the buyout and destroying the neighborhood, or by refusing 
the individual citizen access to a program that would relieve their 
burden.

Recommendations:
    Modify the HMGP program so that it will benefit coastal 
communities, in light of their actual risk. Past losses can certainly 
be a good indicator of risk, but it is not the only one. Coastal V zone 
properties should be included in the FEMA waiver of benefit/cost 
analysis, in recognition of their significant risk.

FEMA Operational Challenges following a catastrophic event
    Continual staff changes (every 4--6 weeks) create an unstable arena 
in which local planners, elected officials and residents constantly 
have to re-explain their situation. Also, institutional learning is 
lost on the processes.
    Recovery resources need to be developed which are consistently 
applied from one event to another and from one geographic area to 
another. Frustration grows when one area learns that the rules are not 
the same or that other areas received greater benefit than theirs.
    Similarly, every time staff rotates in or out, many decisions and 
directions already agreed-to by prior FEMA staff are re-evaluated, and 
new decisions are made related to project eligibility, funding, and 
policy interpretation. This causes significant confusion and delays, 
resulting in a delayed recovery.

Recommendation:
    Provide consistent, stable and long-term very knowledgeable staff, 
especially the key personnel, to help guide the community out of the 
disaster and through the recovery process. And if personnel do change, 
increased efforts should be made to ensure adequate transition time to 
avoid the confusion, delays, re-evaluation of prior decisions and 
problem resolutions, and loss of documentation that has characterized 
the recovery efforts in Galveston when personnel rotated out.

Business support Challenges following a catastrophic event
    There is no clear direction on the role of FEMA and the Small 
Business Administration as it relates to the private sector in 
recovery/rebuilding stages. There are too many different stories and 
rumors relating to what the private sector hears on how to do business 
with FEMA and SBA, how to become a part of the rebuilding process and 
what assistance might be available to the business community, and not 
enough answers that can be relied upon. This lack of transparency and 
inability to get reliable information has confused and lengthened the 
recovery period, and causes many businesses to not seek or obtain help 
available to them.

Recommendation:
    Do a better job of communicating with the business community, both 
directly and by leveraging local resources (communities, chambers of 
commerce, business leaders, elected officials, media, and others). In 
addition, information provided should be in writing, be more 
comprehensive, and by be reliable--statements by inadequately or 
incompletely trained FEMA program staff, Community Relations personnel, 
and tell-registration staff is not sufficient.

Galveston Public Housing Challenges
    Public housing is essential. Four large project units were so 
heavily damaged they need to be replaced. Keeping track of our 
displaced citizens and assisting them with proper documentation to 
fulfill eligibility requirements for FEMA assistance has been a 
challenge.

Recommendations:
    There needs to be a pre-existing IAA (Inter Agency Agreement) 
between FEMA and HUD. HUD is the appropriate federal government entity 
with its sub-contracting Housing Authorities to respond to Public 
Housing Issues after a disaster. FEMA/HUD needs to have the local 
housing data, population data ahead of time or at the time of the storm 
to respond to a disaster. FEMA/HUD must explore options to deal with 
the tenants and landlords rather than dealing with just the landlords 
after a disaster.
    FEMA's Rental Repair PILOT program worked well after hurricane IKE 
and this needs to be part of the housing solution after a disaster. 
This is a program in which FEMA works with the landlord directly to fix 
their damaged units in exchange for landlords to allow eligible 
families to live in those units after a disaster. This program should 
be expanded, however, to also include assistance for owners of single-
family rental properties when other housing resources are insufficient, 
to further enhance the pace of restoration of housing after a disaster 
occurs.
    FEMA must explore pre-fabricated housing options to replace some of 
the housing stock as part of the long-term housing solution.
    FEMA needs to have better operating procedure to educate the local 
media and publish its own newsletters to better provide proper news 
rather than fabrication of stories by the local media and 
misinformation.
    FEMA needs to re-evaluate its policy to only allow temporary 
housing outside of coastal V zones when there is insufficient ability 
to place needed easily be used for temporary housing (including some 
with infrastructure in place), and options to elevate said units above 
anticipated flood levels and protect them against high winds exist, but 
FEMA's policy interpretations won't allow them to place such housing on 
Galveston Island due to the V-zone problem.

Closing Summary: The Need for Cooperative Pre-planning and Long-term 
Continuity for Business/Community Recovery
    Currently programs are initiated only following a catastrophic 
event. In areas like Galveston where Hurricanes are likely to occur, it 
would be beneficial if communities/businesses could be pre-planning or 
proactively working with FEMA to improve contingency planning efforts, 
application forms, contact information, pre-event educational outreach, 
etc. . .In addition, if federal policy following a natural disaster 
came in post-event with a longer time-frame for planning and response 
activities, and included up-front funding to support local efforts so 
that seriously impacted communities can assume greater responsibility 
and leadership in their own recovery planning and implementation 
efforts, this would be most helpful. The continual rush for a pre-set 
time line, of which the deadlines continue being extended, is 
frustrating and psychologically exhausting for residents and those 
affected on a routine basis.

Recommendation:
    Our nation's emergency management system needs to place greater 
value, and dedicate greater resourcing, to the encouragement of pre-
event planning for response and recovery efforts. A grant program for 
states, designated to support community efforts in this regard, would 
be critical to making this happen, as would increased development of 
planning tools and guidance that can be used in support of the 
expenditure of said funds. In addition, in the post-disaster 
environment, it is not enough for the federal government to provide a 
handful of technicians to support long-term recovery planning and 
implementation efforts. Particularly for catastrophically-impacted 
communities like the City of Galveston, resourcing is needed to allow 
the community to take ownership for its recovery and lead its own 
recovery planning process. And that planning process (to include both 
funding and technical support) should not be arbitrarily limited to 
impossibly short timelines; they should be provided for a duration 
deemed appropriate given the magnitude of the disaster in question, as 
determined in consultation with State and local officials. Lastly, 
shoreline protection is the long-range answer to coastal security.

    Mr. Cuellar. Thank you, mayor.
    At this time, I will recognize Ms. Amy Liu, to summarize 
her statement for 5 minutes.

 STATEMENT OF AMY LIU, DEPUTY DIRECTOR, BROOKINGS METROPOLITAN 
              POLICY PROGRAM, BROOKINGS INSTITUTE

    Ms. Liu. Good morning, chairman and members of the 
committee. I am pleased to appear before you this morning, and 
very much appreciate your invitation.
    I do want to preface my remarks by saying that I am not an 
expert on FEMA or emergency preparedness, as are some of my 
colleagues here today. I am primarily an expert on the role of 
the Federal, state and local governments' play to create 
healthy and prosperous cities in metropolitan areas large and 
small. And I hope that unique perspective will be of value to 
you today.
    In general, I have three observations. But before I do 
that, I want to affirm what you started off by saying today, 
which is that any post-disaster recovery effort requires a 
well-greased Federal, state and local partnership, with the 
stress on ``partner,'' or, as you said, ``team.''
    Hurricane Katrina brought into sharp focus the reality that 
there is no one single level of government that has the 
resources and know-how to address the scale of post-disaster 
recovery alone. If any one of those levels of government is not 
performing their role well in rebuilding impacted communities, 
the whole system is ineffective.
    But in this Federalist system, it is incumbent for the 
Federal Government to not simply push massive amounts of money 
out the door, and then adopt a wait-and-see mode with states 
and localities, or even over-regulate with distrust.
    Instead, the Federal Government has a shared stake in 
recovery success, and must be a proactive partner with states 
and localities, by giving the tools and the flexibilities to 
succeed, which brings me to my three main points.
    First is after a mega-disaster, I do think that the Federal 
Government needs to get its own house in order by creating a 
White House-based office in disaster recovery that is focused 
on results.
    Many state and local leaders have certainly praised the 
current Office of the Federal Coordinator for Gulf Coast 
Rebuilding, which is situated in the Department of Homeland 
Security. In practice, though, the office does not have the 
independence or sufficient authorities to deliver optimal 
impact on the ground.
    In short, what we need is a lean White House-based, 
outcome-oriented operation. It should be placed in the White 
House, with direct report to the president to demonstrate that 
long-term recovery success is a priority, and, then, to 
effectively mediate conflicts between two Federal agencies that 
are stifling state and local implementation, such as the 
conflicts that we are seeing between the use of FEMA and CDBG 
funds on a single project.
    But most importantly, such an office should be given the 
mandate to identify explicit goals and outcomes for post-
disaster recovery, working with state and local leaders. What 
does this mean?
    For instance, this office should set such critical goals 
and targets such as showing 100 percent spend-down of fiscal 
year 2006 and 2007 Federal appropriations at the end of a date 
certain; for instance, ensuring on-time quality delivery of 
federally led initiatives, such as the public-housing 
redevelopment and levee modernization; and, in showing that, by 
a date certain, all dislocated families will be in safe, 
affordable, longer-term housing.
    The office should then be given the authorities and the 
accountability to work across these key Federal agencies to 
meet these goals and benchmarks. It is not sufficient to merely 
coordinate. Instead, the situation we have today is that we are 
not organized around goals and we are not organized to deliver 
results. And if there are goals, they are certainly buried 
within a sea of other goals in each of the different agencies.
    Second, the Federal leaders should then, in turn, reward 
state and local leaders for achieving a clear set of recovery 
outcomes, not just critique them on slow spend-down or only 
play ``gotcha'' with regulations of fraud and prevention.
    Now, most philanthropists ask their grantees today, ``What 
are your indicators of success?'' Most private investors ask, 
``What is my return on investment?''
    When it comes to Gulf Coast recovery, I think far too 
often, Federal leaders, and even the media, tend to ask, ``How 
fast is the money going out the door, and how responsibly are 
you spending those funds?''
    Now, don't doubt it is important to spend down funds 
efficiently. And we all certainly applaud efforts to prevent 
fraud, waste and abuse. However, at the end of the day, when 
people ask me, ``Is New Orleans coming back?'' the question 
about speed and responsible spending does not answer that 
question.
    Imagine what we could have accomplished if the Federal 
Government, instead, helped and rewarded state and local 
leaders for achieving explicit recovery goals with benchmarks. 
For instance, that, ``In 2 years, we will restore 75 percent of 
the jobs lost in the city of New Orleans; in 2 years, we will 
repair or replace 20 percent of all the damaged small-unit 
apartment rentals in the Gulf Coast; that we will ensure that 
at least 20 percent of existing residents will benefit from 
new-skills training from the jobs that are being created by all 
the housing repairs and reconstruction in the region.''
    By doing this, we will ensure that taxpayers are getting a 
return on their investment by, in the case of New Orleans, not 
replicating the same city and metropolitan area as before, but 
ensuring that our taxpayer funds are helping create a New 
Orleans that rebounds as a better version of itself.
    To do this, the Federal Government can consider providing 
planning grants to states and localities to develop unified 
plans with community goals and concrete performance outcomes, 
so that will help guide and prioritize Federal spending and 
activities.
    It can also help evaluate the impact of fraud prevention 
and increased economy goals to make sure they don't hamper 
state and local achievements of these goals and outcomes.
    And, then, finally, the Federal Government needs to provide 
better data and transparency to help Federal, state, and local 
leaders track recovery progress and get these key goals and 
outcomes.
    To hold each level of government accountable for outcomes 
assumes that we can quantify and keep track of these outcomes. 
It is not true.
    Since the fall of 2005, the Brookings Institute 
Metropolitan Policy Program has been tracking over 40 
indicators of trends in New Orleans and in Louisiana called--in 
the New Orleans Index. Despite all the data, we do not know the 
following: If our goal is to ensure that New Orleans remains a 
diverse city, homes, and many original residents, we don't 
know--home to many original residents--we don't know how many 
residents today are returning, how many are newcomers, and 
their characteristics.
    We don't even know the status and location of all the 
city's former federally assisted housing residents.
    If a goal is to save the small mom-and-pop shops that are 
at the heart of many tourist communities and others in the Gulf 
Coast, there is no good data on the health and vitality of 
small businesses. Even if the goal is to help accelerate the 
spend-down of existing funds, we don't have the status of 
Federal spending by state, by parish or county, in the 
aggregate, or by spending type, beyond the FEMA public 
assistance and temporary housing assistance. And, as we know, 
we get a lot of questions about spending and where it is going.
    So, for future mega-disasters, I think the Federal 
Government should consider mandating the reporting of all 
Federal short and long-term recovery spending across the 
agencies at the project and at the geography level. We should 
set aside appropriations and staffing for the center's bureau 
to conduct special population and housing estimates for 
disaster-impacted areas.
    And we should create a Federal one-stop shop for all the 
population, labor, economic and housing statistics for 
disaster-impacted areas, for easy access for reporters, for 
decision-makers and researchers, so that we can make sure that 
we are reaching the kind of outcomes we need in the Gulf Coast.
    Thank you very much. And I very much appreciate any--I 
welcome any questions that I can help you with.
    [The statement of Ms. Liu follows:]

                     Prepared Statement of Amy Liu

    Chairman Thompson and members of the Committee, I am pleased to 
appear before you this morning and very much appreciate your 
invitation.
    The purpose of my testimony today will be to provide you with some 
observations about the Gulf Coast recovery efforts and how that can 
help inform future approaches to the way the federal government works 
with state and local governments to rebuild in the aftermath of a major 
catastrophe.

    In general, I have four observations:
        1. Any short-and long-term post-disaster recovery effort 
        requires a well-greased federal-state-local partnership, with 
        the federal government actively providing tools and 
        flexibilities to states and localities to succeed.
        2. In a major disaster like Hurricane Katrina, the federal 
        government needs to get its own house in order by creating an 
        independent ``office of disaster recovery,'' that has the 
        authority to promote integrated approaches, facilitate state 
        and local implementation, and achieve results.
        3. Federal leaders should then reward state and local leaders 
        for achieving a clear set of recovery outcomes that go beyond 
        just speed and fraud prevention to goals of sustainability, 
        inclusion, and economic prosperity.
        4. Finally, the federal government needs to provide better data 
        and transparency to help federal, state and local leaders track 
        recovery progress against key goals and outcomes.
    I do want to preface that I am not an expert on FEMA or emergency 
preparedness, as are some my colleagues here at this hearing. I have 
also spent the bulk of my work on tracking the post-Katrina recovery of 
greater New Orleans and unfortunately have spent less time in Texas, 
Mississippi, and Alabama. Finally, I am primarily an expert on ways to 
create healthy and prosperous cities and metropolitan areas, large and 
small, and the role that federal, state, and local governments play in 
that, with their private sector and nonprofit partners. There is 
nothing like a massive, unprecedented natural disaster to test what one 
knows about the effectiveness of the federal-state-local relationship 
in rebuilding communities. I hope it is that broader perspective that 
can bring some unique value to you today.
    Let me walk through each of these observations.
        1. Any short-and long-term post-disaster recovery effort 
        requires a well-greased federal-state-local partnership, with 
        the federal government actively providing tools and 
        flexibilities to states and localities to succeed.
    Hurricane Katrina brought into sharp focus the reality that no one 
single level of government has the resources and knowledge to address 
the scale of post-disaster recovery alone. We live in a federalist 
democracy. To restore the physical, economic, social, and civic fabric 
of New Orleans, Biloxi, and other Gulf Coast communities requires 
effective federal-state-local partnerships--and public-private sector 
collaborations. And each level of government has a unique role to play 
in post-disaster recovery.
    The federal government needs to take the lead right after a major 
disaster because, as we witnessed with Hurricane Katrina, states and 
localities are often completely incapacitated with no resources or 
capacity to respond to the disaster. Three years after Hurricane 
Katrina, the federal government remains the primary agent for funding 
and facilitating recovery, with many of those dollars still requiring 
federal approval and oversight. For instance, the federal government 
has awarded $17 billion in supplemental Community Development Block 
Grant (CDBG) funds to each of the impacted Gulf States to primarily 
rebuild housing and support other community redevelopment. Nearly $20 
billion is specifically dedicated to state and local infrastructure 
repairs, the rebuilding of the levees, and coastal restoration. And 
another $13.8 billion in tax credits and tax relief have been provided 
in the Gulf Opportunity Zone (Go Zone) for businesses, housing, and 
economic development.
    Meanwhile, the states are critical because they ultimately set the 
rules for redevelopment. They apply for and set the programmatic vision 
for how to spend the federal recovery dollars, such as with CDBG. By 
their very nature, states also govern how funds are spent on 
transportation, land use planning, economic development, higher 
education, and the system of levees, wetlands and the overall coastal 
restoration. Further, states can leverage or match federal dollars with 
their own funds, which they often do. Finally, the feds cannot bypass 
the states and go directly to localities because large-scale disasters 
hit multiple cities and counties in a state.
    Finally, local leadership is absolutely critical. Cities or 
counties are the largest champions for articulating a vision and 
priorities for state and federal funds. And there recovery 
responsibilities that are wholly local, such as addressing blight and 
vacant properties, zoning and land use to accommodate future growth and 
housing, and providing key public service delivery, such as schools, 
public safety/crime, code enforcement and issuing a smooth permit 
process for accelerating housing renovations.
    As much as the media have tried, there is not a single level of 
government to blame for a lack of progress in the Gulf Coast. The 
federal government, states, and localities are inextricably linked and 
if any one of those is not performing well, the whole system is 
ineffective. For their success, communities in Mississippi want 
Washington to streamline regulations to speed up the pace of spending 
in FEMA public assistance and CDBG funds. For their part, Washington 
needs local leaders to be strategic yet responsible with their dollars 
and not succumb to wasteful, fraudulent spending. Local homeowners in 
Louisiana want a state to develop a well-conceived housing repair 
program. As a nation, we need all three levels of government--federal, 
state, and local--to be capable, coordinated, and accountable to the 
successful recovery of a region.
    Finally, it is incumbent for the federal government to be an active 
partner to states and localities in this federalist system. It is not 
enough to push massive amounts of monies out the door and then merely 
hold states and localities accountable for their spending, as President 
Obama recently declared before governors and mayors regarding the 
economic recovery plan. Instead, the federal government must give 
states and localities the tools and flexibilities to succeed.
    Which brings me to the next point.

    2. In a major disaster like Hurricane Katrina, the federal 
government needs to get its own house in order by creating an 
independent ``office of disaster recovery,'' that has the authority to 
promote integrated approaches, facilitate state and local 
implementation, and achieve results.
    Many state and local leaders have praised the Office of the Federal 
Coordinator for Gulf Coast Rebuilding, which is situated in the 
Department of Homeland Security (DHS). In practice, the office did not 
have the independence or sufficient authorities to deliver optimal 
impacts on the ground.
    First, such an office should ideally be placed in the White House 
with direct report to the president. This is important for state and 
local leaders for several reasons: (1) it demonstrates that long-term 
recovery is a priority; (2) it removes a direct report to a cabinet 
secretary (e.g. the Department of Homeland Security), facilitating 
decision-making; (3) it better enables the true cross-agency vision and 
collaboration that is needed to facilitate short-and long-term 
recovery, especially between FEMA/DHS, HUD, HHS, Education, and DOJ; 
and (4) it allows a neutral, independent ability to mediate issues that 
arise between two agencies that stifle state and local implementation. 
For instance, if rebuilding a specific piece of state or local 
infrastructure is delayed due to conflicting regulations between the 
use of FEMA funds and CDBG funds, then there is a concern that, under 
the current model, FEMA would always fare better in such disputes.
    Second, such an office should identify explicit goals and outcomes 
for post-disaster recovery and then be given the powers and authorities 
to help realize those outcomes. It is not sufficient to merely 
``coordinate.'' Such an office should be given the mandate to work with 
key federal agencies to identify a unified set of goals and benchmarks 
for Gulf Coast recovery, that reflect shared objectives with state and 
local leaders in the region. The office should then be given the 
leadership and broad authorities to ensure that key federal agencies 
are working independently and collectively to meet these goals and 
benchmarks. Such authorities could include the powers to lead, convene, 
and manage interagency initiatives, help guide and facilitate specific 
Gulf Coast-related decisions and activities at individual agencies, and 
review and approve (or ``certify'') the budgets of select agencies 
prior to their submission to OMB. As of now, the federal coordinator is 
merely a coordinator, with the force of personality and the reliance of 
good relationships to bring about results. To be sure, these are 
important qualities, but the coordinator should also have the 
structural support to ensure that FEMA, HUD, SBA, the Army Corps of 
Engineers and other agencies work towards a shared plan and vision for 
bringing about results in the Gulf Coast, rather than be individually 
caught in the whims of other priorities within their federal ``silos.''
    What would be such outcomes? For instance, this office could set 
such critical goals and targets as: (1) ensuring 100 percent spend-down 
of existing federal dollars at the end of a date certain; (2) ensuring 
on-time delivery of federally-led initiatives, such as public housing 
redevelopments and levee modernization; and (3) increasing the capacity 
of local governments, nonprofits, and private actors so they can 
implement key parts of long-term recovery, such as housing, public 
school reform, health care reform, and economic development. As such, 
this office should also work with state and local officials to identify 
other quantifiable objectives that ensure that New Orleans and other 
Gulf Coast communities emerge as more competitive, inclusive, and 
sustainable communities.
    By having a powerful, outcome-oriented partner, states and 
localities would benefit from collaborating with a more effective, 
unified, rather than fragmented, federal government.
    Finally, the office should be charged with collecting ``lessons 
learned'' to continually inform the laws, regulations, policies and 
approaches regarding future disaster recovery responses.

    3. Federal leaders should then reward state and local leaders for 
achieving a clear set of recovery outcomes that go beyond just speed 
and fraud prevention to goals of sustainability, inclusion, and 
economic prosperity.
    Most philanthropists today ask their grantees: What are your 
indicators of success? Most private investors ask: What is my return on 
investment?
    When it comes to Gulf Coast recovery, federal leaders tend to hold 
state and local leaders accountable for two outcomes: how fast they are 
spending down existing monies (regardless of whether those funds are 
spent wisely or strategically) and how responsibly they are in spending 
those funds?
    No doubt, it is important to spend down existing funds before one 
seeks new funds. And we all want to prevent fraud, waste, and abuse.
    But, imagine what we could accomplish if federal, state, and local 
leaders worked together on mutually determined, grounds-up indicators 
of success in a post-disaster context? The Army Corp of Engineer has 
set a goal to rebuild a 100-year flood protection levee system in the 
Gulf Coast by 2011. Imagine identifying other social and economic 
goals:
         In two years, all dislocated homeowners will be in 
        safe, affordable more long-term housing so they can have the 
        platform for family stability, job security, and stronger 
        mental health.
         In two years, repair or replace 20 percent of all of 
        the damaged small-unit rental apartments in the Gulf Coast.
         Twenty percent of new jobs from housing repairs, 
        reconstruction, landscaping and other housing-related 
        occupations will be set-aside to train and upgrade the skills 
        of existing residents
    As we all know, prior to the storm, New Orleans was plagued with 
high concentrations of poverty, a stagnant economy with a weak 
workforce, and a region that was growing in unsustainable ways.
    No doubt, the city had enormous assets. But federal investments, 
taxpayer dollars, and even philanthropic dollars must not replicate the 
same city and metro area as before. These efforts must help greater New 
Orleans rebound from Katrina as a better version of itself: safe, 
economically robust, with opportunities for all.
    To do this, the federal government can consider providing planning 
grants to states or localities to develop unified plans with community 
goals and concrete performance outcomes that help guide and prioritize 
federal and state spending.
    It can evaluate the impact of fraud prevention and increased 
accountability rules and policies on state and local achievement of 
their programmatic and larger outcomes.
    The bottom line: Federal rules and regulations need to move beyond 
a ``gotcha'' mentality on states and localities, and instead help state 
and local leaders affirmatively create a more prosperous community for 
the nation in the long-run.

    4. Finally, the federal government needs to provide better data and 
transparency to help federal, state and local leaders track recovery 
progress against key goals and outcomes.
    The best federal-state-local partnership is one that supports 
outcome-oriented decision-making. To hold each level of government 
accountable for outcomes assumes that we can quantify and keep track of 
those outcomes.
    Not really.
    Since the fall of 2005, the Brookings Institution Metropolitan 
Policy Program has been tracking the recovery trends in New Orleans and 
Louisiana, as well as related federal, state and local policy 
developments.
    The main resource we provided was a publication called The Katrina 
Index, which relied on 40 indicators to track the population, housing, 
and economic recovery of the New Orleans region. For two years, we 
issued The Katrina Index on a monthly basis to members of the media, 
key decision makers, nonprofit and private sector groups, and 
researchers. The Index served as an independent, fact-based, one-stop 
resource to monitor and evaluate the progress of on-the-ground recovery 
in New Orleans, Louisiana and some of Mississippi.
    In 2007, The Katrina Index was renamed The New Orleans Index and is 
now a joint collaboration between the Greater New Orleans Community 
Data Center and the Brookings Institution in order to bring an even 
better, more tailored assessment of recovery of the New Orleans region.
    The value of the New Orleans Index is that it helps decision-makers 
understand the progress of recovery and help identify where the 
outstanding needs are and thus policy priorities. For instance, the 
last New Orleans Index, released in January 2009, found that:
         the population of New Orleans is climbing up again 
        after months of stagnation;
         the New Orleans region gained jobs this past quarter 
        while the nation continued to shed them;
         there are approximately 79,000 blighted and abandoned 
        properties in the city of New Orleans; and
         rent prices continued to climb, now reaching 52 
        percent higher than before the storm.
    Despite all of our data, which are primarily collected at the state 
and local level, we do not know the following:
    If a goal is ensure that New Orleans remains a diverse city, home 
to many original residents, we don't know how many residents today are 
returnees and how many are newcomers and their characteristics. We 
don't even have the status and location of all former federally-
assisted housing residents in the city.
    If a goal is to help accelerate the spend-down of existing funds, 
we don't have the status of federal spending by state, parish or 
county, in the aggregate or by funding type, beyond the FEMA public 
assistance dollars and temporary housing assistance.
    If a goal is to help save the small mom and pop stores that are at 
the heart of many tourist communities and others in the Gulf Coast, 
there is no good data on small businesses (opening, closures, etc.)
    Finally, federal population estimates are often more difficult to 
obtain at smaller geographies, which hampers the ability to track 
trends or progress in low-population density communities such as 
Mississippi, where the best data we can get is at the metro area level 
(e.g., Gulfport-Biloxi) rather than at the county or city level.
    The Department of Homeland Security has made important inroads in 
making federal spending of FEMA funds transparent at the local level. 
However, as data become more available, so should transparency 
initiatives.
    For future mega-disasters, the federal government should consider:
         Mandating the reporting of all federal short-and long-
        term recovery spending across the agencies at the project and 
        geographic level
         Setting aside appropriations and staffing for the 
        Census Bureau to do special population or housing estimate 
        counts for disaster-impacted areas (for instance, the American 
        Housing Survey, which is conducted every two years, has not 
        been done for New Orleans since before the storm, and we need 
        critical assessment of housing market, housing quality, and 
        demographics there).
         Creating a federal one-stop shop of all population, 
        labor, economic, and housing statistics for disaster-impacted 
        areas for easy access for reporters, researchers, and decision-
        makers
    In short, I believe that the three years since Hurricane Katrina 
has taught us the importance of a strong and sustained federal-state-
local partnership in post-disaster recovery. We remain at the beginning 
of a long-term rebuilding effort and I believe there is still time to 
apply more concrete goals and outcomes in the Gulf Coast such that 
three years from now, New Orleans and other Gulf communities will be on 
a stronger path towards lasting prosperity.
    I very much appreciate the opportunity to appear before you, and 
would be pleased to answer any questions you might have.

    Mr. Cuellar. Thank you again, to you, Ms. Liu, and to all 
the witnesses for your testimony. I remind each member that he 
or she will have 5 minutes to question the panel.
    I, now, will recognize myself for questions.
    Let me do a ``what if?'' scenario. What if I would ask each 
of you all to get together? Because I think all of you all had 
some good points. Could I ask you, Mr. Czerwinski, to take the 
lead on this--with all due respect to FEMA--with everybody 
else--ask you to come up with a plan on--tell us what we are 
doing for preparedness?
    We spend a lot of time on preparedness. Tell us what we do 
for the immediate response, because we spend a lot of time. I 
think the weakness here is the long-term recovery. You know, 
what are we prepared--what are we doing, what are the goals, 
what are the measurements that we are looking at?
    I would ask you to take the leap--and I am going to ask Mr. 
Rogers if you can assign one of your staff persons along with 
our committee clerk, also, to work with you--within 2 weeks--
and, Mr. Garratt, you--I don't want to hear, with all due 
respect, that you have got to get that cleared up with some of 
the folks.
    But I think that we are asking you to work with us to get a 
plan on adding the measurements, the results, the ideas that 
the mayor had, that Ms. Liu had, Mr. Czerwinski--the plans that 
we talked about--and Mr. Walke--I will ask you to work with us 
on this, and just ask as a put-it plan.
    And you can consult with anybody else. Ask anybody else you 
want to bring in. That said--but I want it within 2 weeks. Tell 
us what we are doing on the preparedness part. I think we know 
what the stats--strengths and weaknesses in the immediate 
response. But more importantly, of course, is the recovery, 
which we are emphasizing right now. What are the weaknesses? 
What are the strengths? What do we need to do to make this work 
better?
    Because, apparently, there are some disconnects here. Mr. 
Chairman, I think, you know, when we talk to our constituents--
I think the bottom line is they don't want to know about 
process. They just want to know, ``When are we going to get our 
assistance?'' You know, ``When are we going to get''--and if we 
started explaining the processes, frankly, they are just not 
interested in that. They want to know when they are going to 
get the assistance--as soon as possible.
    Does everybody know what the assignment is?
    Mr. Czerwinski. Yes, Mr. Cuellar.
    And, of course, as far as asking us to do that, we work for 
you. So we don't--you don't have to------
    Mr. Cuellar. Yes, and I am--and, Mr. Garratt, I just want 
to make sure--I want you to tell us if there is a problem with 
you getting involved in this.
    Mr. Garratt. I don't think there is a problem, Chairman 
Cuellar.
    The timeline might be a little aggressive in terms of 
pulling together the sort of comprehensive plan, if what you 
are looking for is a plan as opposed to an outline--that you 
are asking for. But we will throw our whole support behind this 
effort.
    Mr. Cuellar. Why don't we do this? Thirty days from today--
that should be more than sufficient time to get a 
comprehensive--tell us what we need to do to improve this.
    And, Ms. Liu, definitely get involved, because I do want to 
see some of the results-oriented outcomes there. And, again, it 
is not trying to ``got you,'' here. We are just trying to say, 
``How do we make this work better?''
    And, again, I am--Mr. Rogers will assign one of his staff 
persons. We will assign our clerk also. She will be the lead, 
working with Mr. Czerwinski. And if there is a problem, would 
you let us know way before, not afterwards. I just want to make 
sure we are all in agreement. I just want to see this 
comprehensive--because, I mean, there is a lot of ideas. And we 
want to come up with this meeting with something concrete that 
we can work with.
    And if there is any legislative solutions, then, you know, 
the chairman, here, will take the lead on any changes that we 
need to make. But tell us if there is s anything structural, 
because, I mean, if it is people problems, then we need to 
replace people. But if it is a structural issue, a deficiency, 
then we need to know what the structural issue is there.
    So, Ms. Liu, can you do that?
    Ms. Liu. I would be happy to participate.
    Mr. Cuellar. Mayor Thomas?
    Ms. Thomas. Yes.
    Mr. Cuellar. Mr. Czerwinski?
    Mr. Czerwinski. Oh, absolutely.
    Mr. Cuellar. Mr. Walke?
    Mr. Walke. Yes, sir.
    Mr. Cuellar. Mr. Garratt, no issues. We are not going to 
hear that there is a problem later on?
    Mr. Garratt. We are right with you, sir.
    Mr. Cuellar. OK, all right.
    At this time, I will recognize Mr. Rogers, for his 5 
minutes of questions.
    Mr. Rogers. Thank you, Mr. Chairman.
    Last week, we had Secretary Napolitano with our committee. 
And I brought to her attention my concern that there has been 
some discussion that FEMA may be pulled out of the department. 
And I am adamantly opposed to that.
    I think that we have gone through a growing phase at the 
department over the last several years that is starting to--we 
are starting to see some synergies and some coordination. And I 
think FEMA is a perfect example.
    The last couple of years, we have seen FEMA perform 
exceptionally well in several incidents, in concert with the 
department.
    But for Mr. Garratt, I would like to know, if FEMA were 
pulled out of the department, what do you think would be the 
kind of impact that you would anticipate?
    Mr. Garratt. Sir, I would like to think that FEMA, 
regardless of where we are located, is going to continue to 
press ahead and do our job as well and as successfully as we 
can.
    I know there has been a lot of discussion about this 
subject. I suspect if you asked any Federal agency if they 
would like to be a direct report to the president, the answer 
is very likely going to be, ``Yes.''
    But, quite frankly, where we sit in an organizational chart 
should, in no way, affect our ability to be successful. So I 
think FEMA would be successful either way. And I think FEMA 
will be successful either way.
    Mr. Rogers. Do you not believe--or do you believe--I guess 
a better way--I won't be leading in my question. Do you believe 
that there would be some adverse consequences to FEMA being 
able--prepared to respond to a natural or manmade disaster, 
while undergoing another major reorganization?
    Mr. Garratt. Sir, I believe that a reorganization is likely 
to have some disruptive impacts on FEMA--or would likely have 
some disruptive impacts on FEMA during that transitional 
period. So it is entirely possible that there could be some 
adverse effects from separation.
    Mr. Rogers. Are there some resources that you currently, as 
a department, have available to you as a member of the DHS 
department or team, that you would--that just jump to mind, 
that are beneficial, that you would lose, were you to put away 
and be a stand-alone department?
    Mr. Garratt. No, sir. Under the Stafford Act, the president 
is authorized to direct any Federal agency, with or without 
reimbursement--to provide any form of assistance necessary to 
support state and local governments. That authority is 
delegated to the secretary to FEMA. So we have that authority, 
under the Stafford Act.
    Mr. Rogers. Thank you.
    I want to go to Mayor Thomas.
    Mayor, you made reference a little while ago about the 
slowness with which you found FEMA able to respond to your 
inquiries. Has that been a consistency? Have you seen any 
improvement over time?
    Ms. Thomas. In the beginning, after the storm, they were--
the answers came very quickly. But after about 30 days, the 
whole system slowed down.
    I can speak to you, for instance--just to give you an 
example, FEMA's rule is that after a catastrophic event, a 
school would be opened as a Red Cross shelter. However, there 
were no schools that we could open in Galveston. They all went 
under water. The Red Cross, then, had to hire a vendor to come 
and put up tents and supply those tents with food and blankets 
and bedding and so on.
    We are 6 months out, and FEMA is still questioning whether 
or not it should pay the vendor or the city of Galveston. And 
it is about a $3 million price tag.
    Mr. Rogers. Because Galveston, obviously, is in a position 
where they have been through these natural disasters in the 
past--there has been no coordination between your city and 
FEMA, and your state agencies, as to pre-positioning of 
resources and contracting for services, to anticipate these 
kind of decisions that had to be made?
    Ms. Thomas. The state has done a good job of pre-
positioning things, because of Rita and Katrina--pre-
positioning high-water vehicles and supplies. The state has 
done that in various locations around the state.
    The slowness is when those--and that has all been done, and 
a lot of it came in. But the argument continues as to who is 
going to pay for these pre-position materials, and when they 
are going to get paid. When are the vendors going to get paid? 
When are the contractors going to get paid, because FEMA has a 
difficulty, and decided who owes what to whom?
    On the other hand, the states and the cities go forward as 
quickly as they can in restoration and recovery, feeling secure 
that FEMA will pay the bill, but FEMA does not pay the bill in 
a timely manner.
    Mr. Rogers. Thank you, Mayor. And I look forward to my next 
round of questions so I can ask Mr. Garratt and Mr. Walke to 
respond as to why that has happened.
    Thank you, Mr. Chairman. I yield back.
    Mr. Cuellar. Yes, sir.
    The chair now will recognize other members for questions 
that they may wish to ask the witnesses. In accordance with our 
committee rules and practice, I will recognize the members who 
were present at the start of the hearing, based on seniority on 
the subcommittee, alternating between the majority and the 
minority.
    Those members coming in later will be recognized in the 
order of their arrival.
    The chair now recognizes, for 5 minutes, the gentlemen from 
Mississippi, Mr. Thompson, Chairman Thompson.
    Mr. Thompson. Thank you, Chairman Cuellar.
    Let me pronounce that--indicate that the men and women of 
FEMA respond heroically to all the natural disasters that we 
have suffered with. One of the issues that we now face is: How 
do we provide an orderly recovery process? And that is still 
one of the reasons for this hearing.
    Mayor, I am going to try to help you on two issues today. I 
was a mayor in the 1970's, and I understand, clearly, what you 
are going through. Your phone rings constantly.
    Mr. Walke, are you familiar with that reimbursement issue 
that the mayor just outlined?
    Mr. Walke. I am not, sir.
    Mr. Thompson. All right. I am going to ask you, as your 
responsibility, that, if, in fact, the school was nonexistent, 
that whatever the regulation is--if the school is not there, 
and if we can show pictures of the tents, and prove within a 
reasonable doubt, that this activity did occur, can we get that 
vendor paid?
    Mr. Walke. We will look into that, sir, and report back on 
the situation. But----
    Mr. Thompson. How much time do you need?
    Mr. Walke. Well, I can make a call this afternoon.
    Mr. Thompson. I will give you until Thursday.
    Mr. Walke. Fair enough.
    Mr. Thompson. Mayor, you happy with that?
    Ms. Thomas. You bet. Yes, sir.
    Mr. Walke. I will need to get more specifics from the mayor 
on that so I can----
    Ms. Thomas. I will be glad to give them to you.
    Mr. Thompson. Let us talk a little bit more, because part 
of the recovery process is the city is either having difficulty 
with FEMA or the state, or what have you.
    You have a sea wall in Galveston that you have had some 
difficulty--I want you to tell me a little bit about the sea 
wall. And I am going to try to help you with the sea wall, too.
    Ms. Thomas. Well, after the 1900 storm and--the sea wall--
money was found by the leadership of the city, using their own 
personal good names and credit to go to New York and other 
places in order to secure bond money to pay for the sea wall.
    It was designed by the Dutch. It is about 15 miles long. It 
is 17 feet high. It was completed in 1904. And it has withstood 
every storm since.
    Now----
    Mr. Thompson. What is your problem right now?
    Ms. Thomas. The problem is that the island of Galveston is 
32 miles long. Because of the surge that was caused by Ike, the 
water came very close to coming over the sea wall. It rose 
about 15 feet. And you have some documentation and some 
pictures in front of you that show the waves in part of the--
coming over that sea wall during Ike.
    The island is not totally protected by the sea wall, and it 
needs to have that protection, as I explained in my narration.
    Mr. Thompson. What has FEMA said?
    Ms. Thomas. We have not formally talked to FEMA. The city 
hasn't. There is a committee getting ready to go to FEMA. We 
hope that there will be Corps of Engineer money and hazard-
mitigation money that can be used to protect our shoreline all 
the way to Sabine Pass.
    Mr. Thompson. Mr. Garratt, are you aware of mitigation 
efforts that have been utilized in the past for similar kinds 
of issues the mayor is talking about now?
    Mr. Garratt. Negative, sir.
    Mr. Thompson. Well, I am going to ask you, Mr. Walke, since 
you are the expert.
    Do we consider mitigation as a fundable issue, with respect 
to the--what we are talking about?
    Mr. Walke. Sir, FEMA funds two types of mitigation: One 
under the 406 program, which is a public-assistance program, 
and one under the 404, which is a stand-alone program.
    Under our program, the public assistance, we have not 
funded sea walls as a mitigation measure, because our 
mitigation is limited to repairing the damaged facility into 
better shape than it was before.
    Mr. Thompson. So to say that if you put it back in the 
present form, even though all the research says that it is just 
a matter of time before something worse happens, if you don't 
do something else----
    Mr. Walke. Again, the statue authorizes us, under the P.A. 
program--and I want to be clear what I am talking about.
    Under the program, we pay for damaged structures. Now, the 
mayor is requesting funding to repair--or to construct--a sea 
wall for the remaining 15 miles or so. Under the public-
assistance program, we would not fund that.
    Now, under the----
    Mr. Thompson. Thank you very much. And we will work with 
the mayor.
    If I might, Mr. Chairman, I have one other question.
    Mr. Czerwinski, you have--and Ms. Liu--both talked about 
the need for coordination. And did you give--did you look at 
why Texas is doing such a good job at spending public-
assistance money, and Louisiana and Mississippi is not?
    Mr. Czerwinski. We didn't look, specifically, at the 
comparison of Texas and Louisiana, although we did look at 
characteristics, in general, in the public-assistance program.
    One of the things to think about is the scope of the 
projects and the overall scale of the disaster. And the spend-
out rates will be quicker in the smaller devastation. I think 
Texas is around about $1 billion. Whereas, you are talking 
about a lot more money, a lot bigger projects, in Louisiana and 
Mississippi.
    And given the nature of the public-assistance program, 
which is very procedural, it is iterative. There is a lot of 
cost estimating. What that does--it magnifies the difficulties 
in handling the larger projects.
    Mr. Thompson. Thank you.
    Mr. Walke, if a community has a dispute with the 
reimbursement, like we have heard before, who is the final 
arbiter in this issue?
    Mr. Walke. Sir, may I add to his response on your previous 
question?
    First, you talked about the payout versus Texas versus 
Louisiana. I think there is a fundamental difference for the 
rate of payout. When you look at Texas and Ike, 80 percent of 
the funding there is for debris removal and emergency 
protective measures. And these are costs that the states and 
local communities already incurred.
    If you look at Louisiana, we are looking at, perhaps, about 
35 percent or 40 percent of a cost in debris removal and 
emergency protective measures.
    So in communities that have a large share of permanent 
rebuilding, then that process is much slower, as evidenced by 
the situation in Louisiana versus Texas.
    Now, to your question about who the final arbiter on the 
P.A. projects--well, there are several levels. Initially, we 
have a P.A. manager in the joint field office, near the 
disaster site, who makes a decision on a particular project.
    If, in fact, there is a dispute at that point, then there 
is a first-level appeal to the region administrator, who has 
the authority. And then, subsequently to that, if there is a 
second appeal submitted, then it comes up to our office, and 
the assistant administrator for disaster assistance make the 
decision.
    Mr. Thompson. So it is strictly within the department? 
There is no independent judge or some--it is a FEMA employee 
who makes the final decision?
    Mr. Walke. It is a FEMA employee who has not been 
previously involved in the determination, sir. But, you are 
right. It is----
    Mr. Thompson. It is a FEMA employee that settles the 
dispute.
    Mr. Walke. That is correct.
    Mr. Garratt. Sir, I would like to pipe in on this one.
    In fact, it is a FEMA employee who makes the final decision 
on the appeals process. And there has been concern in the field 
that, perhaps, they are not going to get a fair shake from FEMA 
because, in fact, FEMA continues to render appeals on decisions 
in the field.
    But I would like to point out that, in fact, across the 
Gulf Coast, for Mississippi and Louisiana, the rate of success 
of appeal is approaching 50 percent for those states, combined.
    In other words, of the appeals that they have submitted, 
close to 50 percent of those appeals are being found in favor 
of the appellant, either in whole or in part.
    And I think that speaks volumes about how objective and 
flexible the appeals process is.
    Mr. Thompson. Well, if you are on the positive side of the 
appeal, it does. But if you are on the short end of the appeal, 
then those individuals would say, ``Well, the same people 
turned me down at the final appeal who rendered the decision. 
They are all FEMA employees.''
    What I am talking is--we, probably, as a committee, Mr. 
Chair, ought to look at some independent entity to settle 
disputes when FEMA and local governments are at odds with each 
other.
    The last item--and I apologize for this--I have heard so 
much from mayors and other elected officials that we rotate 
employees too many times during recovery efforts.
    Mr. Garratt, do we require any written transfer of data to 
that next employee coming in, so that the continuity of 
information and everything flows?
    Mr. Garratt. Yes, sir. That is a standard part of a 
transitional process--is that the incoming employee--or, excuse 
me-the employee that is going to be replaced is required to do 
a full transition briefing, transition-management overview, 
with the incoming employee.
    And, typically, they will spend at least a week together, 
managing that transfer of information and corporate 
understanding of what has transpired to that point--standard 
operating procedure, sir.
    Mr. Thompson. OK.
    Well, then, I wonder why Mr. Czerwinski would say just the 
opposite in his report--``developing protocols to improve the 
information in documenting--sharing among FEMA staff, such as 
requiring that staff maintain a record of project decisions to 
share with rotating staff.''
    Now, Mr. Czerwinski, can you help me out on that?
    Mr. Czerwinski. Yes, Mr. Chair.
    I think there is actually two things that go on here. One, 
in terms of rebuilding, it takes a long time. And it is not 
reasonable to keep the staff there that time. So, then, you 
have to build in a system where you have the transfer of 
information.
    And when we looked at examples in the Gulf Coast, we found 
that was not happening the way we wanted. And that is where our 
recommendation came from. And, frankly, this goes back to your 
other point about the appeals process.
    This problem was exacerbating the appeals process, and--
with FEMA decisions--where a subsequent employee would come in 
and give a different determination.
    And the way the process is set up, all the burden is on the 
state and local government. So even if FEMA approved something 
up front, and later on changed it, that is not FEMA's 
responsibility. That is the state's responsibility.
    And what the state and local officials told us is this ham-
strung them from some things they wanted to do, because they 
weren't sure how it would play out.
    Mr. Thompson. Thank you.
    And then I would ask you, on that comprehensive plan, if 
you can add the point that the chairman asked about--``What 
happens if there is a, you know, dispute?'' And, I mean, how 
long do we have to wait, and what is the procedure? What is the 
time tables involved?
    If you all can add that point also, so we can follow up on 
that also, Mr. Czerwinski.
    At this time, I would ask for unanimous consent from Ms. 
Jackson-Lee, who is a member of the full committee of the 
Homeland Security, permission to sit and to question at today's 
hearing.
    At this time, I would like to recognize the gentlemen from 
Texas, Mr. Olson, for 5 minutes of questions.
    Mr. Olson. Thank you, Mr. Chairman. And I would like to 
thank you and the ranking member for putting this important 
hearing together.
    I would like to welcome all the witnesses.
    A special welcome to Mayor Thomas, coming up from 
Galveston, and my good friend, Doug Matthews, in the back, from 
the University of Texas Medical Branch.
    Thank you all so much for coming up.
    My questions, today, are for you, Mr. Garratt, and Mr. 
Walke. And however you want to handle them, that is--I will 
leave that between you.
    But my questions focus on Hurricane Ike recovery. And from 
what I have heard from local officials--and Mayor Thomas echoed 
that today--FEMA's support on the ground has been much 
improved. And one of the lingering problems we are having in 
Texas are some discrepancies that exist between victims of 
Hurricanes Katrina and victims of Hurricane Ike.
    As all of you know, Ike was the third most expensive 
hurricane to hit our country in U.S. history. And so I have a 
couple questions on that.
    As I mentioned earlier, the University of Texas Medical 
Branch in Galveston was hit hard by the storm. It has been 
nationally recognized as one of the finest medical schools and 
medical facilities in the country. It suffered $670 million in 
capital damages.
    But unlike Hurricane Katrina victims, Ike victims can only 
get 75 percent from FEMA for their capital damages and 
mitigation. As a result, they have been forced to turn to state 
and local agencies for millions of dollars that those agencies 
simply don't have.
    And my question to you is: Why is Texas victims of 
Hurricane Ike not been treated like the victims of Hurricane 
Katrina in receiving FEMA reimbursements at the 100 percent 
rate for capital damages and mitigation?
    [The statement of Mr. Olson follows:]

Prepared Opening Statement of Pete Olson, a Representative in Congress 
                        from the State of Texas

    Thank you Mr. chairman and thank you for holding this hearing.
    I am pleased that the first hearing of this subcommittee is one on 
the subject of FEMA and Gulf Coast recovery. Indeed, this subject is 
first on the minds of my constituents and it is one of my biggest 
priorities as a member of Congress.
    I thank Mr. Garratt and Mr. Walke for representing FEMA today but I 
want to extend a special welcome to the Mayor of Galveston, Texas, Ms. 
Lyda Ann Thomas. It is wonderful to have you in Washington today and we 
all look forward to your testimony.
    Months after Hurricane IKE ravaged the Gulf Coast of Texas, 
communities still struggle to return to the way they were and much work 
remains to be done. From what I have heard from state and local 
officials, the assistance they have received from the FEMA officials on 
the ground has been much improved. The problem seems to lie in some 
decisions made on the federal level and some unfortunate discrepancies 
that exist between the victims of Hurricane IKE and Hurricane IKE and 
Hurricane Katrina.
    For instance, the University of Texas Medical Branch in Galveston, 
nationally recognized as one of the finest medical schools and medical 
facilities in the country, suffered $670 million in capital damages. 
Unlike Katrina victims, however, they can only get 75% reimbursement 
from FEMA for capital damages and mitigation. As a result, they are 
forced to turn to state and local agencies for millions of dollars they 
simply do not have.
    In addition, Louisiana and the City of New Orleans received many 
full reimbursement deadline extensions that stretched over a period of 
years when it came to expenses for debris removal and Emergency 
Protective Measures. However, for IKE victims, the deadlines have 
either passed or are fast approaching. These cities and towns are just 
now beginning to recover from this storm and they desperately need a 
deadline extension.
    I hope in the coming weeks and months FEMA and the Department of 
Homeland Security will remedy these inequities and we can proceed with 
our recovery efforts in a fair and efficient manner.
    I thank the witnesses for their time today and I yield back the 
balance of may time.

    Mr. Garratt. Sir, the determination of the cost share that 
a state receives following a disaster is made by the president. 
The president is authorized by the Stafford Act to provide no 
less than 75 percent Federal support.
    Under the regulations that FEMA operates by when we make a 
recommendation for above 75 percent, is a requirement that a 
state meet a certain per-capita threshold. When a state reaches 
that threshold, FEMA is required to make a recommendation to 
the president to increase the cost share to 90 percent.
    And Texas has not reached the threshold that would--Texas 
has not reached that threshold yet. And, therefore, FEMA has 
not recommended a 90 percent cost-share bump-up as a result of 
that.
    Mr. Olson. OK. Thank you.
    Do you know if Texas made that threshold when Hurricane 
Rita hit in 2005?
    Mr. Garratt. I do not know if they made that threshold when 
Hurricane Rita hit. However, for Hurricanes Katrina and Rita, I 
believe that Congress, per legislation, directed that those 
states affected by Katrina and Rita receive 100 percent funding 
for those disasters.
    Mr. Olson. OK. Thank you very much.
    And one more question, if I have time. And it looks like I 
do.
    And I am not--this is not to be interpreted as anything 
against my fellow colleagues from Louisiana and Mississippi. We 
are just looking for some equitable treatment here, in Texas, 
as my colleagues from Texas know.
    But Louisiana and the city of New Orleans received full-
imbursement deadline extensions that stretched over a period of 
years, when it came to Category-A and Category-B expenses. 
However, Ike victims--the deadline for Category-B reimbursement 
passed last October. And the Category-A deadline is rapidly 
approaching.
    Cities and towns are just now beginning to hit their 
strides on their path to recovery from Hurricane Ike, and they 
desperately need a deadline extension. And why is FEMA not--
hasn't authorized--or refusing to extend the deadlines, like it 
did for our fellow citizens in New Orleans?
    Mr. Walke. The state of Texas had requested an extensive 
100 percent funding. And a decision was made that--the 
president made the decision that, for Category A--that would be 
extended through April. And, at the time, given the pace of--or 
debris removal--there was a consensus that that would allow a 
sufficient time for most of the communities to remove mostly 
all of their debris. And that is the decision that--the reason 
that decision was made.
    Conversely, the decided was to extend the 100 percent for 
Category B until whatever the date was. I think it was 44 dates 
from the date of declaration, at which time, I think most of 
the Category-B cost would have been incurred by the local 
governments.
    Mr. Olson. OK. Well, thank you for that answer.
    And I appreciate your time today.
    Thank you, Mr. Chairman.
    Mr. Cuellar. Thank you, Mr. Olson.
    At this time, I would like to recognize the gentleman from 
Missouri, Mr. Cleaver, for his 5 minutes of questions.
    Mr. Cleaver. Chairman Cuellar, Chairman Thompson, and 
Ranking Member Rogers, thank you for this opportunity.
    [The opening statement of Mr. Cleaver follows:]

                       PREPARED OPENING STATEMENT

                U.S. Representative Emanuel Cleaver, II

                         5th District--Missouri

                               Statement

   House Subcommittee on Emergency Communications, Preparedness, and 
                                Response

      ``FEMA's Gulf Coast Rebuilding Efforts: The Path Forward.''

                  Subcommittee Hearing--March 3, 2009

    Chairman Cuellar, Ranking Member Rogers; I am looking forward to 
hearing testimony today on FEMA's Gulf Coast Rebuilding Effort. In 
2005, Hurricane Katrina devastated the lives of nearly half a million 
people in three states on our Gulf Coast. Just one month later, 
Hurricane Rita hit Texas and Louisiana, ruining lives, and causing 
billions of dollars in damage. Three years later, Hurricanes Gustav and 
Ike made landfall in the Gulf Coast, causing yet more damage and 
disarray.
    In the wake of these disasters, President George W. Bush issued a 
major disaster declaration under the Robert T. Stafford Disaster Relief 
and Emergency Assistance Act, thereby allowing federal funds to flow 
into these areas of catastrophe. It is our job today to assess various 
aspects of the federal response to these disasters, including the 
effectiveness of the Public Assistance grant program, which provides 
states and localities with funding for the removal of debris and the 
replacement of critical infrastructure destroyed in a disaster.
    Billions of dollars in federal funds have been obligated in Public 
Assistance grants, yet recovery has been slow. States have not drawn 
down on the full amount of funding that has been obligated to them, and 
challenges to the Public Assistance program have limited recovery 
efforts. As a member of this subcommittee, I am hopeful to hear 
testimony today on why the recovery has been so slow, and anxious to 
hear recommendations that FEMA can implement to remedy inefficiencies 
of the past.

    Mr. Cleaver. I want to kind of see--lean on some things 
that have already been raised and, perhaps, take them a little 
further.
    Mr. Garratt--you or Mr. Walke--who appoints the FCO?
    Mr. Garratt. FCO is appointed by the president.
    Mr. Cleaver. Now, is the FCO an FCO-in-waiting? Or is he or 
she appointed after the event?
    Mr. Garratt. FCO acts--both. Our FCOs are part of a cadre 
of FCOs that FEMA maintains in--either in advance of an event 
or after an event, when a declaration is made--emergency or 
major-disaster declaration. At that time, the FCO is named and 
appointed by the president, who will be responsible for that 
particular emergency or disaster.
    Mr. Cleaver. OK. I raise the question because the GAO 
report speaks about inexperienced staff. They talk about the 
inability of the staff sent into these areas to be in 
sufficient numbers.
    So I am wondering how much expectation there is, and what 
preparation is made, realizing that there will be another 
event. I mean, if the FCO is appointed after the event, then it 
stands to reason that the staff is, then, assembled after the 
event. Am I right about that?
    Mr. Garratt. Depends on how much notice we have for that 
event, sir.
    In fact, if we see an event coming, we will begin 
assembling the staff to support that event before it hits. In 
addition, we can send out one of our incident-management 
assistance teams, who are also led by an experienced FCO. They, 
typically, are designed to arrive and provide that initial 
assistance to the state.
    Mr. Cleaver. OK. Thank you.
    Now, I only have 5 minutes, so I have to--then, that is a 
trained staff available and ready to go, as soon as the event 
occurs?
    Mr. Garratt. We have teams, incident-management assistance 
teams, who are on active alert around the clock, that Congress 
mandated. We stand up these teams, and we have done that. Yes, 
sir, we do.
    Mr. Cleaver. OK, Ms. Liu--excuse me. Thank you.
    Ms. Liu, the GAO report talked about ``inexperienced,'' and 
staff shortages. Is that something that you have also 
concluded--that we have insufficient staff and----
    Ms. Liu. I apologize, but I have not reviewed FEMA staffing 
capacity in the work that I have.
    Mr. Cleaver. Mayor, was that something you recognized after 
the event?
    Ms. Thomas. Could you clarify your question?
    Mr. Cleaver. Well, after the hurricane hit, did you 
experience that FEMA had sufficient staff, and--in terms of 
numbers and people who were knowledgeable, who were able to 
come into Galveston immediately?
    Ms. Thomas. They did have sufficient numbers. And they were 
very well trained, very experienced.
    Mr. Cleaver. Is there a simulation that goes on in terms of 
the training, Mr. Walke?
    Mr. Walke. Sir, regarding the public assistance, we do have 
contractors at our disposal. We have a reserve for folks who 
are experienced in managing the public-assistance program.
    But when one has a disaster the size of Katrina, for 
example, that required us to supply about 1,500 public-
assistance employees, that requires bringing in folks who have 
technical knowledge, but, perhaps, may not be as well versed in 
public-assistance doctrine. And that is what we experienced in 
Katrina; to some lesser extent, in Texas. So there is a 
requirement for counselor training once we deploy people to the 
field.
    Mr. Cleaver. OK.
    Let us chance direction for just a minute.
    I have some concern about the lack of spending the dollars. 
I know you don't just spend it because you have it. But, you 
know, we borrowed that money. And we owe China, give or take, 
$1.9 trillion. And, Japan, we owe more.
    And the third leading expenditure in the U.S. budget is the 
interest on the debt--the interest, not the principle--the 
interest on the debt. And so when we see money laying around 
like that, I am not sure the taxpayers are going to be very 
happy.
    Look, when I go home, if somebody raises that question, 
what should I tell them that makes sense and won't force them 
to curse me out?
    Mr. Walke. I am not a----
    Mr. Cleaver. That won't curse me out, now.
    Mr. Walke. No, no, no. I am not a budgeteer, but I said I 
don't think the money is just lying there. I mean we actually 
obligate monies to the state, which really is just a bill--I 
know. The money is there, and it is not really put on the books 
until they draw it down.
    So----
    Mr. Cleaver. So it is just laying there?
    Mr. Walke. No, no. The promise to pay is there. The money 
is not in the bank. When the states submit their request------
    Mr. Cleaver. Well, that makes it even worse.
    Mr. Walke. Well, let me----
    Mr. Cleaver. That makes it even worse.
    Mr. Walke. How so?
    Mr. Cleaver. You wouldn't have money under your mattress? I 
mean, you would want to put it some place. Right now, probably 
only thing is Treasury notes. But, I mean, I want it to trouble 
you that we are in a financial crisis, and we have money that 
was appropriated for a crisis, and that it is not doing 
anything. And the third-leading expenditure in the U.S. budget 
is interest.
    Your answer would have got me cursed out.
    Mr. Garratt?
    Mr. Garratt. I think the point Mr. Walke was trying to make 
is that this funding comes from the disaster-relief fund. Once 
we obligate funding, take a chunk of that money and provide it 
to the state, what we do is notify the state, now, that ``You 
are eligible to begin pulling this money.''
    So that money is not sitting in the bank at the state. What 
the state knows is that, ``We can now draw that money down to 
support this approved project.''
    Mr. Cleaver. OK. Thank you.
    Thank you, Mr. Chairman.
    Mr. Cuellar. Thank you.
    At this time, I would like to recognize, for 5 minutes, the 
gentleman from Louisiana, Mr. Cao.
    Mr. Cao. Thank you, Mr. Chairman, and the ranking member, 
for holding this meeting.
    And, first of all, I would just like to express my 
appreciation and gratitude to the FEMA personnel who are 
working in New Orleans, because we all owe a great debt of 
gratitude to them.
    With respect to Mr. Garratt and Mr. Walke, I have two 
questions, but, possibly, three. First and foremost, the 
criteria for the loan--Community Loan Forgiveness Program--is 
already late. When do you expect those criteria to come out?
    Mr. Walke. We have prepared regulations to implement that 
providing of the law that contains the forgiveness provision. 
And that is working its way through the process.
    I don't have a date determinative that I can share with you 
as to when it is coming out, other than the fact that it is in 
process.
    I would add, though, that the loans for those communities 
don't become due until 2010. And we should have these 
regulations in place well before then.
    Mr. Cao. And then, with respect to the arbitration language 
in the stimulus bill, and based on the report of Mr. Garratt 
that you are developing procedures to implement this new 
requirement, when do you expect these procedures to be 
finished? And whether or not we could look into--I believe that 
we spoke several times before about a possible lump-sum 
settlement--whether or not we could work on a lump-sum 
settlement through this arbitration process.
    Mr. Garratt. Sir, I don't recall a discussion on the lump-
sum settlement. However, I can assure you that the work to 
develop that arbitration protocol is under way. In fact, we 
worked over that, back and forth, over the weekend.
    I don't know when we are going to have a final version of 
that. I do know that our secretary is very committed and very 
interested in fielding that protocol as soon as possible. And I 
can, again, assure you that it will be fielded very soon.
    Mr. Cao. And with respect to money that had been obligated 
versus the money that has been drawn down, is it the reason why 
the money has not been drawn out--is because of this space 
between FEMA versus state and local government with respect to 
damage evaluations?
    Is that one of the problems why the money has not been--
they have been drawn down?
    Mr. Walke. That could very well be, sir. But I don't have 
any stats on that.
    The project worksheets that the state has said the 
communities are not happy with the scope of work and estimates 
on those. Perhaps that is a subset of the money that has 
already been obligated.
    Mr. Cao. The money already obligated cannot be drawn down 
unless FEMA approves of the amount that is being drawn. Is that 
correct?
    Mr. Walke. The mere fact that FEMA has obligated the 
project worksheet is, in fact, an approval for that scope of 
work. So if the applicant plans to accomplish the scope of work 
that we approve, they can draw the money down.
    Mr. Cao. So, basically, based on the amount you have given, 
the $7.5 billion--that has already been obligated in response 
to all the projects that FEMA has already approved?
    Mr. Walke. That is correct.
    Mr. Cao. OK.
    And I have one last question to Ms. Liu.
    You said that the goals are--I am sorry. This whole 
Federal, state and local process is not organized around goals 
and objectives. What do you see, presently, as the 
organization? Is there any organization around FEMA, state and 
the local governments?
    Ms. Liu. Well, I think what is--well, I tend to look at 
long-term recovery efforts from the ground up. And I know that, 
as a local leader--and the folks who have been working very 
hard in New Orleans to recover--and for many of the communities 
in the Gulf Coast--it isn't just FEMA.
    What they need is the levees to be repaired, the housing 
recovery to happen. All kinds of aid is important. And so it 
cuts across multiple Federal agencies. And at this point, when 
you wake up every day, there is not one single person in the 
Federal apparatus who has made the recovery a priority in terms 
of unifying and accelerating the efforts of the independent 
agencies.
    And at the same time, I--this is not just a Federal issue. 
The fact that it is taking--I still ask folks locally if there 
is a plan in New Orleans that governs Federal and state 
spending, ``How are you prioritizing? What are your goals?''
    You know, the Federal Government should respond in service 
of local and state priorities and goals. And there has, 
obviously, been three different planning efforts, at least in 
the New Orleans area.
    When you talk to folks who implement recovery, they don't 
really--there isn't a path forward, except for at the project--
individual project level--making sure that individual paper 
project gets funded.
    So I think it is not--I think the hard part is that these 
are not efforts that are unified towards a direction. They are 
being leveraged with private-sector funding. We are not scaling 
up the Federal investment in a way that could be optimized. It 
is a lot of very small, independent efforts that I think are--
represent a lot of missed opportunities.
    Mr. Cao. Thank you very much.
    Mr. Cuellar. But, Ms. Liu, you are going to get an 
opportunity to put that path forward.
    Thank you, Mr. Cao.
    At this time, I would like to recognize the gentlewoman 
from California, Ms. Richardson, for 5 minutes.
    Ms. Richardson. Thank you, Mr. Chairman.
    I am going to be as brief as I can in asking the questions. 
And I am going to ask that you do the same in answering, 
because we have got less than 5 minutes to get them through.
    I am going to focus my questions on Hurricane Katrina and 
the impact in New Orleans and Louisiana, because we have heard 
much discussion, so far, about Texas.
    How many current staff members are located in New Orleans 
with FEMA?
    Mr. Garratt. Approximately 800, total, in Louisiana.
    Ms. Richardson. OK.
    And do these folks actually go out into the lower Ninth 
Ward, St. Bernard Parish, et cetera? Are they walking around, 
or are they just in an office, doing paperwork?
    Mr. Garratt. Both, Congresswoman. In fact, we have teams 
that do nothing except specialize in interacting with their 
counterparts at the jurisdictional and local level.
    Ms. Richardson. OK.
    I participated in a congressional trip with Majority Whip, 
Mr. Clyburn, and Speaker Pelosi, that--July 19th through the 
22nd. So I personally went there and observed some of the 
progress and some of the lack of progress.
    So, therefore, my questions are--I had an opportunity--I 
went into--one person--they were currently renovating their 
home. They were living in a trailer--about eight people in one 
trailer. They were clearly, I would say, 75 percent--80 percent 
done. And, yet, even though they were almost done, FEMA was 
saying, ``Hey, you got to get out of this trailer, you know, 
Sunday.''
    And there was a clear--had someone just walked out there 
and seen this situation, as opposed to pushing paper and 
accepting and denying, they would have clearly seen that by 
giving them another, you know, 2 weeks, 30 days, whatever, it 
could have resolved the issue.
    Do you have a process in place to actually talk to people, 
where people can come in and talk to someone once their request 
has been denied?
    Mr. Garratt. Yes, ma'am, we certainly do.
    And I would like to just explore this issue. Was this a 
trailer that was on somebody's private property----
    Ms. Richardson. Yes.
    Mr. Garratt. ----of a home that they were repairing?
    Ms. Richardson. Yes.
    Mr. Garratt. FEMA has not required that anyone turn in 
their trailers. What may have happened is that a local 
jurisdiction has an ordinance in place that they are enforcing 
which requires those trailers to be removed. But FEMA has not 
required, to this point, that anybody's trailer on private 
property be removed.
    Ms. Richardson. OK. I will get you the contact of the 
individual. Because it is my understanding it is FEMA.
    My next question is: It seems quite clear that people say 
time and time again that FEMA is underestimating and 
undervaluing the damages of what has occurred to people's 
homes. Is there any process in place to have someone look at 
that process and the inspectors who are doing the job?
    Mr. Garratt. Any applicant who believes that their home was 
not accurately valued, or it was undervalued, can appeal that 
decision, and can get another inspector to come out and 
reevaluate their home.
    Ms. Richardson. But, again, as our chairman said, if you 
have the same group of people who are all working together, and 
Suzie said, ``Oh, you know, the value was only $50,000,'' and 
then Johnny goes out--Johnny doesn't want to make Suzie angry 
by going in and saying, ``You know what? Suzie was wrong. It is 
actually $200,000.'' So you have got the fox watching the hen, 
and it is not working.
    So have you thought of a process, or are you doing 
something in place, based upon what the chairman said, to 
possibly reconsider that maybe that system is not working?
    Mr. Garratt. I would challenge that that system, in fact, 
is not working.
    And what I have, in fact, seen, is that, on a routine 
basis, when a housing evaluation is challenged, and we send in 
another inspector who doesn't know the other inspector to go in 
and revisit that, they will very often find that there are 
additional damages, and that they will write that up.
    So we have not seen, at least from my perspective----
    Ms. Richardson. Excuse me one----
    Mr. Garratt. --any systemic problem is this regard.
    Ms. Richardson. Excuse me. Excuse me. I have only got 50 
seconds.
    We have a mayor here who is chomping at the bit, I think.
    Would you like to join in, and assist me in this?
    Ms. Thomas. The issue is the change in personnel. One 
inspector puts the house at a certain value. Another one comes 
and changes it by appeal. And another appeal can take place.
    And what we are talking about is time. People are out of 
their houses. They are renting off the island or out of their 
cities. They are paying mortgages and rent. And FEMA takes too 
much time to make the assessments. They should be done 
immediately. We are still in the assessment stage 6 months 
after the hurricane in Galveston.
    Ms. Richardson. OK.
    So, Mr. Garratt, I am going to--I am new on the committee, 
so I am looking forward to working with all of you. And I am 
going to supply you with some information that I think might, 
hopefully cause you, as well as what the chairman has said, 
maybe reevaluate and reconsider.
    My last question--housing supplement in New Orleans--what 
is the status? I know of folks who have been paying $1,300 a 
month on their own, with no assistance from FEMA. And, you 
know, although we had tremendous goals of how quickly we wanted 
to resolve things, it wasn't quite as easy as, maybe, we had 
hoped it would be.
    So what is the status?
    Mr. Garratt. I am sorry, ma'am.
    Ms. Richardson. Is there no longer any housing supplement 
for folks who were impacted by Hurricane Katrina?
    Mr. Garratt. No. In fact, HUD is extending--what they are 
doing is transitioning from DHAP, which ended at the beginning 
of March, to a additional assistance period. And they are 
providing continued assistance until June 1st to DHAP 
participants.
    And those individuals who were in the Disaster Housing 
Assistance Program that HUD is managing are either being 
transitioned into the Housing Choice Voucher program, or they 
are being transitioned into Section-8 programs, or they--if 
they are eligible or able to take care of themselves--are being 
transitioned out of the program.
    Ms. Richardson. OK.
    If you could supply my office and the committee some of 
that information, it would be helpful.
    And, as I close, Ms. Liu, it would just like to say, in 
your statements, you said, ``We need not to focus so much on 
how much has been expended, but, in fact, what are the goals.''
    With all due respect, ma'am, what I would say to you is we 
just passed a recovery act of over $700 billion. And you know 
why some of these areas didn't get more money? It is because 
some of what they already have has not been spent.
    So when you make those comments, you may want to keep that 
in mind, because others would argue that we could use not only 
the money that we have, but more. Thank you.
    Mr. Cleaver. [Presiding.] The chair recognizes the 
gentlelady from Nevada, Ms. Titus.
    Ms. Titus. Thank you, Mr. Chairman. I just want to change 
direction a little bit. I would address this question to Mr. 
Czerwinski, and ask the two representatives from FEMA to also 
comment.
    My district includes parts of Las Vegas. So you can imagine 
that it is very important to us, for business, to be able to 
recover after a disaster, which is not likely to be a 
hurricane, but could be equally catastrophic.
    But as I look at the suggestions that you offer--and they 
would be good to help our small businesses. You talk about 
technical assistance and relocation and a tent where businesses 
can operate. That is really not going to apply to us very much, 
because we have several things in place that are very 
different.
    I mean, if you look at it, our major business is tied to 
tourists, not to local patrons. And so being able to get in and 
out of the city--those transportation routes are going to be 
what is very, very important.
    You talk about coordination among the different levels of 
government. We also have an incredible private security system 
in place, with all the major hotels, with manpower and 
technology, that probably should be part of this coordination, 
because I think they can offer some valuable services.
    We can't relocate the MGM Grand into a tent somewhere and 
let it keep operating. And, finally, there is a certain bias 
against gaming when it comes to the use of public dollars, to 
help it, even though that is a source of many jobs, and the 
kind of golden goose of the state's economy.
    So I worry about what I am hearing. And it seems to be kind 
of a one-size-fits-all when it comes to setting priorities, 
drawing up plans, determining who is eligible for grants and 
loans. So I would ask you, is there any room for flexibility 
here? And how can we design some things that would accommodate 
more tourist industry, or some things like Las Vegas might 
have?
    Mr. Czerwinski. Sure. You make very good points.
    And the key that we want to talk about is the importance of 
considering the business sector in whatever rebuilding plans 
you develop.
    Ms. Titus. I agree with that.
    Mr. Czerwinski. Particularly, small business, because they 
are the most vulnerable, and they can also provide good start-
up.
    So what we would suggest is exactly what you are saying. It 
is not a one-size-fits-all. It is actually tailoring the 
business recovery plan to the specifics of that disaster, and 
of that area.
    And the two areas that we think that do cover anything, 
regardless of what the specifics are, are the idea of financial 
and technical assistance. But they would play out very 
differently in very different circumstances.
    You would want your businesses to be given the assistance 
they need in terms of the money they need to keep operating. 
But, also, it is a changing environment.
    There is an example that we had from Los Angeles, where 
there was a fish market that was in business. And the whole 
landscape of their neighborhood changed. And the business got 
money. They came back. But they were selling the exact same 
kind of product. But their whole clientele had changed.
    So that points at your idea about being flexible. By 
putting a one-size, one idea out there, it no longer worked in 
the new environment. So we would agree 100 percent what you are 
saying.
    Ms. Titus. Gentlemen?
    Mr. Garratt. We would also agree.
    One of the things I would like to do is follow on on the 
remarks of Ms. Liu and the gentleman at my left. And that is to 
talk a little bit about the Emergency Support Function 14.
    Emergency Support Function 14 is long-term community 
recovery. It is a relatively young emergency support function. 
It first appeared with the National Response Plan. It was 
developed a couple of years ago. The purpose of that function 
is to facilitate a comprehensive recovery strategy at the 
community level.
    They are designed to bring in Federal, state, local, 
private sector, voluntary agencies--into the discussion, and 
into helping develop what is a comprehensive approach for that 
community's recovery.
    In many respects, that function is designed to help 
facilitate the sorts of things that we are talking about here. 
Can they do that better? Yes, they can. It requires everyone to 
come aboard, everyone to be willing to play. But that function 
is designed to help kick-start that process, and help move that 
process forward.
    Ms. Titus. I yield back my time. Thank you, Mr. Chairman.
    Mr. Cuellar. [Presiding.] Thank you, Ms. Titus.
    At this time, I would like to recognize Ms. Jackson-Lee, 
gentlewoman from Texas, for 5--I mean, for 5 minutes of 
questions.
    Ms. Jackson-Lee. Thank you very much, Mr. Chairman. Might I 
thank you and the ranking member for your indulgence and your 
kindness, which speaks to the collaboration of this committee--
the Homeland Security Committee--and the committee chairs?
    I look forward to joining with Chairman Cuellar for a 
hearing in the region. And I am very grateful for his--or the 
acquiescence, rather--for this idea. And we look forward to 
doing so, where we can reflect on what happened, but then, 
also, look forward to the hurricane season.
    We are about 3 months away from the hurricane season. And I 
want to thank the chairman and the ranking member for a very 
vital hearing, and their indulgence, again.
    Let me also add my appreciation, overall, to the 
hardworking FEMA employees who leave their families in the cold 
of winter or the heat of summer, to come to give aid to those 
who are suffering. I have experienced their great and diligent 
work. Those are the ones that are on the ground, that are 
sleeping on the ground, that are sleeping in tents through 
Hurricane Katrina and Rita.
    As a member of this committee, I have been in places as the 
winds have lifted. I was in east Texas as we were trying to get 
water trucks and ice trucks in to the region, as we were 
speaking to county commissioners who were living in conditions 
much less desirable than they would want to have.
    I visited Mayor Thomas, who has a long legacy of 
philanthropic work, in a building that was--days of sewage. I 
am aware of her work--that she did not cease throughout the 
storm.
    As we met with the president of the United States, the 
sewage seeped into our meeting. Mayor Thomas continued her 
work. And I think we owe a great deal of debt of gratitude to 
local leaders, such as herself.
    Mr. Garratt, let me try to be quick. And I need to have you 
be quick as well.
    Are you familiar with UTMB? Have you heard of that?
    Mr. Garratt. Yes, ma'am.
    Ms. Jackson-Lee. All right.
    I would like a full report as the amount of money that is 
either in the hands of FEMA or in the state, and the status and 
position of FEMA with respect to UTMB. I want an urgency put on 
that. I would prefer it at the end of the day.
    But if tomorrow morning is necessary--I want you to tell 
me: What are the obstacles for the full, complete operation of 
UTMB? I know the mayor may have some answers, but I am really 
going to direct this to FEMA.
    I have spoken to the state legislature in Texas. I am aware 
of their attempt and efforts to turn around what had been a 
dastardly decision to close it. This reminds me of the charity 
hospital in Galveston that is not closed--so, a full report on 
UTMB.
    The second is that there is a contract--there is a funding 
for disaster housing that I helped secure in Texas 3 years ago. 
The contractor is Heston House. Could you give me a full report 
as to why houses are not on the ground with respect to that 
contract?
    I visited, over the weekend, a warehouse full of modular 
homes, ready to go; 60, in fact. And they are being stalled by 
FEMA dilatory tactics. And I would like to know when we will 
get that housing on the ground, including the housing in 
Houston, Texas.
    I also need to ask you--and I would like an answer on 
this--there are 30,000 cases that social workers are dealing 
with, between a contract--because of Hurricane Ike and a 
contract between Texas and HHS. There are nonprofits who are 
ready with their caseworkers to work on these cases; 16,000 of 
them in Harris County.
    FEMA will not engage in a contract until April. These 
agencies are now laying off workers, quite contrary to the 
president's intent. And by the way, I want to thank the 
president for his commitment to Homeland Security. And they are 
not able to do their work because FEMA will not even indicate 
to them, ``We will reimburse you for those cases that are tied 
to Hurricane Ike.''
    Can you tell me why FEMA is still standing in the way of 
Hurricane Ike victims getting relief?
    Mr. Garratt. Ma'am, first thing--I need a clarification. 
And that is the second issue that you mentioned that is 
regarding the Heston Homes. Are you referring to the contract 
that was--or the competitive grant that was awarded to Texas as 
part of the Alternative Housing Pilot Project?
    Ms. Jackson-Lee. Yes, because those are the houses that 
they are now using to help east Texas, and also Harris County.
    Mr. Garratt. OK.
    Ms. Jackson-Lee. Yes, sir.
    Mr. Garratt. In terms of our commitment to the citizens and 
residents of Texas, I think we are very committed to that. And 
I think we have demonstrated that.
    Regarding the issue, specifically, of case management--we 
have a couple of case-management efforts under way in Texas. 
One of them is being managed by HUD under the DHAP-Ike program 
that they manage in their case-managing--the individuals and 
households that are part of that.
    We have another case-management program that, as you 
indicated, is part of a pilot effort that we are working with 
the Department of Health and Human Services.
    Ms. Jackson-Lee. And can I stop you a moment, sir? And I do 
appreciate you. The time runs on members, and I am asking for--
if chairman could yield me an additional 3 minutes.
    I ask unanimous consent. I have been yielded an additional 
3 minutes to pursue the questioning.
    I think what will be helpful is--and I understand the DHAP 
program. This is specifically the HHS. And it is a specific 
question. And what I am asking you to do is to pull it out of 
the ashes.
    The question is: FEMA indicated that they will not engage 
in a contract until April. The question is: You have social 
workers that are being laid off. You have cases that are not 
being handled. And the answer that I would hope, as you review 
it--that you would expedite either the contract, or that you 
would engage with the social-work agencies that you have 
already confirmed--that they could continue their work and be 
reimbursed.
    What I am saying is you have people who are not being 
helped, waiting and languishing because FEMA is not engaging in 
a contract. That money is already in place. So I think that 
requires you to go and investigate, and to give me an answer as 
to how we can work together to jump-start that contract. That 
is the HHS one.
    Mr. Garratt. I would agree with that.
    Ms. Jackson-Lee. All right, sir.
    And I thank you very much.
    I am sorry. Did you want to finish? No. All right, so I 
will be back in touch with you.
    Ms. Liu, let me thank you for your recommendations. But 
what I would like to get on the record is the difficulty of 
doing anything with FEMA, with an antiquated Stafford Act. 
Would you agree that we need to either overhaul or have an 
extensive review of a Stafford Act that provides the match--
that does not take into consideration Mayor Thomas' predicament 
of having, literally, no income?
    She is celebrating the fact that 65 percent of businesses 
are in. But I know her economy; 35 percent businesses out hurts 
Galveston. Can you asses that through your further studies--the 
review of the Stafford Act as antiquated and needing some 
revisions and-or total reconstruction?
    Ms. Liu?
    Ms. Liu. I agree with that. And I believe there have been a 
lot of really good studies and reports done, including those by 
GAO, that reviewed and makes recommendations to the Stafford 
Act. I think that the most important thing at this point, 
because we know that disasters are going to continue to happen, 
and happen in a more frequent rate--is that we need to--not 
only do we need to streamline the emergency response and find a 
much more human way of dealing with the emergency response, but 
we don't really have a policy on longer-term recovery.
    And I know that there are concerns and recommendations 
about whether or not longer-term recovery is really the 
providence of FEMA. And in the past, historically, FEMA does 
short-term emergency response. The longer-term recovery is done 
by others.
    And when I think about, again, from the ground up, what is 
needed for longer-term recovery, FEMA has really good systems 
in place----
    Ms. Jackson-Lee. Right.
    Ms. Liu. --for emergency response. But they are not waking 
up every day, thinking about community development, economic 
development, the mental health of the people who are there. 
That is a different set of responsibilities; requires a 
different kind of interagency response. And, in fact, it is a 
different kind of set of outcomes.
    So I do think that those are things that need to be 
visited, certainly, by this committee.
    I wanted to even respond a little bit, when--to some of 
Congressman Richardson's comment about case management and----
    Ms. Jackson-Lee. Well, I will yield to you. So that means I 
will have----
    Ms. Liu. I am sorry.
    Ms. Jackson-Lee. --just a little bit more time.
    I will let you answer----
    Ms. Liu. Oh, I am sorry.
    Ms. Jackson-Lee. ----that question.
    Mr. Chairman?
    Ms. Liu. I was going to say--respond a little bit to your 
question about FEMA----
    Ms. Jackson-Lee. No, that is all right. I am yield to you--
and respond to that question.
    Ms. Liu. Thank you very much.
    I do think there is certainly case management on all kinds 
of temporary housing, whether it is the DHAP vouchers or the 
trailers--families in trailers.
    I think that if we went back and talked about outcomes, 
there are certainly concerns raised by me that the case 
management that is being done right now is mostly about 
collecting people's income, data, demographics, 
characteristics. But the goal of case management isn't to make 
sure that they have a place to live at the end of the term of 
expired assistance--not like the way we do case management for 
welfare reform or TANF, where we actually actively work to find 
placement of jobs; even temporary jobs. That is a Federal 
mandate on TANF recipients.
    So I think that, again, when we think about temporary 
housing and the people who get temporary housing--we should not 
treat them as paperwork, but as humans. And there should be a 
case-management process that really thinks about, ``what are 
the different kinds of services, whether it is mental health or 
housing assistance or employment assistance?'' and get them 
into stable situations.
    Ms. Jackson-Lee. Let me thank you for that answer.
    And, Mr. Chairman, if I could have the last question to 
Mayor Thomas--I think you have made a very valid point.
    Mayor Thomas, I have studied your statement. And I want to 
thank your city manager and others, who are here. And I would 
like to ask on the record, Mr. Garratt, if you would--I realize 
the work. And your deputy, who is here, Mr. Walke--would you 
take the memorandum, or the statement, of Mayor Thomas?
    She has 14 recommendations. I know those answers cannot 
come to me tomorrow. But I want to engage you. I am going to 
use that document. I want to engage you. I would like to have 
you in my office. But I would like a response to those 14 
recommendations that she is given.
    I, frankly, believe that they are a peephole into 
hurricanes to come.
    Let me ask Mayor Thomas: What was the most difficult aspect 
of dealing with FEMA? I would argue that the Stafford Act needs 
to be completely overhauled. I think there are instances where 
money should come directly to the jurisdiction, where there is 
a crisis, as long as capacity is there. If the city fathers and 
mothers are no longer there, the devastation is so bad that 
everybody has completely left the area, then that is a 
different story.
    But if there are local governments trying to function--if 
they are trying to deal with renters, which you have indicated 
is a big issue--they are trying to deal with public housing. 
And I, frankly, believe those dollars should come directly to 
the local jurisdiction.
    Would you comment? And you might also comment on how north 
Galveston is doing. I will also mention Harris County. I think 
all these things impact the Hurricane Ike victims all over. And 
they also speak to Hurricane Rita and Katrina victims. We are 
not leaving them out.
    It is a complete continuity, because these people are still 
suffering as well.
    Mayor?
    Ms. Thomas. Yes, ma'am. I would be happy to answer.
    Number one, our most difficult issue was and is housing. As 
far as FEMA is concerned, regarding housing, Galveston is an 
island. FEMA has a rule that no FEMA trailer or modular house 
will be built on land that is not--I think it is six feet above 
sea level. So we have been--again, 6 months out, and finally 
getting some temporary housing.
    I also feel that Galveston has a very clean record of 
dealing with Federal money, because of the millions of CDBG 
money that we have had since 1974. And I would ask that FEMA 
pay in advance certain millions of dollars to the local 
communities on the ground, who can get our people into 
temporary housing. And they don't have to wait 6 and 7 months, 
as we are now doing that.
    So housing is a huge problem. And it is further complicated 
by the delays--by the requests for leases, for insurance, for 
school records, for medical records that have been drowned in 
the flood. And our residents--nor could they in New Orleans--
come up with these unending requests for paperwork.
    The people who live in Galveston know who their people are. 
And we know whether they had been a resident in Federal 
housing, or whether they are renters. And we can get them under 
cover if we have the funds in advance to do it.
    The other issue, Mr. Chairman, that I would like to just 
remind this group of--and it has to do with shoreline 
protection. It has to do with the fact that Galveston Bay rose.
    So when we talk about funding for shoreline protection, we 
want our fair share, as has been given to New Orleans. New 
Orleans had to rebuild its levees. We need to build levees on 
the north side of town, which is a side of town that we are 
talking about, here, that went under water first. And that is 
where our low-to-moderate-income population is.
    So we need levee protection--the same kind of 
reimbursement, the same kind of 100 percent funding that has 
been given to New Orleans, Louisiana and Mississippi. And we 
need to cut out the unending paperwork that FEMA requires for 
our folks, our people, to get shelter. Those are our main 
concerns--housing, too much paperwork, shoreline protection for 
an entire region.
    Ms. Jackson-Lee. Thank you, Mr. Chairman.
    If I may speak to the chairman--I would hope that the FEMA 
witness could give a response to those questions that the mayor 
has asked, because they are now still in the midst of fighting 
the battle of recovery. And I would hope that it would not be 
perceived as a Hurricane Ike gift; that we could begin to look 
at how we relate, overall, to hurricanes.
    Because I do believe the money trail is stalled when it 
goes to the state. And I do believe the Stafford Act is an 
obstruction to long-term recovery. And I believe this 
committee, with your leadership, and this full committee, can, 
during this term, really look at how we help those who are 
suffering and experiencing disasters.
    I thank you, Mr. Chairman, for your indulgence.
    Mr. Cuellar. Thank you again.
    And I just want to just clarify--the materials and the 
questions--or the responses--that have been requested by 
Congresswoman Jackson-Lee and, of course, going also to the 
mayors--I would ask that you send the originals to us, to the 
committee, so they can become part of the record, copied to Ms. 
Jackson-Lee. But just make sure they come to our committee.
    Also, I would like to ask unanimous consent to insert the 
following document from Mayor Thomas, that includes a pictorial 
description of the city damages,\1\ an index of Hurricane Ike 
orders from the city of Galveston, Hurricane Ike response-and-
recovery statewide-activity report, and, of course, FEMA's 
rental repair pilot program--ask that to be part of the record 
also.
---------------------------------------------------------------------------
    \1\ See committee file, ``Focusing on the Future'', Mayor Lyda Ann 
Thomas, City of Galveston, U.S. House Committee on Homeland Security 
Subcommittee on Emergency Communications, Preparedness and Response, 
Washington, DC, March 3, 2009.
---------------------------------------------------------------------------
    Mr. Cuellar. Before we close, I would ask also'the 
witnesses, before you take off--ask you to meet with Denton 
Herring--gentleman right here--before you leave, so you can 
organize the report on the recovery recommendations that I 
asked for.
    The only thing is--I was telling Denton that one of the 
things that I want is--I don't want to have five different--or 
five reports--should I say ``four different reports.'' I just 
want to have one, which means that you all have to sit down and 
talk about it on that.
    And if there is a difference on one recommendation, just 
add, ``And this recommendation was not agreed upon.'' But I 
really would like to have consensus as much as possible on the 
one report, not four different reports.
    So before you leave, I would ask you to sit down and take 
note. I know I have had--a couple members have asked me that 
they want their committee staffs to be involved. So any 
committee member that wants to get involved with their staff on 
the reports--and the first report will be this Friday at 12 
noon.
    I have asked for every--at least a status report, not the 
full report--a status report. Everybody, 12 noon--you will all 
be talking to Mr. Herring, here, to give us a report on this, 
because I don't want to be surprised at the end of 30 days--
and, ``Guess what? We haven't even got started on it.''
    So I would ask you to go ahead and do that. Make sure you 
all share phone numbers, get to know who is who here, because 
you are going to be spending a little bit of time together for 
the next 30 days.
    Any questions from anybody?
    Ms. Thomas. Mr. Chairman, I want to be sure that when you 
say that we are going to work together every Friday, you are 
talking about by conference?
    Mr. Cuellar. Yes. It is up to you.
    Ms. Thomas. I mean, I don't think I can come to 
Washington----
    Mr. Cuellar. No, no, I am not--I know. I am not asking 
that.
    Ms. Thomas. --especially when it is this cold.
    Mr. Cuellar. Yes. No. If I had my way, we would be going 
down to Galveston. I was asking the chairwoman--``We will go 
down to Galveston, but make sure it is warm when we go down 
there.
    Ms. Thomas. And so when we meet today, after this, because 
we all have other places to go, it is simply to exchange 
information.
    Mr. Cuellar. Yes.
    Ms. Thomas. And then Mr. Czerwinski will set up conference 
calls in order to pursue your request? Is that----
    Mr. Cuellar. Right, under the direction of the committee.
    And I think you all met the committee staff person who will 
be in charge.
    If you want to, wave and make sure everybody sees you.
    Just make sure that it will be under the committee staff. 
The lead person will be Mr. Czerwinski, but they will be under 
the committee supervision.
    Ms. Thomas. Thank you.
    Mr. Cuellar. OK.
    All right, I thank all the witnesses for their valuable 
testimony, and the members for their questions. The members of 
the subcommittee may have additional questions for the 
witnesses, and we ask you to respond to those as soon as 
possible, in writing, to those questions.
    Hearing no further business, the hearing is adjourned. 
Thank you.
    [Whereupon, at 11:59 a.m., the subcommittee was adjourned.]

                                 
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