Disaster Assistance: Improvement Needed in Disaster Declaration  
Criteria and Eligibility Assurance Procedures (31-AUG-01,	 
GAO-01-837).							 
								 
Since 1990, the Federal Emergency Management Agency (FEMA) has	 
expended over $27 billion in disaster assistance, over half of	 
which was spent for Public Assistance projects such as repairs of
roads, government buildings, utilities, and hospitals damaged in 
declared disasters. FEMA has established criteria that it uses to
determine whether to recommend that the President declare a	 
disaster and, once a disaster has been declared, approve and fund
Public Assistance projects.  In 1999, FEMA published formal	 
criteria for recommending presidential approval of disaster	 
declarations. These criteria include both minimum financial	 
thresholds and other qualitative measures that FEMA applies in	 
deciding whether to recommend presidential approval. These	 
criteria are not necessarily indicative of a state's ability to  
pay for the damage because they do not consider the substantial  
differences in states' financial capacities to respond when	 
disasters occur. As a result, federal funds may be provided for  
some disasters when they are not needed. Problems with applying  
FEMA's criteria remain. In part, these problems may persist	 
because many of the staff assigned to disaster field offices who 
make eligibility decisions are temporary and may not have the	 
skills and training needed to make appropriate decisions. FEMA	 
has developed a credentialing program to establish qualifications
and training requirements for these staff but has not implemented
this program. According to FEMA officials, budgetary and	 
programmatic factors have delayed implementation. In addition,	 
FEMA's review process does not ensure that all projects are	 
reviewed by the most knowledgeable officials. FEMA also lacks	 
centralized, quantified information that would be helpful for	 
managing the Public Assistance program. Its information 	 
system--essentially an electronic filing cabinet--stores	 
information project by project and does not provide effectively  
for programwide analysis. Furthermore, according to FEMA	 
officials, the system is unreliable and difficult to use. As a	 
result, data are lost or never entered. 			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-01-837 					        
    ACCNO:   A01699						        
  TITLE:     Disaster Assistance: Improvement Needed in Disaster      
Declaration Criteria and Eligibility Assurance Procedures	 
     DATE:   08/31/2001 
  SUBJECT:   Disaster relief aid				 
	     Management information systems			 
	     Internal controls					 
	     Eligibility criteria				 
	     FEMA National Emergency Management 		 
	     Information System 				                                                                 
	     FEMA Public Assistance Program			 
	     FEMA Hazard Mitigation Program			 
	     FEMA Individual Assistance Program 		 

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GAO-01-837
     
Report to the Subcommittee on VA, HUD, and Independent Agencies, Committee
on Appropriations, U. S. Senate

United States General Accounting Office

GAO

August 2001 DISASTER ASSISTANCE

Improvement Needed in Disaster Declaration Criteria and Eligibility
Assurance Procedures

GAO- 01- 837

Page i GAO- 01- 837 Disaster Assistance Letter 1

Results in Brief 2 Background 3 Criteria for Assessing State and Local
Response Capability Do Not

Adequately Reflect Capacity 9 FEMA Has Developed Criteria to Better Ensure
Project Eligibility,

but Some Implementation Problems Remain 15 Conclusions and Recommendations
21 Agency Comments and Our Evaluation 22 Scope and Methodology 23

Appendix I Efforts to Develop Criteria for Evaluating Governors? Requests
for Presidential Disaster Declarations 25

Appendix II Comments From the Federal Emergency Management Agency 29

Appendix III GAO Contacts and Staff Acknowledgments 34

Figures

Figure 1: Presidential Disaster Declarations and FEMA?s Public Assistance
Costs, Fiscal Years 1991- 2000 4 Figure 2: Total Costs for the Public
Assistance, Individual

Assistance, and Hazard Mitigation Programs for Presidential Disaster
Declarations, Fiscal Years 1991- 2000. 7

Abbreviations

FEMA Federal Emergency Management Agency NEMIS National Emergency Management
Information System Contents

Page 1 GAO- 01- 837 Disaster Assistance

August 31, 2001 The Honorable Barbara A. Mikulski Chair The Honorable
Christopher S. Bond Ranking Minority Member Subcommittee on VA, HUD, and
Independent Agencies Committee on Appropriations United States Senate

Since 1990, FEMA has expended over $27 billion in disaster assistance, over
half of which was spent for Public Assistance projects such as repairs of
roads, government buildings, utilities, and hospitals damaged in declared
disasters. FEMA has established criteria that it uses to determine whether
to (1) recommend that the President declare a disaster and, once a disaster
has been declared, (2) approve and fund Public Assistance projects. However,
over the past decade, the President, the Congress, FEMA?s Inspector General,
and GAO have expressed concerns over the adequacy and application of these
criteria. As the President noted in his fiscal year 2002 budget proposal,
the lack of clear and meaningful criteria for recommending disaster
declarations puts FEMA at risk of providing federal funds to some states
that do not need assistance, while ignoring the legitimate needs of others.

This Committee asked us to review FEMA?s processes for recommending a
disaster declaration and for ensuring that only eligible Public Assistance
projects are funded.

As agreed with your offices, this report assesses (1) the adequacy of the
current criteria used to determine whether a disaster exceeds state or local
capability to respond effectively and a presidential disaster declaration
should therefore be recommended and (2) the progress FEMA has made in
ensuring that only eligible projects within a declared disaster area are
funded. FEMA provides disaster assistance grants through its Public
Assistance, Hazard Mitigation, and Individual Assistance programs. This
report focuses on the Public Assistance program because it provides the most
funding for disaster assistance. To assess the adequacy of the criteria FEMA
uses to recommend a presidential disaster declaration, we analyzed available
data on damage estimates to determine whether disasters met the statewide
financial criteria for recommending a disaster declaration and estimated how
the use of other financial measures of state

United States General Accounting Office Washington, DC 20548

Page 2 GAO- 01- 837 Disaster Assistance

fiscal capacity would affect declaration recommendations. We also examined
applicable laws, regulations, and past reports by GAO, FEMA?s Inspector
General, and others. To determine whether FEMA?s procedures ensure that
projects meet eligibility requirements, we interviewed agency officials and
reviewed relevant documentation and data from the agency?s National
Emergency Management Information System (NEMIS). Our scope and methodology
are described further starting on page 23 of this report.

The Stafford Act (P. L. 93- 288) requires a finding that conditions are
beyond state and local capability to respond effectively before major
disaster assistance from the federal government is warranted. The law,
however, specifically prohibits FEMA from denying federal assistance ?solely
by virtue of an arithmetic formula or sliding scale based on income or
population.? 1 In 1999, FEMA published formal criteria for recommending
presidential approval of disaster declarations. These criteria include both
minimum financial thresholds and other qualitative measures that FEMA
applies in deciding whether to recommend presidential approval. Under its
current financial thresholds, FEMA can recommend a disaster declaration if
preliminary estimates of the damage exceed $1.04 per capita statewide and $1
million in total. FEMA?s other criteria include qualitative factors such as
the heavy impact of a disaster on a particular area or the occurrence of
recent multiple disasters in the same area. These criteria are not
necessarily indicative of a state?s ability to pay for the damage because
they do not consider the substantial differences in states? financial
capacities to respond when disasters occur. As a result, federal funds may
be provided for some disasters when they are not needed- a result that would
be inconsistent with the Stafford Act?s intent.

While FEMA has made substantial progress in developing clear criteria for
determining individual projects? eligibility, problems with applying the
criteria remain. In part, these problems may persist because many of the
staff assigned to disaster field offices who make eligibility decisions are
temporary and may not have the skills and training needed to make
appropriate decisions. FEMA has developed a credentialing program to
establish qualifications and training requirements for these staff but has
not implemented this program. According to FEMA officials, budgetary

1 42 U. S. C. 5163. Results in Brief

Page 3 GAO- 01- 837 Disaster Assistance

and programmatic factors have delayed implementation. In addition, FEMA?s
review process does not ensure that all projects are reviewed by the most
knowledgeable officials. FEMA also lacks centralized, quantified information
that would be useful for managing the Public Assistance program. Its
information system- essentially an electronic filing cabinet- stores
information project by project and does not provide effectively for
programwide analysis. Furthermore, according to FEMA officials, the system
is unreliable and difficult to use. As a result, data are lost or never
entered. FEMA?s reliance on temporary staff who often lack experience with
the system or training in its use may exacerbate these problems.

We are recommending actions designed to improve FEMA assessment of state or
local capability to respond to a disaster and to ensure the appropriate
application of project eligibility criteria within FEMA?s Public Assistance
program. These actions include (1) developing criteria that more accurately
reflect the affected state and local governments? capability to respond to a
disaster, (2) improving the processes for reviewing proposed disaster
projects to better ensure they meet eligibility requirements, (3) assigning
a higher budget priority to implementing a credentialing and training
program for federal disaster staff, and (4) establishing a plan to identify
recurring problems and take appropriate actions.

FEMA found our observations about the disaster declaration process timely
and valuable for its review of disaster declaration criteria. The agency
also stated that its current procedures were designed to ensure appropriate
review and validation of proposed projects for eligibility considerations.
While we acknowledge the intent of these procedures, our review found areas
where the procedures did not always accomplish their intent.

Over the last several years, the Congress has expressed concern over the
number and costs of disaster declarations. GAO has also identified the cost
of disaster assistance as one of FEMA?s major management challenges. Figure
1 depicts the number of major disasters declared since fiscal year 1991 and
FEMA?s share of the Public Assistance program costs for projects associated
with them. Background

Page 4 GAO- 01- 837 Disaster Assistance

Figure 1: Presidential Disaster Declarations and FEMA?s Public Assistance
Costs, Fiscal Years 1991- 2000

Note: The costs shown are the Public Assistance funding provided to states
for completed projects and for incomplete projects whose costs have been
estimated. Dollars are adjusted for inflation. Approximately $4.6 billion in
fiscal year 1994 is attributable to the Northridge, California, earthquake.

Source: FEMA?s Office of Financial Management (as of May 31, 2001).

The Robert T. Stafford Disaster Relief and Emergency Assistance Act (the
Stafford Act), as amended, 2 establishes the process for states to request a
presidential disaster declaration. The Stafford Act requires that ?requests
for a declaration by the President that a major disaster or emergency exists
shall be made by the Governor of the affected state.? 3 As part of the
request to the President, a governor must affirm that the state?s emergency

2 42 U. S. C., 5121 et seq.

3 A state also includes the District of Columbia, Puerto Rico, the Virgin
Islands, Guam, and American Samoa.

Page 5 GAO- 01- 837 Disaster Assistance

plan has been implemented 4 and the situation is of ?such severity and
magnitude that effective response is beyond the capabilities of the State
and the affected local governments and that Federal assistance is
necessary.? 5

Before a governor asks for disaster assistance, federal, state, and local
officials normally conduct a joint preliminary damage assessment. FEMA is
responsible for recommending to the President whether to declare a disaster
and trigger the availability of funds as provided for in the Stafford Act.
FEMA uses the damage assessment data in preparing its recommendation to the
President. 6 When an obviously severe or catastrophic event occurs, a
disaster may be declared before the preliminary damage assessment is
completed.

In response to a governor?s request, the President may declare that a major
disaster or emergency exists. 7 This declaration activates numerous
assistance programs from FEMA and may also trigger programs operated by
other federal agencies, such as the Departments of Agriculture and Labor,
the Federal Highway Administration, the Small Business Administration, and
the U. S. Army Corps of Engineers, to assist a state in its response and
recovery efforts. 8 The federal disaster assistance provided

4 Under terms of the Stafford Act, to be eligible for disaster assistance,
each state must have submitted a plan that sets forth ?a comprehensive and
detailed State program for preparation against and assistance following,
emergencies and major disasters,? including provisions for assisting
individuals, businesses, and local governments, as well as for training
emergency staff and establishing necessary regulations and procedures. (42
U. S. C. sec. 5131.)

5 42 U. S. C. sec. 5170. 6 FEMA also uses the data from the damage
assessment to determine what resources are necessary to respond to the
disaster, including the personnel required to staff FEMA?s disaster field
offices and the resources needed from other federal agencies involved in the
disaster response.

7 If the President declares an emergency, rather than a major disaster, the
federal response is limited to the immediate and short- term assistance that
is necessary to save lives, protect property and public health and safety,
or lessen or avert the threat of a catastrophe. FEMA?s expenditures may not
exceed $5 million under an emergency declaration, unless the Congress is
notified of the nature and extent of the assistance requirements.
Approximately seven emergencies, averaging about $7 million, have been
declared annually over the past decade. Our focus is on disaster, not
emergency, declarations.

8 Some agencies, including the Department of Agriculture, the Small Business
Administration, and the Federal Highway Administration, have the authority
to initiate certain emergency assistance efforts without a presidential
disaster declaration.

Page 6 GAO- 01- 837 Disaster Assistance

under a major disaster declaration has no dollar limit. FEMA provides
assistance through one or more of the following grant programs:

 Public Assistance provides aid to state government agencies; local
governments; Indian tribes, authorized tribal organizations, and Alaskan
Native villages; and private nonprofit organizations or institutions that
provide certain services otherwise performed by a government agency.
Assistance is provided for projects such as debris removal, emergency
protective measures to preserve life and property, and repair and
replacement of damaged structures, such as buildings, utilities, roads and
bridges, recreational facilities, and water- control facilities (e. g.,
dikes and levees).  Individual Assistance provides for the necessary
expenses and serious

needs of disaster victims that cannot be met through insurance or
lowinterest Small Business Administration loans. FEMA provides temporary
housing assistance to individuals whose homes are unlivable because of a
disaster. Other available services include crisis counseling to help relieve
any grieving, stress, or mental health problems caused or aggravated by the
disaster or its aftermath. FEMA provides unemployment compensation and can
cover a percentage of the medical, dental, and funeral expenses that are
incurred as a result of a disaster.  The Hazard Mitigation Program provides
additional funding (currently up

to 15 percent of total federal aid for recovery from the disaster) 9 to
states to assist communities in implementing long- term measures to help
reduce the potential risk of future damages to facilities.

Figure 2 shows the obligations for each of these three general programs for
fiscal years 1991 through 2000. As this figure indicates, the Public
Assistance program is the largest of the three grant categories, in terms of
dollars expended.

9 Under recent amendments to the Stafford Act, funding for mitigation can be
increased to 20 percent for states that meet enhanced planning criteria.
FEMA is currently developing regulations to implement this provision.

Page 7 GAO- 01- 837 Disaster Assistance

Figure 2: Total Costs for the Public Assistance, Individual Assistance, and
Hazard Mitigation Programs for Presidential Disaster Declarations, Fiscal
Years 1991- 2000.

Note: The costs shown are the Public Assistance funding provided to states
for completed projects and for incomplete projects whose costs have been
estimated. Dollars are adjusted for inflation. Approximately $4.6 billion in
fiscal year 1994 is attributable to the Northridge, California, earthquake.

Source: FEMA?s Office of Financial Management (as of May 31, 2001).

Not all programs are activated for every disaster. The determination to
activate a program is based on the needs identified during the joint
preliminary damage assessment. For instance, some declarations may provide
only Individual Assistance grants and others only Public Assistance grants.
Hazard Mitigation grants, on the other hand, are available for most
declarations.

In addition to its central role in recommending to the President whether to
declare a disaster, FEMA has primary responsibility for coordinating the
federal response when a disaster is declared. Typically, this response
consists of providing grants to assist state and local governments and
certain private nonprofit organizations to alleviate the damage resulting

Page 8 GAO- 01- 837 Disaster Assistance

from such disasters. Once a federal disaster is declared, FEMA usually
establishes a field office at or near the disaster site. This office is
generally staffed with a crew of permanent, full- time FEMA employees; a
cadre of temporary reserve staff, also referred to as disaster assistance
employees; and the state?s emergency management personnel. Damage estimates
for each project, known as project worksheets, can be prepared either by
FEMA staff or by personnel from applicants, such as state agencies,
communities and certain nonprofit organizations. Full- time FEMA staff then
review these project worksheets for final approval.

To facilitate their review, approval, and funding, projects are divided into
two groups. Projects are considered small if their estimated cost does not
exceed $50,600. 10 If a FEMA employee or state representative prepares a
worksheet for a small project and it passes all appropriate reviews, it is
funded according to its estimated costs. However, if an applicant prepares a
project worksheet, FEMA or state officials may verify the accuracy of the
claims by validating the project?s cost and eligibility. 11 Typically,
officials validate a sample of an applicant?s small projects before
approving the funding for them. Large disaster projects, whose estimated
costs exceed $50,600, are funded incrementally as work on each phase is
completed. In all cases, the states, as the grantees, are responsible for
disbursing FEMA funds to the applicants and for certifying that all costs
were appropriate and that work on the project was completed in accordance
with the approved project estimates.

The Stafford Act sets the federal share for the Public Assistance program at
no less than 75 percent of eligible costs of a disaster. The President can
increase the federal share for the Public Assistance program if it is
determined that the disaster costs greatly exceed a state?s financial
capabilities. The federal share can sometimes reach 100 percent for
emergency work, for limited periods, if it is deemed necessary to prevent
further damage, protect human lives, or both. FEMA officials indicated they
are reluctant to recommend a 100- percent federal share for projects because
this percentage provides no incentives for the states to control costs.

10 This value applies to projects funded in fiscal year 2001. It is adjusted
for inflation annually. 11 An applicant may be a local municipality, state
agency, public utility, or certain private nonprofit entities within
designated counties or equivalent official boundaries of the state.

Page 9 GAO- 01- 837 Disaster Assistance

To better use disaster resources and devolve major management responsibility
for the Public Assistance program to the states, the Director of FEMA
implemented a pilot project in 2000 to allow those states that have the
capability to do so to manage the Public Assistance segment of their own
small disasters. 12 Under this Public Assistance pilot project, the states
and affected communities make all project eligibility determinations and
ensure that all disaster projects comply with current codes and standards,
as well as with federal laws, regulations, and FEMA policies. To participate
in this pilot project, a state must, in FEMA?s view, be capable of managing
its own disaster recovery program, have a sound financial accounting system
to track disaster projects, and enter into an operational agreement with
FEMA that defines its roles and responsibilities. 13

In 1999, FEMA published its criteria for evaluating a governor?s request for
a disaster declaration. For the Public Assistance program, FEMA identified
two specific financial thresholds, as well as several other less specific
criteria, such as severe local impact, previous actions taken that helped
mitigate the disaster damages, and the overall impact of multiple recent
disasters in the state. Any or all of these, as well as ?other relevant
information,? can be used to determine whether a disaster declaration should
be recommended under the Public Assistance program.

FEMA?s explicit financial thresholds are less accurate measures of a state?s
true ability to respond effectively to a disaster than other available
financial measures. In responding to congressional interest in more
objective disaster declaration criteria, FEMA set two financial thresholds
to be considered in evaluating when a disaster has exceeded a state?s
capacity to respond without federal assistance. First, it estimates the
percapita impact of the disaster damages in the state through the
preliminary damage assessment process. In 1999, FEMA set a figure of $1.00
per capita as a critical threshold that might warrant federal assistance.
This figure, which is currently $1.04, is adjusted annually for inflation.
Secondly, it set

12 Small disasters are defined as those whose estimated infrastructure
damages do not exceed an estimate of $15 million (Public Assistance
projects) and do not exceed $2 per capita statewide.

13 As of May 2001, three states were participating in the pilot project:
Florida, Arizona, and Oklahoma. Criteria for Assessing

State and Local Response Capability Do Not Adequately Reflect Capacity

FEMA?s Financial Thresholds Are Poor Proxies for a State?s Fiscal Capacity

Page 10 GAO- 01- 837 Disaster Assistance

a $1 million threshold for statewide Public Assistance damages. This
threshold, however, is not adjusted for inflation.

In 1986, FEMA proposed the $1.00- per- capita threshold as a means of
gauging state fiscal capacity. The measure was based on the 1983 percapita
personal income nationwide, then estimated at $11,667. FEMA thought it
reasonable ?that a State would be capable of providing $1.00 for each
resident of that State to cover the costs of State efforts to alleviate the
damage which results from a disaster situation,? inasmuch as this amount was
roughly equivalent to 0.1 percent of estimated General Fund expenditures by
states. 14 FEMA proposed to adjust this figure each year by the ratio of
each state?s personal income to the nationwide average, thus making it more
sensitive to interstate differences over time. This proposal met with
opposition from state and local officials and resulted in a provision in the
Stafford Act that prohibited denying federal disaster assistance ?solely by
virtue of an arithmetic formula or sliding scale based on income or
population.? 15 Nevertheless, the unadjusted $1.00- per- capita threshold
continued to be used informally as part of FEMA?s preliminary damage
assessment efforts.

In 1998, FEMA submitted a concept paper for consideration by state emergency
managers. In the paper, the agency recommended that the percapita threshold
be set at $1.51. This figure accounted for inflation since 1986, but was no
longer linked to average state tax expenditures as the 1986 threshold had
been. In response to comments from state emergency management officials,
FEMA used the $1.00- per- capita threshold when it published its formal
criteria in 1999. It further provided that adjustments based on annual
inflation be made and applied uniformly to states.

A state?s capacity to respond to a disaster using state resources depends on
several factors, the most important of which is perhaps the underlying
strength of the state?s tax base and whether that base is expanding or in
decline. A state?s tax base represents the resource base against which it
can draw to fund its public services needs, including the necessary repairs
that arise in the wake of a disaster. An expanding economy also provides
more potential revenues than one that is flat or in decline.

14 51 Fed. Reg. 75, p. 13333 (4/ 18/ 86). 15 42 U. S. C. 5163. FEMA?s
Development of the

Per- Capita Criterion Measures of State Capability

Page 11 GAO- 01- 837 Disaster Assistance

A readily available indicator of states? funding capacities and one commonly
used in many formula grant programs is state per- capita personal income.
Per- capita income provides a quantitative measure of income received by
state residents. As such it provides a reasonable starting point for gauging
a state?s capacity to bear the burden of making the necessary repairs in the
aftermath of a major disaster. Per- capita personal income is commonly used
in federal grant programs as a basis for sharing program costs between
states and the federal government.

Better measures of a state?s fiscal capacity, however, exist. Per- capita
personal income, while providing a reasonable indication of state funding
capacity, has a number of defects as well. In the past, we have found
percapita income to be a relatively poor indicator of a state?s fiscal
capacity because it does not comprehensively measure income potentially
subject to state taxation. For example, it does not include income produced
in a state unless it is received as income by a state resident. Thus,
profits retained by corporations for business investment, though potentially
subject to state taxation, are not included in a state per- capita income
measure because they do not represent income received by state residents. We
have previously reported that Total Taxable Resources (TTR), a measure
developed by the U. S. Department of the Treasury, is a better measure of
state funding capacity in that it provides a more comprehensive measure of
the resources that are potentially subject to state taxation. 16 For
example, TTR includes much of the business income that does not become part
of the income flow to state residents, undistributed corporate profits, and
rents and interest payments made by businesses to out- of- state stock
owners. This more comprehensive indicator of state funding capacity is
currently used to target federal aid to low- capacity states under the
Substance Abuse and Mental Health Service Administration?s block grant
programs. 17 In the case of FEMA?s Public Assistance program, adjustments
for TTR in setting the threshold for a disaster declaration would result in
a more realistic estimate of a state?s ability to respond to a disaster. If,
instead of setting a uniform $1.00- percapita threshold, FEMA had set the
average threshold at $1.00 but allowed

16 See, for example, Federal Grants: Design Improvements Could Help Federal
Resources Go Further (GAO/ AIMD- 97- 7, Dec. 18, 1996). 17 42 U. S. C. 300x-
33; 42 U. S. C. 300x- 7. In its 1986 notice of proposed rulemaking, FEMA
acknowledged that TTR ?may well provide an improved method of determining
State capability in the future,? but was under review. Thus FEMA considered
it too early to judge its appropriateness.

Page 12 GAO- 01- 837 Disaster Assistance

it to vary according to state TTR estimates, the Tennessee threshold, for
example, would have been $0.88 in 1998, 18 while Washington State?s would
have been $1.05 per capita.

TTR also has the advantage of providing a more sensitive adjustment for
growth over time in a state?s fiscal capacity than does adjustment for
inflation based on personal income. For example, TTR in the United States is
estimated to have grown from $4.4 trillion in 1986 to $9.9 trillion in 1998.
If the $1.00- per- capita threshold proposed in 1986 had been adjusted at
this rate in 1998, the financial threshold would have been $2.24 per capita
(rather than the $1.51 inflation- adjusted figure proposed by FEMA and the
$1.04 threshold currently in effect). Furthermore, since TTR provides
estimates of each state?s fiscal capacity, adjustments for TTR growth would
vary by state. For example, if adjusted for the TTR growth rates from 1986
to 1998, the financial threshold for disaster declarations in Tennessee
would be $2.35 per capita, and in Washington State would be $2.65 per
capita.

We believe that implementing TTR would not be a violation of the statutory
prohibition against basing aid solely on an arithmetic formula or sliding
scale based on income or population. Rather, TTR provides a more refined
measure of a state?s capacity to respond to a disaster than FEMA?s existing
$1.04- per- capita measure. It is our expectation that FEMA would continue
to take into account several criteria in deciding, for any given incident,
whether to recommend a disaster declaration to the President. When FEMA
published its declaration criteria in 1999, it maintained that the $1.00-
per- capita measure was not a violation of the statutory prohibition because
the agency examines all the other listed criteria when it decides whether to
recommend a disaster declaration. We agree and believe that the use of TTR
or some other more sensitive measure in place of the per- capita measure,
together with other criteria such as those identified in the regulations,
would be consistent with the statute.

In its 1999 regulations, FEMA established a second quantitative measure of a
state?s ability to respond to disasters. The agency set a $1 million
statewide damage criterion as an indicator that disaster damages might
require federal assistance. As a rationale for setting this threshold, FEMA
cited its ?belief that we can reasonably expect even the lowest population

18 1998 is the latest year for which TTR estimates are currently available.
Statewide Damage Criterion

Page 13 GAO- 01- 837 Disaster Assistance

states to cover this level of public assistance damage.? 19 In effect, this
criterion set the per- capita threshold at greater than $1.00 for those
seven states with populations under 1 million. FEMA also made no provisions
to adjust this threshold for future inflation.

In its 1999 regulations, FEMA identified five other factors that it
considers in evaluating a governor?s request for a Public Assistance
disaster declaration:

 Localized impacts. FEMA considers the extent to which damages are
concentrated heavily at the county or local government level even if the
statewide per- capita criterion is not met. According to FEMA, this
consideration is particularly relevant where critical facilities are
involved or where localized per- capita damages might be ?extremely high.?
FEMA offers no specific threshold for localized per- capita impact but
remarks that the agency has seen damages ?in the tens or even hundreds of
dollars per capita? in situations where the statewide per- capita threshold
was not met.  Insurance coverage in force. FEMA reduces the grant by the
amount of

insurance coverage that ?is in force or should have been in force as
required by law or regulation? when the disaster occurred. As discussed in
appendix I, insurance coverage for Public Assistance grants is currently
only a postdisaster condition of receiving a grant; that is, if grant
recipients do not currently have insurance, they must agree to procure it as
a condition of receiving federal assistance. FEMA is now attempting to
define a minimum level of insurance coverage that would be reasonable to
require public entities to maintain in order to be eligible for public
assistance. 20 The issue is still under review.  Hazard mitigation. FEMA
attempts to encourage mitigation efforts to

avert or reduce damages from future disasters by explicitly considering
previous mitigation efforts that may have reduced the damages from the
current disaster. FEMA suggests that a state that has made such efforts in
the past is more likely to receive disaster assistance when the estimated
Public Assistance damages fall below the per- capita criterion.

19 44 C. F. R. 206.48. 20 FEMA published an advanced notice of proposed
rulemaking soliciting comments on options to address insurance issues in the
Public Assistance program on February 23, 2000 (65 Fed. Reg. 36, 8927-
8931). It published a summary of the comments it received on October 2, 2000
(65 Fed. Reg. 191, 58720- 58721). FEMA?s Other Qualitative

Criteria and Their Impact on Decisions

Page 14 GAO- 01- 837 Disaster Assistance

 Recent multiple disasters. In evaluating a governor?s request for
assistance, FEMA also considers the cumulative impact that disasters in the
previous 12 months may have had on the state?s or locality?s ability to
respond effectively. FEMA includes both Stafford Act and state- declared
disasters and the extent to which the state has spent its own funds.  Other
federal assistance programs. FEMA also considers other

federal sources of disaster relief that might more appropriately meet the
needs created by the disaster. Disaster relief in various forms is also
available under the programs of a number of federal agencies, including the
Federal Highway Administration, the Department of Agriculture, and the Small
Business Administration. 21

A disaster declaration can be recommended on the basis of any of these
criteria, as well as of ?other relevant,? but unspecified, information.

We analyzed the 79 major presidential disaster declarations that were issued
in the 2 years since FEMA published its revised regulations and in which
Public Assistance grants were made available. 22 Sixty of those disaster
declarations- about 76 percent- met the statewide per- capita dollar
thresholds for a presidential disaster declaration; in all but four cases
the damages were estimated to be greater than $1 million. 23 However, some
disasters were declared when the per- capita damage was substantially less
than $1. In one case, FEMA cited significant localized impact as the reason
for recommending a disaster declaration when the preliminary estimates
indicated a statewide per- capita cost of $0.17. In another case, the state
had incurred damages amounting to $0. 12 per capita, but the declaration was
based on the occurrence of several earlier disasters. These declarations may
well have been justified in the circumstances peculiar to these disasters
and consistent with existing regulations. However, they illustrate the
latitude afforded FEMA by its subjective and nonspecific criteria for
determining whether an effective

21 While FEMA may consider this factor in evaluating a request, it has not
always adhered to it in funding individual projects. FEMA?s Inspector
General has found a number of instances in which assistance provided by FEMA
would have been more appropriately provided by a different federal agency or
the same assistance was provided by both. See

Review of Governors? Disaster Requests (I- 02- 99, Mar. 22, 1999). 22 There
were 93 major presidential disaster declarations in fiscal years 1999 and
2000; of those, 14 declarations were for Individual Assistance only. 23 Two
of the cases with damages below $1 million met the per- capita threshold.

Page 15 GAO- 01- 837 Disaster Assistance

response to a disaster is beyond the capabilities of the state and the
affected local governments. 24

Our finding that 76 percent of disasters declared in 1999 and 2000 met the
$1.00 per- capita criterion may reflect some improvement over the earlier
findings of FEMA?s Inspector General. (See app. I.) In 1999 the Inspector
General reported that only 60 percent of disasters from 1988 through 1998
met this criterion. This change may be attributable to FEMA?s 1999
publication of formal declaration criteria. However, because disasters are
extremely variable in their occurrence and severity and our available sample
was restricted to a 2- year period, such attribution may be premature.

Our May 1996 report on FEMA?s Public Assistance program identified many
weaknesses and made several recommendations to strengthen the program,
especially its processes for determining project eligibility. 25 In
addition, FEMA?s Office of Inspector General noted weaknesses in FEMA?s
ability to establish project eligibility. Those reports also noted that, in
addition to having accurate, useful, and readily available policies and
procedures, FEMA employees- especially temporary employees- should receive
training in the appropriate application of the latest policies and
information systems. To address these problems, FEMA redesigned the Public
Assistance program and implemented the changes in October 1998. As part of
this redesign, FEMA developed and disseminated numerous regulations,
policies, procedures, user manuals, and guides. FEMA also developed a new
training curriculum for its permanent and temporary staff.

While there is evidence that staff regularly use the new policies and
procedures, some eligibility problems persist. These may in part be due to
the lack of a formal credentialing mechanism to ensure that staff authorized
to review and approve Public Assistance projects or obligate federal funds
have received adequate training. The recent emphasis on devolving the
management of small disasters from FEMA to the states increases the
importance of FEMA?s processes and controls over disaster

24 42 U. S. C. sec. 5170. 25 Disaster Assistance: Improvements Needed in
Determining Eligibility for Public Assistance (GAO/ RCED- 96- 113, May 23,
1996). FEMA Has Developed

Criteria to Better Ensure Project Eligibility, but Some Implementation
Problems Remain

Page 16 GAO- 01- 837 Disaster Assistance

projects to help ensure that they meet eligibility criteria and federal
funds are spent efficiently and effectively.

Our 1996 report noted the need for clearer eligibility criteria to improve
the accuracy and consistency of eligibility determinations for individual
projects once a disaster has been declared. It stated that ?FEMA officials
may have to make subjective judgments because the criteria lack specificity
and/ or concrete examples.? For example, officials at FEMA?s regional
offices noted problems in ?determining the standards (building codes) that
are applicable to repair/ restoration work,? a process that affects
decisions on whether a facility should be repaired or replaced. Our report
also stated that the criteria had not been systematically updated and
disseminated and that some decisions were unofficial and unwritten. We
concluded that clearer criteria were essential because FEMA relies on
temporary personnel with limited training to prepare its project worksheets.
Furthermore, as the magnitude of disaster damage increased, it was more
likely that FEMA would have to call on additional, possibly less thoroughly
trained, temporary employees, who were likely to be less familiar with the
eligibility rules and regulations.

When FEMA redesigned its Public Assistance program, it addressed the
identified shortcomings by revising or developing its program guidance,
which included policies, standard operating procedures, handbooks, guides,
digests, and fact sheets. FEMA has developed or revised Public Assistance
policies in 35 areas or topics since the program?s redesign in 1998. The new
and revised publications were distributed to FEMA?s regional offices to make
them available to the personnel staffing disaster field offices. In
addition, FEMA placed the documents on its Web site for easy access. These
publications include (1) an easy- to- read summary of program policies; (2)
a guide describing the provision and application of procedures for program
grants and an index of relevant portions of pertinent regulations and
legislation; (3) an applicant handbook containing questions and answers on
how to apply for a program grant; and (4) a guide for planning, mobilizing,
and controlling large- scale debris clearance and disposal operations.

To document its business processes and ensure that all personnel are
familiar with its current doctrine, FEMA has continually reviewed and, as
necessary, revised its standard operating procedures. FEMA?s Web site lists
these procedures and, in some cases, provides details on them. For example,
at the time of our review, the Web site contained procedures on (1) the
roles and responsibilities of a Public Assistance Coordinator, (2) FEMA Has
Developed

Eligibility Policies and Disseminated Them to Field Staff

Page 17 GAO- 01- 837 Disaster Assistance

how to conduct a kickoff meeting, (3) the process for project formulation,
(4) the procedures used to validate small projects, (5) immediate needs
funding, and (6) how to use the cost- estimating format for large projects.

According to the FEMA staff we contacted, those tools are used and viewed as
useful in every field office. Several regional managers said they had
noticed an increased reliance on this guidance and a corresponding decrease
in the tendency of employees to ?shoot from the hip? when deciding on a
project?s eligibility under the Public Assistance program.

While FEMA has taken actions to address the issues identified in our 1996
report, FEMA officials believe that congressional direction would be needed
for the agency to change two policies our 1996 report questioned. These
include eliminating the eligibility for (1) revenue- generating nonprofit
organizations, (2) facilities not actively used to deliver government
services, (3) postdisaster beach renourishment, as well as increasing the
damage threshold for replacing a facility. 26

Despite the efforts that FEMA has made to improve its criteria, eligibility
problems persist. FEMA?s Office of Inspector General audits a sample of
disaster assistance recipients each year. We reviewed the 281 audits
conducted during fiscal years 1998 through 2000 that involved Public
Assistance grants. These audits found 226 cases of ineligible or
questionable claims. In nearly half of these cases, the Inspector General
found that FEMA had paid duplicate claims for reimbursement for disaster
projects or claims for reimbursement for projects that should have been
funded by another agency. 27 For example, some of the costs for disaster
projects were found to be already covered by a private or government
insurance policy or the costs were covered under programs managed by other
federal agencies, such as the Federal Highway Administration. The
persistence of these problems may in part be due to uneven staff training,
the use of a nonformal process to review proposed projects, the inadequate
or untimely review of completed projects, and the use of a

26 FEMA will now pay to replace rather than repair buildings if the repair
costs would be more than 50 percent of the estimated replacement cost. 27
FEMA requires grantees to maintain their records for 3 years following the
closeout of a disaster in order to facilitate any audits or reviews of
project files. Most of the financial audits we reviewed were of projects
that were completed prior to the 1999 revisions to the Public Assistance
program. Despite Improved Criteria,

Project Eligibility Problems Still Exist

Page 18 GAO- 01- 837 Disaster Assistance

management information system that makes reviews of programwide
effectiveness difficult.

FEMA recognizes the need to ensure that its employees, particularly the
temporary reserve staff in its disaster field offices, receive training in
the appropriate application of the latest policies and information systems.
To meet this need, the agency designed a credentialing program with minimum
standards for the disaster personnel who make program and cost eligibility
decisions that obligate federal funds for disaster projects. However, it has
not implemented the program. In addition, according to FEMA officials, the
agency does not have a single system that maintains up- to- date information
on the training and work experiences of its disaster staff.

In fiscal year 1999, FEMA developed a comprehensive credentialing plan that
provided a framework for evaluating the knowledge, skills, and abilities of
its staff- including its permanent full- time employees as well as its
temporary Disaster Assistance Employees- who are deployed during a disaster.
FEMA expected that this plan would ensure that its employees would have the
basic qualifications to perform their jobs and would make Public Assistance
managers, applicants, and the public more confident about their performance
in the field. According to FEMA officials, although the credentialing
program was formulated, it has not been implemented because of budget
constraints and programmatic issues that need to be resolved, such as the
number of job proficiency levels within job titles.

FEMA offers training for its Public Assistance staff at its Emergency
Management Institute in Emmitsburg, Maryland. FEMA also offers to conduct
training at a field office at the start of its disaster response effort. The
Public Assistance budget for training has decreased from about $1.9 million
for fiscal year 1999 to $725,000 for fiscal year 2001. In our review of
several FEMA internal studies of the operations of individual disaster field
offices during 1999 and 2000, we noted that field office training either was
not timely or was not offered at all. Because the majority of disaster
personnel are temporary reserve staff, providing training at a field office
is the only viable means to train them.

According to FEMA officials, the agency currently does not have a single
system that maintains up- to- date information on the training and work
experiences of its disaster staff. For example, according to available data
on formal training, only 20 percent of the staff have received training on
FEMA Staff May Not

Receive Critical Training

Page 19 GAO- 01- 837 Disaster Assistance

NEMIS- the management information system staff are expected to use to
document disaster projects- and only one region had over half of its staff
trained to use the system. Agency officials told us that this measure does
not capture the informal training that disaster staff receive in briefings,
refresher courses, and condensed courses while at the disaster field office.
Nevertheless, without implementing a comprehensive credentialing plan that
tracks the training and experience of its employees, FEMA cannot ensure that
all of its disaster personnel are appropriately prepared to make project
eligibility determinations.

FEMA has not established a formal process for reviewing project worksheets
to ensure that special considerations- such as environmental or historic
issues, insurance coverage, or flood control- are addressed before the
worksheets are approved. Although the agency has established procedures for
applicants or FEMA staff to prepare the worksheets, it has left the review
process up to the judgment of the FEMA staff in charge. According to a FEMA
official, the agency has not formalized the review process because it wants
to avoid a time- consuming sequence of reviews and fund projects as quickly
as possible. We agree that eligible projects should be funded quickly, but
some controls are necessary to ensure that proposed projects meet FEMA?s
eligibility criteria and their associated costs are reasonable. During our
review of project worksheets for a disaster in Nevada, we found that most of
those for flood control projects had not been reviewed by a specialist on
contract from the Army Corps of Engineers for that purpose. As a result,
FEMA had no assurance that the proposed projects should be funded by FEMA
instead of being referred to the U. S. Army Corps of Engineers. FEMA?s
efforts to encourage more applicants to prepare their own project worksheets
increase the importance of a systematic review process to ensure that
proposed projects meet the agency?s criteria for eligibility and cost
reasonableness before federal funds are obligated.

We found that small disaster projects do not always receive appropriate and
timely validation of their estimated costs and that large projects are
frequently not certified upon completion. Over 83 percent of Public
Assistance projects are considered to be small projects and have been funded
solely on the basis of their initial cost estimates. That funding is fixed,
regardless of the final cost the applicant actually incurs. FEMA reserves
the right to validate 20 percent of an applicant?s small projects to ensure
that all costs are eligible and reasonable. In our file reviews, FEMA Lacks
a Formal

Process for Reviewing Project Worksheets

Validation and Certification of Public Assistance Projects Can Be
Perfunctory or Untimely

Page 20 GAO- 01- 837 Disaster Assistance

however, we found little evidence of small project validations by FEMA
staff.

FEMA relies on the states to review completed large projects (those
exceeding $50,600) to certify that the applicant has completed the proposed
work. FEMA reviews the project after its completion and may adjust the
dollar amount of the grant to reflect the actual cost of the eligible work.
We found, however, that states, because of their limited staff, often have
large backlogs of projects awaiting final review. According to staff at 9 of
FEMA?s 10 regional offices, about 50 percent of the state emergency
management offices do not regularly submit their required quarterly reports
on the certification of large projects. Most of them report that their heavy
workload and/ or lack of resources preclude them from certifying the
completion of large projects promptly. As a result, FEMA?s review is delayed
and the agency cannot ensure that the funds already expended on uncertified
projects were reasonable and in compliance with applicable regulations and
policies.

While FEMA?s primary information system- NEMIS- helps the agency manage
projects during a disaster, opportunities exist to further develop the
system as a management of the Public Assistance program. To help FEMA
management achieve its program performance goals, NEMIS should have sound
internal management controls. However, we found instances in which the
system?s activity, application and quality controls are limited. Although
NEMIS collects and can provide information project by project, it provides
only limited data for effective programwide analyses. In addition, the
system does not automatically verify certain information that has been
entered, and it can be unreliable, time- consuming, and difficult to use in
a remote disaster environment, according to FEMA officials. Project data may
be lost or not entered as a result. Finally, FEMA?s reliance on temporary
staff who may lack experience with the system or training in its use
threatens the quality of the information it contains.

NEMIS is an agencywide system of hardware, software, telecommunications, and
applications. It is designed to provide a new technology base to FEMA and
its partners to carry out emergency management efforts. Its purpose is to
support disaster staff in the field and to maximize the distribution of
project worksheet information to Public Assistance grant applicants and
regional office staff. According to FEMA officials, NEMIS allows concurrent
and remote reviews of project worksheets that are developed in the field,
thus improving their timeliness FEMA?s Information

System Provides Limited Management Information for the Public Assistance
Program

Page 21 GAO- 01- 837 Disaster Assistance

and quality. It also provides a single source of all project information
that is useful for any necessary subsequent review.

However, while NEMIS can provide information on a project- by- project
basis, it is severely limited in its ability to provide higher- level
information that will help FEMA management to review the agency?s
performance against measures and indicators for the Public Assistance
program. FEMA officials informed us that field staff must enter all
modifications to project worksheets-- including changes to project cost
estimates- by entering them into a narrative field. As a result, it would be
difficult for FEMA management to perform automated analyses of summary
information in order to track the programwide costs of project modifications
or assess the impact of revised Public Assistance policies.

In addition, while the Public Assistance function of NEMIS has been upgraded
since the system was implemented in August 1998, system problems still cause
delays and inaccuracies in entering project information. Our review of
FEMA?s internal evaluations of disaster field office operations found many
complaints from federal and state disaster personnel that the system is
difficult to use or often is not working at all. As a result, data are not
entered promptly or may not be entered at all. The Public Assistance portion
of NEMIS also lacks common verification processes. For example, dates of key
activities and reviews can be entered incorrectly because the system lacks
automated error- checking processes to validate entries. Finally, because
many field office staff are not trained to use NEMIS, information for the
same disaster could be inconsistently entered from site to site and person
to person. The potential for inconsistency impedes FEMA?s ability to have an
accurate overview of its Public Assistance processes, performance, and field
staff?s efforts. Insufficient staff training could also lead staff to spend
more time using the system than would otherwise be the case and thus
decrease their productivity.

The criteria FEMA uses for determining whether to recommend a presidential
disaster declaration give the agency great flexibility to respond promptly
to a wide variety of natural disasters. However, they are not necessarily
indicative of state or local capability to respond effectively to a disaster
without federal assistance. For this reason, we recommend that the Director
of FEMA develop more objective and specific criteria to assess the
capabilities of state and local governments to respond to a disaster.
Specifically, the Director should consider replacing the per- capita measure
of state capability with a more sensitive measure, such as a Conclusions and

Recommendations

Page 22 GAO- 01- 837 Disaster Assistance

state?s total taxable resources. The Director should further consider
whether a more sensitive measure would eliminate the need for a statewide $1
million threshold. At a minimum, the Director should consider adjusting the
threshold for inflation and providing a more detailed rationale for whatever
threshold is chosen.

While FEMA has clarified its criteria for individual project eligibility, it
still experiences problems with the application of the criteria. Given the
magnitude of the funds involved, we recommend that the Director of FEMA do
the following:

 Develop internal control processes for ensuring appropriate reviews of
disaster project worksheets- especially when specialists? reviews are
required- to ensure that proposed projects meet eligibility requirements
before receiving final approval and funding.  Reconsider budgetary
priorities to determine if a higher priority should be

assigned to implementing a credentialing and training program for federal
disaster staff that focuses on the knowledge, skills, and abilities needed
for each of the various roles involved in disaster management.  Establish a
plan to identify recurring problems identified by internal and

external audits and take appropriate actions to minimize their recurrence.
We provided FEMA with a draft of this report for its review and comment.
FEMA found our observations about the disaster declaration process timely
and valuable for its review of disaster declaration criteria. FEMA also
commented that its current procedures were designed to ensure that the
eligibility of proposed projects is appropriately reviewed and validated.
While we acknowledge that this is the intent of these procedures, our review
found areas where the procedures did not always accomplish their intent.

In response to our concerns that all disaster staff may not receive
appropriate preparation for making project eligibility determinations, FEMA
stated that all disaster staff have attended its basic training class, which
provides such instruction. We believe, however, that FEMA should consider
giving higher priority to implementing a credentialing program such as the
one the agency has designed. The program would establish both training and
experience requirements appropriate for federal disaster staff in all job
positions.

Finally, FEMA responded to our assessment of the availability of FEMA
eligibility review processes and procedures, stating that formal approval
Agency Comments

and Our Evaluation

Page 23 GAO- 01- 837 Disaster Assistance

procedures exist for projects with special considerations. Our analysis
found, however, that the requirements for appropriate reviews by specialists
are not always followed. In the flood control cases we referred to, we found
no evidence of review by a flood control specialist, although the review
queue called for such a review and the Public Assistance Coordinator
approved the project. We have modified our original language to recommend
that FEMA develop internal controls to ensure consistent compliance with its
eligibility review processes.

FEMA suggested additional technical clarifications that we incorporated into
the report, as appropriate. The full text of FEMA?s comments can be found in
appendix II.

To review the adequacy of the criteria FEMA uses to formulate a
recommendation to the President on whether a presidential disaster
declaration is warranted and is consistent with regulatory requirements, we
reviewed (1) the applicable laws, regulations, and FEMA policies on
conducting preliminary damage assessments; (2) FEMA?s efforts to develop
criteria for reviewing requests of presidential disaster declarations; and
(3) relevant GAO and FEMA Office of Inspector General reports. In addition,
we analyzed available data on damage estimates to identify any minimum
criteria that might have been used to recommend a disaster declaration. We
also analyzed available data on damage estimates to determine whether
disasters met statewide financial criteria for recommending a disaster
declaration. We did not, however, perform independent assessments of the
degree to which individual disasters met other qualitative criteria, such as
significant localized impact or a recent history of multiple disasters.

To determine whether FEMA ensures that proposed Public Assistance projects
meet eligibility criteria, we (1) reviewed FEMA?s Public Assistance program
policies, procedures, and guidance; (2) assessed the extent to which the
program?s policies and procedures were disseminated and made available to
staff that make eligibility determinations; (3) analyzed the availability of
the training provided to staff; and (4) reviewed files on selected projects
and interviewed managers and staff to assess how effectively the program?s
policies and procedures were used to determine eligibility. We also reviewed
FEMA?s internal controls and oversight processes to determine whether they
provided adequate assurance that disaster funds were consistently used in an
effective and efficient manner. For instance, we (1) looked for any
oversight or reviews to verify that project worksheets prepared for proposed
projects complied Scope and

Methodology

Page 24 GAO- 01- 837 Disaster Assistance

with policy; (2) reviewed the timeliness and adequacy of efforts to validate
and certify completed projects and (3) assessed FEMA?s efforts to identify
recurring systemic problems and take corrective actions to minimize them in
future disasters. In addition, we obtained access to the program?s case
management file to review the available documentation supporting project
eligibility determinations.

In conducting our review, we interviewed officials in FEMA?s Response and
Recovery Directorate, Infrastructure Support Division in Washington, D. C.,
and the equivalent FEMA personnel in three regional offices - Atlanta,
Georgia; Denton, Texas; and San Francisco, California. In addition, we
conducted a structured telephone interview with the Infrastructure Branch
chiefs in 9 of FEMA?s 10 regional offices and its Caribbean office. We also
interviewed officials from FEMA?s Information Technology Services
Directorate and auditors from its Office of Inspector General. We performed
our work from August 2000 through August 2001 in accordance with generally
accepted government auditing standards.

We are sending copies of this report to the appropriate congressional
committees; the Director of the Federal Emergency Management Agency; and the
Director of the Office of Management and Budget. We will also make copies
available to others upon request.

If you have any questions about this report, please contact Robert E. White
or me at (202) 512- 2834.

JayEtta Z. Hecker Director, Physical Infrastructure Issues

Appendix I: Efforts to Develop Criteria for Evaluating Governors? Requests
for Presidential Disaster Declarations

Page 25 GAO- 01- 837 Disaster Assistance

Over the last several years, the Congress has tried several times to have
FEMA establish clear criteria for evaluating a governor?s request for a
disaster declaration by better defining the state?s capability to respond to
a disaster. In 1993, the House Appropriations Committee noted ?the tendency
on the part of the Federal government to declare more and more disasters to
be eligible for disaster assistance funds? and directed FEMA to provide a
detailed cost/ benefit analysis to the Committee by October 1, 1993. 1 FEMA
responded, in September 1993, that a reliable cost/ benefit analysis of the
disaster declaration process would not be possible. In addition, the Vice
President?s National Performance Review noted that FEMA needed to develop
objective indicators of what constituted a major disaster. The National
Performance Review further noted that those indicators should account for
both the costs of the disaster and a state?s ability to meet those costs.

The Senate Bipartisan Task Force on Funding Disaster Relief, established by
Public Law 103- 211, noted in its report that one approach to modifying
federal disaster assistance and possibly reducing federal disaster
assistance costs would be to establish ?more explicit and/ or stringent
criteria for providing Federal disaster assistance.? 2 That report also
cited a 1994 FEMA Office of Inspector General report stating that (1)
neither a governor?s findings nor FEMA?s analysis of capability were
supported by standard factual data or related to published criteria and (2)
FEMA?s process did not ensure equity in disaster decisions because the
agency did not always review requests for declarations in the context of
previous declarations. 3

In September 1995, 4 we reported that although the Stafford Act did not
specify criteria for evaluating a governor?s request for a declaration, FEMA
used an informal process that generally considered various factors in making
a recommendation to the President. Some of the factors FEMA considered were

1 House of Representatives Report 103- 150 (1993), p. 66. 2 Federal Disaster
Assistance: Information for the Bipartisan Task Force on Funding Disaster
Relief, U. S. Senate, Nov. 1994. 3 Disaster Declaration Decisions: Staff
Support by FEMA, Inspection Report I- 02- 93, May 17, 1994. 4 Disaster
Assistance: Information on Declarations for Urban and Rural Areas

(GAO/ RCED- 95- 242, Sept. 14, 1995). Appendix I: Efforts to Develop
Criteria for

Evaluating Governors? Requests for Presidential Disaster Declarations

Appendix I: Efforts to Develop Criteria for Evaluating Governors? Requests
for Presidential Disaster Declarations

Page 26 GAO- 01- 837 Disaster Assistance

 the number of homes that were destroyed or sustained major damage,  the
extent to which the damage was concentrated or dispersed,  the total
estimated cost to repair the damage,  the extent to which the damage was
covered by insurance,  the level of assistance available from other federal
agencies,  the state and local governments? abilities to deal with
disasters,  the level of assistance available from voluntary organizations,
 the extent of health and safety problems, and  the extent of damage to
facilities providing essential services (e. g., medical

and police services and utilities). The Senate Appropriations Committee
remarked on the lack of specific disaster declaration criteria in its report
on FEMA?s appropriations for fiscal year 1999. 5 In that report, the
Committee directed FEMA to make several administrative changes to reduce
disaster relief costs, including the development of specific disaster
declaration criteria.

To develop specific declaration criteria, FEMA formed a working group with
the National Emergency Management Association. 6 However, FEMA faced a
legislative restriction precluding any geographic area from receiving
assistance ?solely by virtue of an arithmetic formula or sliding scale based
on income or population.? 7 This working group developed several indicators
for evaluating governors? requests for disaster declarations and issued
these indicators as a concept paper in September 1998. On January 26, 1999,
FEMA published the proposed declaration criteria in the Federal Register.
Those proposed rules were similar to the indicators FEMA had used
informally.

At the request of the Senate Appropriations Subcommittee, FEMA?s Office of
Inspector General reviewed the proposed regulations and issued a report in
March 1999. 8 The report questioned FEMA?s use of a fixed percapita figure
as a means to determine a state?s capability and noted that, without the
means to measure this capability, FEMA?s ability to determine whether
disaster assistance was warranted was ?hampered if not negated

5 Senate Report 105- 216 (1998), p. 87. 6 The National Emergency Management
Association is a professional association of emergency management directors
from states and U. S. territories. 7 42 U. S. C, sec. 5163.

8 Review of Governors? Disaster Requests (I- 02- 99, Mar. 22, 1999).

Appendix I: Efforts to Develop Criteria for Evaluating Governors? Requests
for Presidential Disaster Declarations

Page 27 GAO- 01- 837 Disaster Assistance

altogether.? The report recommended that FEMA use total taxable resources 9
in place of its per- capita cost measure to better reflect the state?s
economic health and ability to raise public revenues to cover the costs of a
disaster. Additionally, the report identified numerous ways to improve the
proposed declaration regulations, including

 publishing a county- level per- capita measure that could be used as an
indicator to better establish the disaster?s localized impact;  specifying
how FEMA intended to determine the amount of insurance

coverage and the source( s) of its information, as well as clarifying how
insurance deductibles would be measured;  citing the criteria that would be
used when considering state and local

mitigation measures to evaluate the need for assistance, including
recordkeeping requirements to support states? claims; and  prescribing a
limit on the impact of multiple past disasters, including

further defining what other events and emergencies could be included or
excluded from FEMA?s declaration evaluation, as well as establishing state
record- keeping requirements.

The Inspector General?s report further noted that a significant number of
disasters were declared, even though the estimated costs of disaster damage
fell below the statewide financial thresholds historically used by FEMA.
Specifically, the report stated it examined 192 declarations for the 10-
year period from October 1988 through September 1998 and found that 40
percent were declared even though the state per- capita damage figure had
not met FEMA?s statewide financial threshold of $1 per capita of damages.
The report also identified the following as most common factors for
recommending a declaration when the disaster cost estimates were below the
minimum financial criteria. These included

 Special populations (e. g., poor, elderly) lived in affected areas. 
Preliminary damage assessments were ongoing, and the cost estimates

were not yet complete.  The disaster had a heavy localized impact.

9 Total Taxable Resources (TTR) is a measure defined by the Department of
the Treasury that takes into account all income either received by state
residents or produced in a state. We have suggested applying this method to
federal grant formulas in other areas, such as education or health, to
better reflect a state?s economic health and the ability to raise revenues.
See, for example, School Finance: Trends in U. S. Education Spending

(GAO/ HEHS- 95- 235, Sept. 15, 1995) and Budget Issues: Budgetary
Implications of Selected GAO Work for Fiscal Year 2001 (GAO/ OCG- 00- 8,
Mar. 31, 2000).

Appendix I: Efforts to Develop Criteria for Evaluating Governors? Requests
for Presidential Disaster Declarations

Page 28 GAO- 01- 837 Disaster Assistance

 The state had no assistance program. Despite the Inspector General?s
report and other criticisms, FEMA published its final rule on September 1,
1999. The criteria for disaster declarations remained substantially
unchanged from those the agency proposed in January.

FEMA has also begun to address the issue of insurance requirements for
public buildings. In July 1999, FEMA submitted draft regulations to the
Office of Management and Budget proposing that, under the Public Assistance
program, grant funding for buildings damaged in a disaster be made available
only to state and local agencies and other public entities that maintain
specified minimum levels of insurance coverage. Currently, the Public
Assistance program requires insurance coverage only as a postdisaster
condition. If a public facility is not insured when a disaster strikes, the
responsible agency must agree to procure insurance against future disasters
as a condition for receiving FEMA assistance. After receiving comments from
us and others, FEMA decided to wait for the completion of a comprehensive
study of what insurance requirements are reasonable before proceeding
further. 10

In its report on FEMA?s fiscal year 2000 appropriations, the Senate
Appropriations Committee also expressed concern that the indicators the
agency proposed to guide declaration recommendations were ?no more stringent
than those used in the past.? 11 The Committee further noted that it
expected FEMA to apply the criteria it had published in a consistent manner
and to strengthen the criteria over time, while recognizing the need to
maintain some flexibility for unique circumstances.

10 We addressed some concerns about FEMA?s rulemaking procedures in
developing this proposal in Disaster Assistance: Issues Related to the
Development of FEMA?s Insurance Requirements (GAO/ GGD/ OGC- 00- 62, Feb.
25, 2000).

11 Senate Report 106- 161 (1999), p. 99.

Appendix II: Comments From the Federal Emergency Management Agency

Page 29 GAO- 01- 837 Disaster Assistance

Appendix II: Comments From the Federal Emergency Management Agency

See comment 5. Now on page 13. See comment 4.

Now on page 12. See comment 3.

Now on page 6. See comment 2.

Now on page 5. See comment 1.

Now on pages 3 and 4.

Appendix II: Comments From the Federal Emergency Management Agency

Page 30 GAO- 01- 837 Disaster Assistance

See comment 11. Now on page 19. See comment 10.

Now on page 19. See comment 9.

Now on page 19. See comment 8.

Now on page 18. See comment 8.

Now on page 17. See comment 6.

Now on page 17.

Appendix II: Comments From the Federal Emergency Management Agency

Page 31 GAO- 01- 837 Disaster Assistance

See comment 9. Now on page 22. See comment 12.

Now on page 21.

Appendix II: Comments From the Federal Emergency Management Agency

Page 32 GAO- 01- 837 Disaster Assistance

The following are GAO?s comments on the Federal Emergency Management
Agency?s letter dated August 17, 2001.

1. While figure 1 indicates that the number and estimated cost of disasters
involving Public Assistance funding have both declined recently, we note
that, because disasters are extremely variable in their frequency and
severity, it is premature to suggest that the recent decline in their number
and cost constitutes a downward trend that could be expected to continue.
Furthermore, our intent is to ensure that the criteria for both disaster
declarations and eligibility determinations are appropriate to each case,
independent of any trends in the aggregate cost of disasters.

2. The draft has been modified to clarify the relationship between a
disaster declaration and other federal assistance programs.

3. Suggested deletion accepted. 4. Sentence has been clarified. 5. Word
inserted. 6. Suggested examples included. 7. See response to comment 8. 8.
As our report recommended, we believe that FEMA should consider

giving higher priority to implementing a credentialing program such as the
one the agency has designed. The program would establish both training and
experience requirements appropriate to each level of federal disaster staff.
Such a program would also include a comprehensive recordkeeping system that
would ensure that all staff meet these requirements.

9. The requirement that all projects with special considerations receive
appropriate reviews by specialists is apparently not always followed. For
example, in a major disaster we refer to, we found no evidence of review by
a flood control specialist, although the review queue called for such a
review and the Public Assistance Coordinator approved the projects. GAO
Comments

Appendix II: Comments From the Federal Emergency Management Agency

Page 33 GAO- 01- 837 Disaster Assistance

10. See response to comment 9. The final sentence has been modified to
clarify the respective roles of FEMA and the U. S. Army Corps of Engineers.

11. Under FEMA procedures, the reviewer is required to complete a validation
worksheet identifying the projects reviewed and any associated eligibility
and cost variances. Our case review of both paper files and NEMIS records
found very few validation worksheets. FEMA field personnel also acknowledged
that the validation process is not always conducted as required.

12. Word deleted. 13. See response to comment 9. We have modified the
recommendation to

focus on compliance with, rather than the development of, a policy that
ensures appropriate specialist reviews.

Appendix III: GAO Contacts and Staff Acknowledgments

Page 34 GAO- 01- 837 Disaster Assistance

Robert E. White, (202) 512- 5463 Jerry Fastrup, (202) 512- 7211

In addition to those named above, Patricia Moore, Richard B. Smith, Thomas
Barger, Jr., Curtis L. Groves, and John Vocino made key contributions to
this report. Appendix III: GAO Contacts and Staff

Acknowledgments GAO Contacts Acknowledgments

(385868)

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