Status of FEMA's FY03 Pre-Disaster Mitigation Program (28-APR-04,
GAO-04-727R).							 
                                                                 
The Federal Emergency Management Agency (FEMA) provides federal  
disaster assistance to help those in need respond to, prepare	 
for, and recover from disasters. As the costs for disaster	 
assistance have risen, FEMA has made disaster mitigation a	 
primary goal in its efforts to reduce the long-term cost of	 
disasters and minimize risk to property and individuals from	 
natural or man-made hazards. Previous FEMA mitigation grant	 
programs were formula-based and provided funds both prior to and 
after a disaster occurred. Fiscal Year 2003, marks the first-time
FEMA has implemented a grant program that awards funds for	 
mitigation activities on a competitive basis. This report	 
presents information on (1) FEMA's processes and criteria for	 
awarding planning and competitive pre-disaster mitigation grants 
to states and localities, and (2) the status of FEMA's efforts to
implement the Fiscal Year 2003 Pre-Disaster Mitigation Program.  
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-727R					        
    ACCNO:   A09944						        
  TITLE:     Status of FEMA's FY03 Pre-Disaster Mitigation Program    
     DATE:   04/28/2004 
  SUBJECT:   Appropriated funds 				 
	     Budget obligations 				 
	     Competition					 
	     Disaster relief aid				 
	     National preparedness				 
	     Federal grants					 
	     Grant administration				 
	     Grant award procedures				 
	     Grants-in-aid					 
	     FEMA Fiscal Year 2003 Pre-Disaster 		 
	     Mitigation Program 				 
                                                                 

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GAO-04-727R

United States General Accounting Office Washington, DC 20548

April 28, 2004

The Honorable Daniel K. Akaka

Ranking Minority Member

Subcommittee on Financial Management, the Budget and International
Security Senate Committee on Governmental Affairs United States Senate

Subject: Status of FEMA's FY03 Pre-Disaster Mitigation Program

Dear Senator Akaka:

The Federal Emergency Management Agency (FEMA) provides federal disaster
assistance to help those in need respond to, prepare for, and recover from
disasters. As the costs for disaster assistance have risen, FEMA has made
disaster mitigation a primary goal in its efforts to reduce the long-term
cost of disasters and minimize risk to property and individuals from
natural or man-made hazards. Previous FEMA mitigation grant programs were
formula-based and provided funds both prior to and after a disaster
occurred. Fiscal Year 2003, marks the first-time FEMA has implemented a
grant program that awards funds for mitigation activities on a competitive
basis.

You asked us to review the status of FEMA's implementation of the Fiscal
Year 2003 Pre-Disaster Mitigation Program. This report presents
information on (1) FEMA's processes and criteria for awarding planning and
competitive pre-disaster mitigation grants to states and localities, and
(2) the status of FEMA's efforts to implement the Fiscal Year 2003
Pre-Disaster Mitigation Program.

We reviewed fiscal year 2003 guidance, interviewed FEMA headquarters
officials, and analyzed data regarding planning and project applications.
To assess the reliability of the pre-disaster mitigation application and
grant data presented in the briefing, we interviewed agency officials
knowledgeable about the data and the system that produced them and
reviewed existing information about the application process. We determined
that the data were sufficiently reliable for the purposes of this
briefing. We conducted our review from November 2003 through February 2004
in accordance with generally accepted government auditing standards.

We provided your staff with a formal briefing on March 12, 2004. This
report includes the briefing slides used at the presentation and
summarizes our findings and FEMA's lessons learned from the implementation
of the Fiscal Year 2003 Pre-Disaster Mitigation Program to improve the
program in the future.

                     GAO-04-727R FEMA's Mitigation Program

In summary, we found the following with regard to processes and criteria
for awarding planning and competitive grant awards:

o  	In 2003, Congress appropriated $150 million to initiate the
implementation of a competitive pre-disaster mitigation grant program.
This is the first-time FEMA has implemented a competitive mitigation grant
program.

o  	The Fiscal Year 2003 Pre-Disaster Mitigation Program included
approximately $13.7 million for noncompetitive planning grants and
approximately $131.5 million for competitive pre-disaster grants for
mitigation activities and technical assistance. Each of the 55 states and
territories were eligible to receive approximately $250,000 in
noncompetitive grants. FEMA awarded the competitive grants based on a
ranking and evaluation process.

o  	FEMA assessed the applications for the competitive mitigation grants
for eligibility and technical feasibility. FEMA then ranked and evaluated
the applications using both quantitative and qualitative factors for
selection of competitive award grants.

In summary, we found the following with regard to implementation of the
Fiscal Year 2003 Pre-Disaster Mitigation Program:

o  	FEMA had obligated all of the $13.7 million in noncompetitive planning
grants to 54 states and territories that applied.

o  	FEMA received 459 competitive grant applications. Approximately 40
percent of the competitive grant applications submitted by the states,
tribes, and territories did not meet eligibility and technical feasibility
requirements. FEMA attributes this to the short application period.

o  	FEMA identified 200 applications to award competitive grants. These
applications have a value of $98.7 million and cover 37 states, 2
territories, and 6 tribes. FEMA expected to begin awarding the competitive
grants mid-March 2004.

o  	FEMA plans to use lessons learned from the implementation of the
Fiscal Year 2003 Pre-Disaster Mitigation Program to improve the program in
the future. These lessons include (1) implementing a longer application
period, (2) sequentially reviewing grant applications to reduce
inefficient use of resources, and (3) making the e-Grant application form
standard with paper applications to reduce processing time.

We met with FEMA's Risk Reduction Branch Chief for Mitigation and other
FEMA officials in the Mitigation Division to discuss the facts of this
report. They generally agreed with the information in the briefing and
provided some clarifying comments that we incorporated as appropriate.

Page 2 GAO-04-727R FEMA's Mitigation Program

As agrred with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days from
the date of this report. At that time, we will send copies of this report
to the congressional committees and subcommittees responsible for issues
related to FEMA and the Department of Homeland Security. In addition, this
report will be available at no charge on GAO's Web site at
http://www.gao.gov.

If you have any questions about this briefing or need additional
information, please
contact me at (202) 512- 8757. Key contributors to this briefing were
Chris Keisling,
Kirk Kiester, and Mark Abraham.

Sincerely yours,

William O. Jenkins
Director, Homeland Security and Justice

Enclosure

Page 3 GAO-04-727R FEMA's Mitigation Program

             Status of FEMA's FY 03 Pre-Disaster Mitigation Program

 Briefing to the Staff of the Committee on Governmental Affairs Subcommittee on
    Financial Management, the Budget and International Security, U.S. Senate

                                 March 12, 2004

                                       1

                       Objectives,Scope, and Methodology

Objectives

o 	What are the Federal Emergency Management Agency's (FEMA) processes and
criteria for awarding planning and competitive pre-disaster mitigation
grants to states and localities?

o 	What is the status of FEMA's efforts to implement the Fiscal Year 2003
Pre-Disaster Mitigation (PDM) program?

Scope and Methodology

o 	To determine the processes and criteria for awarding planning and
competitive predisaster mitigation grants to states and localities, we
reviewed fiscal year 2003 guidance and discussed the guidance with FEMA
headquarters officials.

o 	To determine the status of FEMA's efforts to implement the fiscal year
2003 program, we reviewed and analyzed data regarding planning and project
applications and awards and interviewed FEMA headquarters officials
regarding the status of program implementation.

We conducted our review from November 2003 through February 2004 in
accordance with generally accepted government auditing standards.

                                       2

                                   Background

PDM Program Purpose

o  The Disaster Mitigation Act of 2000 authorized a noncompetitive PDM
program.

o 	In FY 2003, Congress appropriated $150 million and further defined the
program to explicitly require competitive grant awards.

o 	The PDM program provides funding to states, tribal governments, and
local communities before disasters occur through mitigation planning and
competitive pre-disaster mitigation planning and project grants designed
to reduce risk to life and property.

                                       3

                              Background (cont'd)

Eligible noncompetitive pre-disaster mitigation planning grant activities
include

o  Development of state and local multi-hazard mitigation plans

o 	Marketing and outreach activities to better educate the public on
mitigating disaster risk

Eligible competitive pre-disaster mitigation grant activities include

o  Property acquisition projects

o 	Structural and non-structural retrofitting projects (e.g., structural
elevations, storm shutters, and roof straps)

o 	Localized hazard control projects (e.g., culverts, retention basins,
ring levees, and flood walls)

o  Mitigation planning

                                       4

                              Background (cont'd)

PDM Program Funding

o  $150 million FY 03 Appropriations included:

o 	$250 thousand for state (or territory) applying for noncompetitive
mitigation planning grants and;

o 	$131.5 million for competitive pre-disaster grants for mitigation
activities and technical assistance.

Eligibility Requirements for Planning and Competitive Mitigation Grants

o 	Cost share requirement: up to 75 percent federal (up to 90 percent
federal for small, impoverished communities1)

o 	National Flood Insurance Program participation for communities that
have been identified as having a Special Flood Hazard Area

1Small, impoverished communities would include, for example, a community
with residents having an average per capita annual income not exceeding 80
percent of national per capita income.

                                       5

Objective 1

  Processes and Criteria for Awarding PDM Grants Competitive Grant Application
                                    Process

                                       6

Criteria Used for National Ranking Score (Competitive Mitigation Planning
Activities)

                                       7

Criteria Used for National Ranking Score (Competitive Mitigation Project
Activities)

                                       8

Description of National Ranking Score Criteria

o 	Risk Assessment (planning only): A process in which states and
localities determine (1) which hazards could affect a jurisdiction, (2)
what areas are vulnerable to the hazard; (3) what structures and
infrastructures will be affected; and (4) to what degree will they be
affected.

o 	Small, impoverished community (planning and project): Would include,
for example, a community with residents having an average per capita
annual income not exceeding 80 percent of national per capita income.

o 	FEMA-approved mitigation plan (planning and project): As of November 1,
2003, FEMA-approved local mitigation plans were required to receive PDM
grants for local projects. After November 1, 2004, a FEMA-approved state
plan will be required to receive PDM grants for state and local projects.

o 	Community Mitigation Factors (planning and project): Participation in
activities that reduce the community's vulnerability to hazards, such as
the Community Rating System, Cooperating Technical Partner, Firewise
Community and the adoption and enforcement of certain fire and building
codes.

o  State/Tribal Priority (planning and project): Prioritization given to
application based on state/tribal defined criteria.

o 	Critical facilities (project only): Projects that protect facilities
such as hazardous waste facilities, emergency operations center, medical
care facilities and police and fire facilities.

o 	Benefit-Cost Analysis (project only): A quantitative procedure that
assesses the desirability of a hazard mitigation project by taking a
long-term view of avoided future damages compared to the cost of a
project. FEMA requires that all project benefits must equal or exceed
cost.

o 	Population Benefits (project only): The percent of the community's
population benefiting from the proposed mitigation project.

                                       9

Example of FEMA's scoring process for mitigation planning activities: Risk
Assessment criteria

                                       10

Criteria Used for National Evaluation (Competitive Mitigation Planning
Activities)

                                       11

Objective 1

 (cont'd) Criteria Used for National Evaluation (Competitive Mitigation Project
                                  Activities)

                                       12

Objective 1

Processes and Criteria for Awarding PDM Grants: Evaluation (cont'd)
Description of National Evaluation Score Criteria

o  Feasibility (planning and project ): The ability of the desired
mitigation objectives to be achieved.

o  Implementation (planning and project ): The reasonableness of the
activity timelines and expectations.

o 	Staff and resources (planning and project ): Sufficient staff and
resources that are available to implement proposed mitigation activities
and their ability to provide the resources.

o 	National Priority (planning and project ): Consistency with FEMA's
National priority to address NFIP repetitive flood loss properties.

o 	Community mitigation initiative (planning and project ): Initiatives
such as tax credits, waiver of building permit fees, and building codes

o 	State and local community involvement (planning and project ): State
and localities ability to leverage additional resources through
partnerships.

o  Outreach (planning and project ): State and local efforts to market and
inform the public on mitigating disaster risk.

o  Model for other communities (planning and project ): Intention to
mentor other communities, tribes, or states.

o 	Innovation and creativity (planning and project ): The use of
innovative and creative methods to address mitigation needs.

o 	National Ranking Score: A score based on a quantitative set of criteria
used to determine which application will proceed to the evaluation phase
of the program.

o 	Financial and Social Benefits (project only): The degree of long-term
financial and social benefits the mitigation activity offers.

o 	Critical facilities (project only): Projects that protect facilities
such as hazardous waste facilities, emergency operations center, medical
care facilities, and police and fire facilities.

                                       13

            Timeline of Events for the Fiscal Year 2003 PDM program

                                       14

Objective 2

Status of FEMA's Implementation of the FY03 PDM Program (cont'd)

          Number of Competitive Grants Applications Received by Region

                                       15

Objective 2

Status of FEMA's Implementation of the FY03 PDM Program (cont'd)

      Competitive Grant Applications Received According to Primary Hazard

              a Total does not equal 100 percent due to rounding.

                                       16

Objective 2

Status of FEMA's Implementation of the FY03 PDM Program (cont'd) FEMA
Awarded Noncompetitive Planning Grants to all of the 54 states and
territories that applied; only one state-West Virginia-did not apply.

Localities in 52 out of the 55 States and Territories Have Submitted
Competitive Grants Applications.

FEMA

o  received 459 competitive planning and project grant applications,

o  selected 271 competitive planning and project grant applications for
evaluation, and

o  identified 200 competitive planning and project grant applications to
receive funding.

                                       17

Objective 2

Status of FEMA's Implementation of the FY03 PDM Program (cont'd)

Note: FEMA continues to review applications, which may result in funding
for a third phase. Total does not equal 100 percent due to rounding.

                                       18

                                Lessons Learned

FEMA plans to utilize lessons learned from the implementation of the
FY2003 PDM program to improve the program in the future. Approximately 40%
of the competitive grant applications submitted by the states, tribes, and
territories did not meet eligibility and technical feasibility
requirements. FEMA attributes this primarily to the short application
period for these grants. The following factors contributed to the short
application period:

o  FY 03 Appropriations were not finalized until February 2003.

o 	FEMA required more time for first year implementation to develop the
program and coordinate with the Office of Management and Budget & the
Department of Homeland Security to obtain their approval.

According to FEMA, the 90-day application period was not long enough for

o  States and localities to understand the requirements of a new
competitive program;

o  Localities to prepare and submit applications;

o  States and localities to make use of the new e-Grants system;

o  States to review and prioritize applications; and

o  States and localities to secure cost share commitments.

FEMA plans to implement a longer application period (optimally 150 - 180
days ). 19

                            Lessons Learned (cont'd)

Additional lessons FEMA learned from the implementation of the FY 2003 PDM
program to improve the program in the future include

o 	Concurrent eligibility and technical review was inefficient because
resources were used to determine if projects were technically qualified
then some qualified projects were subsequently determined to be ineligible
for funding. FEMA plans to sequentially review grant applications starting
with eligibility and completeness review followed by the technical review.

o 	Nonstandardized paper applications made the review process more
time-consuming. FEMA plans to make the paper application form consistent
with the e-Grant form for those states that choose to submit paper
applications.

                                       20

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