Disaster Assistance: Guidance Needed for FEMA's "Fast Track" Housing
Assistance Process (Letter Report, 10/17/97, GAO/RCED-98-1).
Pursuant to a congressional request, GAO examined several issues
pertaining to the Federal Emergency Management Agency's (FEMA) use of
the Fast Track process and FEMA's crisis-counseling assistance to
victims of the Northridge earthquake, focusing on: (1) the authority and
rationale for the Fast Track process; (2) FEMA's experience with the
Fast Track process in Northridge and whether the process was influenced
by the Office of Inspector General's recommendations; (3) the advantages
and disadvantages of the Fast Track process, including the amounts of
payments that FEMA designated for recovery and subsequently recovered
and the reasons for ineligibility; and (4) FEMA's criteria and process
for providing crisis-counseling funds and ensuring their use for
authorized purposes.
GAO noted that: (1) the legislation authorizing FEMA's temporary housing
assistance has no explicit provision for a process such as Fast Track;
(2) however, as FEMA concluded, the act gives the agency wide latitude
in providing expeditious assistance for disaster victims; (3) FEMA's
rationale in implementing the Fast Track process following the
Northridge earthquake was to assist the largest number of disaster
victims in the shortest possible amount of time; (4) in implementing the
process, FEMA experienced operational difficulties including the
inconsistent application of criteria when designating zip codes; (5)
because of these errors, not all Northridge victims in similar
circumstances were treated the same; (6) FEMA also experienced
constraints with the computer software used to process applications; (7)
these difficulties, combined with an enormous volume of applications for
assistance and FEMA's decisions on applicants' eligibility for payments
made under both the regular and Fast Track processes, may have
contributed to FEMA's provision of housing assistance beyond actual
needs; (8) FEMA has not developed written guidance for implementing the
Fast Track process, even though FEMA's Inspector General recommended
establishing formal procedures after the Fast Track process's first (and
only other) use in 1992; (9) a principal advantage of the Fast Track
process is that it provides temporary housing assistance grants for some
applicants more quickly than would the regular process; (10) according
to FEMA officials involved in the response to the Northridge earthquake,
Fast Track provided an intangible benefit by demonstrating to the
victims and the general public that help was actually on the way; (11) a
principal disadvantage to Fast Track is the relative loss of control
over the disbursement of federal funds and the subsequent need to
recover ineligible payments; (12) FEMA ultimately designated for
recovery 6.7 percent ($9.6 million of $143 million) of the temporary
housing assistance provided under the Fast Track process for 3,856
Northridge earthquake applicants; (13) FEMA provides crisis-counseling
funding for screening and diagnosing individuals, short-term crisis
counseling, community outreach, consultation, and educational services;
and (14) for funds provided after the Northridge earthquake, FEMA
officials said that they visited all service providers and that center
officials evaluated their accounting procedures and controls and found
them to be satisfactory.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: RCED-98-1
TITLE: Disaster Assistance: Guidance Needed for FEMA's "Fast
Track" Housing Assistance Process
DATE: 10/17/97
SUBJECT: Disaster relief aid
Property damages
Homelessness
Eligibility determinations
Eligibility criteria
Replacement housing
Relief agencies
Mental health care services
Claims processing
Overpayments
IDENTIFIER: Northridge Earthquake
FEMA Fast Track Process
Los Angeles (CA)
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Cover
================================================================ COVER
Report to the Chairman, Committee on Commerce, Science, and
Transportation, U. S. Senate
October 1997
DISASTER ASSISTANCE - GUIDANCE
NEEDED FOR FEMA'S "FAST TRACK"
HOUSING ASSISTANCE PROCESS
GAO/RCED-98-1
Disaster Assistance
(385669)
Abbreviations
=============================================================== ABBREV
FEMA - Federal Emergency Management Agency
ZIP - zone improvement plan
OIG - Office of Inspector General
MMI - Modified Mercalli Intensity
CMHS - Center for Mental Health Services
HUD - Department of Housing and Urban Development
Letter
=============================================================== LETTER
B-276359
October 17, 1997
The Honorable John McCain
Chairman, Committee on Commerce,
Science, and Transportation
United States Senate
Dear Mr. Chairman:
On January 17, 1994, an earthquake that became the nation's costliest
natural disaster struck the Northridge area of metropolitan Los
Angeles, California. The estimated cost of the disaster is
approximately $30 billion and rising, of which over $7 billion will
be borne by the Federal Emergency Management Agency (FEMA).
Approximately 12 percent, or about $143 million, of FEMA's temporary
housing assistance to about 400,000 households was distributed
through an expedited process known as "Fast Track." The Fast Track
process differed from the regular temporary housing assistance
process in that for applications from certain designated zone
improvement plan (ZIP) code areas, FEMA issued checks to the
applicants before conducting physical inspections of the applicants'
residences to verify their eligibility. Fast Track recipients were
advised that in cashing the check, they were confirming that their
application was correct and that they would use the money only for
disaster-related emergency housing needs, rent for alternative
housing, or repairs. FEMA spent another $32 million to provide
crisis-counseling services for persons suffering earthquake-related
mental stresses.
In response to your February 14, 1997 request, we examined several
issues pertaining to FEMA's use of the Fast Track process and FEMA's
crisis-counseling assistance to victims of the Northridge earthquake.
Specifically, we agreed to examine
-- the authority and rationale for the Fast Track process;
-- what FEMA's experience with the Fast Track process in Northridge
was and whether the process was influenced by the Office of
Inspector General's (OIG) recommendations;
-- the advantages and disadvantages of the Fast Track process,
including the amounts of payments that FEMA designated for
recovery and subsequently recovered and the reasons for
ineligibility; and
-- FEMA's criteria and process for providing crisis-counseling
funds and ensuring their use for authorized purposes.
In addition, you asked us to provide information on other federal
disaster assistance programs that assist victims prior to determining
an applicant's eligibility. Appendix I provides information on the
programs we identified.
RESULTS IN BRIEF
------------------------------------------------------------ Letter :1
The legislation authorizing FEMA's temporary housing assistance--the
Robert T. Stafford Disaster Relief and Emergency Assistance Act
(P.L. 93-288), as amended--has no explicit provision for a process
such as Fast Track. However, as FEMA concluded, the act gives the
agency wide latitude in providing expeditious assistance for disaster
victims. We agree that FEMA is authorized to use the process.
FEMA's rationale in implementing the Fast Track process following the
Northridge earthquake was to assist the largest number of disaster
victims in the shortest possible amount of time. Within the first
week of the earthquake, over 27,000 disaster victims were living in
or outside of shelters, and FEMA's application centers were
overwhelmed by crowds of applicants.
In implementing the process, FEMA experienced operational
difficulties including the inconsistent application of criteria when
designating ZIP codes; some ZIP code areas that met FEMA's criteria
were omitted (i.e., applications from residents of those areas were
not processed under Fast Track) while some ZIP code areas that did
not meet the criteria were included. Because of these errors, not
all Northridge victims in similar circumstances were treated the
same. FEMA also experienced constraints with the computer software
used to process applications. These difficulties, combined with an
enormous volume of applications for assistance and FEMA's decisions
on applicants' eligibility for payments made under both the regular
and Fast Track processes, may have contributed to FEMA's provision of
housing assistance beyond actual needs. FEMA has not developed
written guidance for implementing the Fast Track process, even though
FEMA's Inspector General recommended establishing formal procedures
after the Fast Track process's first (and only other) use in 1992.
FEMA officials could not explain why the agency had not implemented
the Inspector General's recommendation but observed that there had
been uncertainty about whether the process would ever be used again.
Well-planned and well-documented guidance could help FEMA avoid
operational difficulties in implementing a future Fast Track process
and help avoid ineligible payments.
A principal advantage of the Fast Track process is that it provides
temporary housing assistance grants for some applicants more quickly
than would the regular process (which requires an on-site inspection
prior to the receipt of assistance). Also, according to FEMA
officials involved in the response to the Northridge earthquake, Fast
Track provided an intangible benefit by demonstrating to the victims
and the general public that help was actually on the way. A
principal disadvantage to Fast Track is the relative loss of control
over the disbursement of federal funds and the subsequent need to
recover ineligible payments. FEMA ultimately designated for recovery
6.7 percent ($9.6 million of $143 million) of the temporary housing
assistance provided under the Fast Track process for 3,856 Northridge
earthquake applicants, primarily because (1) the damage to the
applicants' primary residence was not sufficient to qualify the
applicants for the assistance, (2) the applicants received insurance
payments for the damage, or (3) the damaged residence was not the
applicants' primary residence. As of September 1997, FEMA had
recovered about $4 million, and recovery efforts were underway for
most of the rest.
FEMA provides crisis-counseling funding for screening and diagnosing
individuals, short-term crisis counseling, community outreach,
consultation, and education services. To receive grants, states must
demonstrate that existing state and local resources are inadequate
and provide estimates of the number of individuals affected, the
types of assistance needed, and the estimated cost of assistance.
For approved applications for the immediate services program, which
generally covers the first 60 days after a disaster, the FEMA
Regional Director or designee makes funds available to the state for
disbursement to its department of mental health. Under the regular
program, FEMA's headquarters transfers funds to the Department of
Health and Human Services' Center for Mental Health Services for
distribution through the grants management process. FEMA, the Center
for Mental Health Services, and the state's department of mental
health all participate in site visits and monitor programmatic,
accounting, and financial management of the programs. Detailed
periodic and final reports on activities and costs are submitted to
the Center and to FEMA. For funds provided after the Northridge
earthquake, FEMA officials said that they visited all service
providers and that Center officials evaluated their accounting
procedures and controls and found them to be satisfactory.
BACKGROUND
------------------------------------------------------------ Letter :2
FEMA assists with providing a large range of services for disaster
victims, including mass care (such as food and emergency medical
care) in the immediate aftermath of disasters. FEMA also pays for
temporary housing and crisis counseling for eligible victims.\1
--------------------
\1 In addition, FEMA's public assistance program funds the repair of
eligible public and private nonprofit facilities, such as roads,
government buildings, utilities, and hospitals that are damaged in
natural disasters. See Disaster Assistance: Improvements Needed in
Determining Eligibility for Public Assistance (GAO/RCED-96-113, May
23, 1996).
TEMPORARY HOUSING ASSISTANCE
---------------------------------------------------------- Letter :2.1
Authorized by section 408 of the Stafford Act, as amended, FEMA's
temporary housing grants cover the costs of renting alternate housing
when victims' primary predisaster residence is rendered uninhabitable
or inaccessible, and/or quickly repairing damages to make the
residence habitable. Until they receive such assistance, disaster
victims may be forced to stay with friends or relatives or in
temporary mass care shelters. The intent of the assistance is to get
victims out of mass care shelters or other temporary dwellings--not
to restore their residence to its predisaster condition. (Federal
assistance for permanent restoration generally comes in the form of a
Small Business Administration disaster loan.)
A FEMA inspector typically visits each applicant's residence,
confirms whether or not it is uninhabitable or inaccessible, and
obtains insurance information and documentation verifying that the
dwelling is the applicant's primary residence.\2 Applicants whose
residence is in need of repairs costing less than $100 are not
eligible; the maximum grant amount is $10,000.
--------------------
\2 FEMA's program guidance provides for exceptions to the inspection
requirement when a blanket eligibility determination can be made,
such as when a tornado destroys an entire block of houses.
THE FAST TRACK PROCESS
---------------------------------------------------------- Letter :2.2
The Fast Track process differed from the regular temporary housing
assistance process in that for applications from certain designated
ZIP code areas, the physical inspection of the applicant's residence
and the determination of eligibility were made after FEMA issued a
check to the applicant.
For the Northridge earthquake, FEMA utilized earthquake shaking
intensities as criteria for designating certain geographic areas as
eligible for Fast Track housing assistance. FEMA used the "Modified
Mercalli Intensity" (MMI) scale, which measures the intensity of
earthquake shaking on a scale of 1 to 12--the more severe the
shaking, the higher the number. The most severe shaking in
Northridge was at level 10; FEMA decided to use the Fast Track
process for applicants residing in each ZIP code area with an MMI
level of 8 or above. The degree of damage associated with this level
includes the partial collapse of ordinary-quality masonry; the fall
of chimneys, factory stacks, monuments, towers, and elevated tanks;
and the movement of frame houses on their foundation if not bolted
down. (A description of MMI intensity levels is in app. II.)
FEMA officials selected a total of 68 ZIP codes to designate as
eligible geographic areas with MMI readings of level 8 or higher.
This designation covered an approximately 40-by-40 mile area from
Santa Monica and Burbank westward into Simi Valley. FEMA initiated
the Fast Track process for Northridge victims in the 68 designated
ZIP code areas on January 23, 1994; limited it to applicants in only
three ZIP code areas on February 3, on the basis of an analysis of
the degree of damage reported by field inspectors and the temporary
housing applications received; and discontinued it altogether on
April 7. About 47,000 housing assistance applicants--out of about
409,000--received a check under the Fast Track process.
Prior to the Northridge earthquake, FEMA used the Fast Track process
for only one disaster--Hurricane Andrew in 1992. As with Northridge,
FEMA used the Fast Track process for applicants in ZIP code areas
believed to have sustained the greatest damage.
CRISIS-COUNSELING ASSISTANCE
---------------------------------------------------------- Letter :2.3
As authorized by section 416 of the Stafford Act, FEMA provides
funding for professional counseling services for disaster workers and
victims. Individuals are eligible for crisis-counseling services if
they were residents of the designated disaster area or were located
in the area at the time of the disaster and are experiencing mental
health problems caused or aggravated by the disaster. States must
apply for crisis-counseling funds. The magnitude of need is based
primarily on a formula that takes into account such factors as the
numbers of fatalities, injuries, homes destroyed or damaged, and
unemployment resulting from the disaster. FEMA makes the funds
available to the Center for Mental Health Services (CMHS), which
awards grants to applicant states (typically to the state's
department of mental health). The state, in turn, disburses funds to
local governments, which fund the activities of private organizations
actually providing the counseling services. In the case of the
Northridge earthquake, California's Department of Mental Health was
the grantee, while Los Angeles and Ventura counties contracted with
51 service providers and oversaw their day-to-day activity.
Crisis-counseling grants totaled $36 million, of which $32 million
was actually expended.
FEMA HAS THE LEGAL AUTHORITY TO
IMPLEMENT FAST TRACK
------------------------------------------------------------ Letter :3
The Fast Track process is not specifically authorized in the Stafford
Act. In a letter to us setting forth FEMA's determination of the
legality of the process, FEMA's Acting General Counsel stated that
FEMA believes that the legal authority to process temporary housing
assistance in this manner is implicit in the Stafford Act and its
implementing regulations. (The letter appears in app. III).
Sections 302(a) and 302(b) of the Stafford Act, 42 U.S.C. � 5143,
state that the President shall, immediately upon his major disaster
declaration, appoint a Federal Coordinating Officer to operate in the
affected area and
"take such other action, consistent with authority delegated to
him by the President, and consistent with the provision of this
Act, as he may deem necessary to assist local citizens and
public officials in promptly obtaining assistance . . . ."
The statute describes those persons eligible and the circumstances
under which they are eligible to receive temporary housing aid.
Under section 408(a), FEMA may help those "persons who, as a result
of a major disaster, require temporary housing." (42 U.S.C. �
5174(a)(1)(A)). Assistance can be provided for up to 18 months from
the time of the disaster declaration unless an extension is granted
because of extraordinary circumstances. (42 U.S.C � 5174(a)(3)). No
statutory provision, however, requires that FEMA verify that the
applicants have met all relevant conditions of eligibility prior to
providing temporary housing assistance. FEMA has the discretion
under the Stafford Act to set the methods it will use to verify
eligibility. Thus, we agree with FEMA that it has the authority
under the Stafford Act to implement the Fast Track process.
FEMA also noted that the purpose of the temporary housing regulations
is to assist "the greatest number of people in the shortest possible
time." (44 C.F.R. � 206.101(b)). In the case of Northridge, FEMA
concluded that the Fast Track process was essential to meet the needs
of disaster victims expeditiously. The enormous number of disaster
victims and their psychological and physical need for immediate
assistance provided the rationale for implementing the Fast Track
process. After the earthquake, FEMA's on-site disaster application
centers and teleregistration center were overwhelmed by the
unprecedented number of applicants. Because the application centers
received more applicants than could be accommodated, FEMA gave
applicants appointments to come back at a later date. Even so, by
the end of the first month after the disaster, nearly 360,000
applications had been filed, and the backlog of housing inspections
had grown to about 189,000 residences.\3
Within the first week of the January 17, 1994 disaster, over 27,000
disaster victims were living in or outside of shelters, and
appointments to submit applications for assistance were not available
until mid-March. Police intervention was required at application
centers to help contain unruly crowds. On January 21, 4 days after
the disaster, the President visited the disaster scene and, noting
the long lines of applicants, decided that the situation was
unacceptable. As a result, FEMA instituted the Fast Track process to
provide residents with checks quickly so they could find better
accommodations.
--------------------
\3 After the Northridge earthquake, 681,765 total disaster assistance
applications were filed, while 304,369 and 219,825 total applications
were filed after Hurricanes Hugo and Andrew (two other "catastrophic"
disasters), respectively.
NORTHRIDGE EXPERIENCE SUGGESTS
NEED FOR FAST TRACK GUIDANCE
------------------------------------------------------------ Letter :4
In implementing the Fast Track process following the Northridge
earthquake, FEMA experienced operational difficulties, including the
inconsistent application of criteria when designating areas with the
greatest estimated damage and constraints in its application
processing software. These difficulties, combined with the
logistical challenge of processing an enormous volume of applications
for assistance, as well as FEMA's decisions on the eligibility of
housing assistance under both the regular and Fast Track processes,
may have contributed to FEMA's providing housing assistance in excess
of actual needs.
The decision to use the Fast Track process is ultimately a subjective
judgment--specifically, that the benefit of rushing aid to certain
disaster victims outweighs the risk of disbursing funds to ineligible
recipients or in excess of recipients' needs. Hence, a large-scale
future disaster could lead FEMA to use a Fast Track approach again.
FEMA has not developed written guidance for implementing the Fast
Track process, even though FEMA's Inspector General recommended
establishing formal procedures after its first use in 1992.
Furthermore, FEMA officials acknowledge that the guidance for the
temporary housing assistance program needs revision. Well-planned
and well-documented guidance could help FEMA avoid operational
difficulties in implementing a future Fast Track process and help
avoid ineligible payments.
FEMA EXPERIENCED ERRORS IN
DESIGNATING ZIP CODE AREAS
---------------------------------------------------------- Letter :4.1
One of the first implementation tasks facing FEMA was designating the
areas whose inhabitants would be "Fast Tracked." There were no
preexisting criteria for FEMA to draw on. FEMA worked with the state
of California and California Institute of Technology seismologists to
develop MMI maps of the Northridge area. According to a FEMA
official involved in identifying ZIP code areas, the process was
undertaken on a "crash" basis, possibly resulting in some errors in
the selection of ZIP codes. Our analysis shows that some ZIP code
areas that met FEMA's criteria were omitted (i.e., applications from
residents of those areas were not processed under Fast Track) and
vice versa. Because of these errors, not all Northridge victims in
similar circumstances were treated the same.
According to a FEMA official who was involved in the process, FEMA
ultimately designated 68 ZIP code areas whose inhabitants'
applications for temporary housing assistance would be processed
under Fast Track. We traced the 68 ZIP codes--which designated
eligible geographic areas with MMI readings of 8 or higher--to an MMI
map identical to the one used by FEMA officials. We found that 56 of
the 68 ZIP codes met FEMA's announced criteria--they were located in
areas that had experienced earthquake shaking intensities of 8, 9, or
10 on the MMI scale. As shown on the map in figure 1, we also found
the following:
-- Nine of the 68 ZIP codes did not meet the criteria because they
were located in areas that had experienced earthquake shaking
intensities of less than 8 on the MMI scale. (These nine ZIP
codes account for about 4 percent of the payments that FEMA
designated for recovery.)
-- Three of the designated ZIP codes did not appear on the map.
-- Twelve ZIP codes that met FEMA's criteria were not designated
for the Fast Track process.
Figure 1: ZIP Code Areas
Designated for the Fast Track
Process
(See figure in printed
edition.)
Note: Circle is 20 miles from epicenter of the earthquake.
Including ZIP codes that did not meet the criteria means that
residents within those ZIP code areas inappropriately received Fast
Track funding, and the reverse was likely true. Because we were
unable to locate three of the designated ZIP codes on the map, we do
not know whether they met the selection criteria. However, according
to data compiled by FEMA's OIG, no temporary housing assistance
payments were made under the Fast Track process to applicants from
these three ZIP code areas.
According to a FEMA official who participated in the process, his
notes suggest that the officials debated which MMI shaking
intensities should be included-- specifically, whether to include
areas with an MMI level of 7. The official noted that some of the
designation errors might have occurred because the final list of ZIP
codes that was distributed to the federal certifying officers
handling applications from Northridge victims was hand-written and
therefore difficult to read.
Data developed by FEMA's Inspector General indicated that Fast Track
payments were made to 110 ZIP code areas, as opposed to the 68 that
FEMA designated.\4 FEMA officials reviewed their records for a few of
the ZIP codes and found that some of the discrepancy may be due to
errors made in entering addresses into the database or that some
recipients' post-disaster mailing address was different from the
address of the damaged residence.
We analyzed the payments that FEMA made to ineligible disaster
victims to determine the extent to which they might be attributable
to the inclusion of ZIP codes that did not meet FEMA's Fast Track
criteria. We found that payments made to those ZIP code areas had a
negligible effect on the ineligible payments, accounting for about 4
percent of the total amount. (App. IV provides a more detailed
explanation of our analysis.)
--------------------
\4 Letter dated March 27, 1997, from FEMA's Inspector General to
Senator John McCain. The Inspector General analyzed a list of all
Fast Track recipients.
COMPUTER SOFTWARE REQUIRED
MODIFICATION
---------------------------------------------------------- Letter :4.2
In accordance with the sequence of events under the regular temporary
housing assistance program, FEMA's automated system for processing
applications required FEMA to enter the date of the inspection of an
applicant's residence. The date was required before the system would
process the application further for the issuance of a check. Because
FEMA intended that applicants under the Fast Track process receive a
check before an inspection occurred, FEMA officials had to develop a
way of overriding the automated system. While FEMA was able to
accomplish this, the resulting records are not entirely reliable
because of inconsistent data. Fictitious inspection dates were
initially entered to circumvent the control, but the computer program
was subsequently modified. Also, according to FEMA officials,
personnel handled data entries in different ways; some made adjusting
entries while others eliminated the initial entry.
FEMA was able to overcome this operational problem in order to
distribute checks to recipients. However, through improved planning
in designing a system to accommodate the Fast Track process, such
operational difficulties might be avoided without creating unreliable
records. In commenting on a draft of this report, FEMA stated that
the agency has been developing a new automated processing system that
would include the ability to handle a Fast Track procedure.
FEMA ALLOWED MORE THAN ONE
PAYMENT PER HOUSEHOLD
---------------------------------------------------------- Letter :4.3
FEMA normally limits housing assistance to one application and grant
per household. In its efforts to expedite assistance to disaster
victims at Northridge, FEMA lacked the normal controls used to verify
duplication among applicants and/or households. Because of this,
FEMA provided more than one payment for some households. FEMA
decided that, to treat all Northridge disaster victims equitably, it
would allow this exception to its normal policy. An April 19, 1994,
memorandum from FEMA's headquarters clarifying the policy for the
Northridge earthquake stated that
"largely because of the fast track system, multiple housing
checks have been provided to individual household members. . .
. In dealing with this situation, the following policies should
apply: 1. The initial increment of assistance should be
provided to all applicants without regard to their membership in
a household. This decision is based on the need to treat all
applicants in like situations similarly."
According to some FEMA officials involved in processing Northridge
applications, the large volume of applications, combined with
limitations in the capability of FEMA's application-processing
computer system, made it difficult, if not impossible, to search the
applicant database for potential duplicate names and/or addresses.
This may have contributed to situations in which more than one
applicant per household received a check. While physical inspections
may have identified--and thus prevented--duplication for applicants
under the regular program, the inspections would not have done so for
Fast Track applicants because inspections of their residences were
performed after they received checks. A memorandum laying out
general procedures for the Fast Track process from the Northridge
Human Services Officer to all certifying officers stated that
disbursements would be based on the applicant's letter and ZIP code
and that as a result, items such as proper name spelling, address,
fair market rent, and ownership could not be determined until the
inspection was completed.
FEMA DID NOT ATTEMPT
RECOVERY OF PAYMENTS
EXCEEDING REPAIR COSTS
---------------------------------------------------------- Letter :4.4
FEMA's temporary housing grantees generally receive funds to cover
either the cost of renting alternate housing or to cover the
estimated cost of minor repairs needed to quickly make the residence
habitable. The decision of whether a residence can be made quickly
habitable and the estimated cost is based on a physical inspection.
For Fast Track applicants, FEMA was unable to make this distinction
because payment preceded the physical inspection. Therefore, FEMA
provided all Fast Track applicants with rental assistance funds--2
months' rental assistance to renters and 3 months' rental assistance
to owners. For owners, the amount averaged about $3,400, on the
basis of the average fair market rental of a residence for 3 months.
Along with the check, FEMA included an insert stating that
"This is in response to your application for FEMA disaster
housing assistance. By cashing the enclosed check, you are
confirming that the information is true and correct and are
agreeing to use these funds only to meet your disaster-related
emergency housing needs, rent for alternative housing, or
repairs to your home. You will soon receive a letter from FEMA
with more specific information concerning this assistance."
The physical inspection of a Fast Track applicant's residence could
have indicated that repairs costing less than $3,400 could have made
the residence habitable. According to FEMA officials, such
applicants were allowed to keep the full amount even if it was more
than the cost of repairs. Because it did not seek the recovery of
amounts exceeding the estimated costs of repairs needed to make a
residence habitable, FEMA potentially provided some Fast Track
applicants with payments in excess of their needs.
FEMA DID NOT LIMIT
ASSISTANCE TO APPLICANTS
WITH UNINHABITABLE
RESIDENCES
---------------------------------------------------------- Letter :4.5
FEMA's Instruction 8620.11, Policies and Guidance for the
Administration of the Temporary Housing Assistance Program, and
current regulations on the housing program, 44 C.F.R. 206.101,
provide that an applicant's residence must be uninhabitable or
inaccessible in order for the applicant to be eligible for temporary
housing assistance. However, FEMA provided assistance for Northridge
earthquake applicants whose residences were not uninhabitable or
inaccessible. A February 4, 1994, joint state/FEMA news release
stated that
"some people receiving housing checks mistakenly believe that
they are not eligible for housing assistance because they're
still able to live in their homes. 'In many cases the housing
checks which applicants receive can be used to repair quake
damage, including damage to chimneys, windows, doors and walls,
even though the applicants weren't forced to move out of the
home . . . .'"
In a 1996 report on FEMA's housing program, the Inspector General
reported that FEMA had also not limited temporary housing assistance
to applicants with uninhabitable residences in other disasters. The
Inspector General concluded that FEMA was using the temporary housing
assistance program in a manner inconsistent with the Stafford Act.\5
Specifically, the Inspector General found that rather than make a
habitability determination for damaged residences, FEMA "accepts
damages over $100 as evidence of an uninhabitable house," and that
FEMA was also paying for repairs apparently not related to making the
residence habitable, such as carpet replacement, rain gutters,
drywall finishing, wall tiles, and paint. The Inspector General
recommended that in the future, FEMA limit grants to uninhabitable
housing and for only those repairs necessary to make the housing
habitable. According to a FEMA official, the agency has adopted this
recommendation.
--------------------
\5 Audit of Home Repair Grants Provided Through FEMA's Disaster
Housing Program, Office of Inspector General, FEMA, H-07-96 (Sept.
20, 1996).
PAYMENTS EXCEEDING ACTUAL
NEEDS MAY HAVE BEEN
SIGNIFICANT
---------------------------------------------------------- Letter :4.6
In the case of the Northridge earthquake, FEMA provided 408,663
applicants with $1.2 billion in housing assistance. In applying for
federal assistance shortly after the earthquake, Los Angeles and
Ventura counties reported a combined total of 9,919 housing units
destroyed, 15,096 suffering major damage, and 29,927 suffering minor
damage, for a total of 54,968 residences suffering minor damage or
worse. These numbers were based on preliminary assessments.
However, in a January 1995 report, the Department of Housing and
Urban Development (HUD) stated that a total of 308,900 units of
housing were damaged by the Northridge earthquake; presumably, the
damage in many cases did not render the residences uninhabitable.
Because of limitations in FEMA's computerized database, we were
unable to determine the frequency of the various deviations from
normal policy discussed above or the role they played in the apparent
discrepancy between housing grants and damaged housing units. FEMA
program officials explained that it is difficult to determine when a
residence has sustained enough damage to be uninhabitable and that
the decisions are subjective. They suggested that FEMA probably
tended to err on the liberal side, rather than risk denying aid to
someone who needed it, when damages of as little as $100 can be
eligible under current policy.
GUIDANCE FOR FAST TRACK
COULD HELP AVOID
IMPLEMENTATION DIFFICULTIES
AND INELIGIBLE PAYMENTS
---------------------------------------------------------- Letter :4.7
FEMA's basic policy and procedures guidance for the regular temporary
housing assistance program--FEMA Instruction 8620.11--does not
address the Fast Track process. FEMA's Inspector General recommended
establishing formal procedures for Fast Track after its first use in
1992. Additionally, FEMA officials acknowledge that the May 12,
1987, guidance needs revision and is sometimes modified in actual
practice. Well-planned and well-documented guidance could help FEMA
avoid operational difficulties in implementing a future Fast Track
process and help avoid ineligible payments.
FEMA's Office of Inspector General reviewed FEMA's experience with
Fast Track after Hurricane Andrew.\6 At that time, the Inspector
General recommended that FEMA develop formal procedures for the Fast
Track process. The recommendations included actions that would help
implement the Fast Track process and minimize the loss of federal
funds through overpayments. Specifically, the Inspector General
recommended that FEMA develop a Fast Track method with appropriate
controls and limit grants to 1 month's rental assistance. (In the
wake of Hurricane Andrew, owners had received 4 months' assistance
under Fast Track, and renters received 3 months' assistance.)
FEMA officials could not explain why the Inspector General's
recommendations were not implemented. We note that because of major
reorganizations and personnel reassignments that took place between
Hurricane Andrew and the Northridge earthquake, many of FEMA's
program staff who worked on Fast Track at Northridge were not
involved in the housing program at the time of Hurricane Andrew and
were likely unaware of the Inspector General's recommendations.
Also, several FEMA officials had concerns about Fast Track's
vulnerability to fraud, waste, and abuse; hence, formalizing guidance
for the process may not have been a priority because of the
uncertainty about its future use. Several FEMA program officials
expressed concern that reducing Fast Track payments to increments of
1 month's rental assistance--as recommended by the Inspector
General--could increase FEMA's administrative burden and congestion
at the Disaster Application Centers, a major concern at Northridge.
In the absence of preexisting guidance, officials implementing the
Fast Track process after the Northridge earthquake developed guidance
on an ad hoc basis, issuing several memorandums detailing how the
process would be implemented. Memorandums included information on
the amount of rental assistance to be provided, the designated ZIP
code areas, the modification of the computerized database to
accommodate Fast Track, and the handling of appeals and
recertifications (the provision of additional assistance to
applicants beyond the initial time period).
We believe that if FEMA had followed the Inspector General's
recommendations and developed written guidance for the Fast Track
process, some of the operational difficulties experienced following
the Northridge earthquake may have been avoided. For example, FEMA
might have identified and mitigated limitations in its
application-processing software or developed criteria for designating
the areas for which the Fast Track process might be used following
different kinds of large-scale disasters. Preexisting guidance would
avoid the need to develop ad hoc guidance in the crisis atmosphere
that inevitably follows a large-scale disaster.
--------------------
\6 FEMA's Disaster Management Process: A Performance Audit After
Hurricane Andrew, Office of Inspector General, FEMA, H-01-93 (Jan.
14, 1993).
FAST TRACK REPRESENTS TRADE-OFF
BETWEEN EXPEDITED ASSISTANCE
AND CONTROL OF FEDERAL FUNDS
------------------------------------------------------------ Letter :5
A principal advantage of the Fast Track process is that it hastens
the distribution of temporary housing assistance grants to some
applicants, facilitating a move into alternate housing more quickly
than would the regular process. Also, according to FEMA officials
involved in the response to the Northridge earthquake, Fast Track
provided an intangible benefit by demonstrating to the victims and
the general public that help was actually on the way. A principal
disadvantage is the relative loss of control over the disbursement of
federal funds and the subsequent need to recover ineligible payments.
FEMA determined that it should recover about $9.6 million in Fast
Track payments made to 3,856 Northridge earthquake recipients. As of
September 1997, FEMA had recovered $4 million, and recovery efforts
were under way for most of the rest.
FAST TRACK EXPEDITED
ASSISTANCE
---------------------------------------------------------- Letter :5.1
The obvious benefit of implementing Fast Track is its potential to
provide assistance for those victims most in need as quickly as
possible--more quickly than would be the case under the regular
process. While it is difficult, 3 years after the event, to assess
how much Fast Track helped disaster victims, FEMA program officials
estimate that because of the catastrophic nature of the Northridge
disaster, applicants would have received their checks several months
later without the Fast Track process. A primary bottleneck in the
regular housing assistance process was physical inspections. As of
mid-February 1994, nearly 1,400 inspectors were inspecting
approximately 8,000 residences a day; in spite of this, the backlog
of inspections grew steadily, from 94,000 on February 7 to a peak of
189,000 on February 13. Fast Track applicants did not have to wait
for FEMA to inspect their residences prior to receiving housing
assistance checks.
We were unable to determine--and therefore to compare--the average
lengths of time actually taken to provide Northridge applicants with
temporary housing assistance under either the Fast Track or regular
process, because FEMA's data systems cannot readily provide
information on the average length of time taken to provide temporary
housing assistance and because, according to FEMA officials, the
accuracy of the database is questionable. According to a FEMA
analysis of past large disasters--in which the regular process was
used exclusively--the average time between a disaster victim's
application and the Treasury's mailing of a temporary housing
assistance check was 21 days, as follows:
-- Application taken and mailed to FEMA's processing center for
processing--2 days.
-- Application electronically transmitted to inspector and
inspection made--9 days.
-- Processing center makes eligibility determination--2 days.
-- FEMA requests check issuance from Treasury Department; check is
prepared and mailed--8 days.
According to FEMA's analysis, this time could be reduced to an
average of 10 days for Fast Track applicants because the inspection
(usually requiring an average of 9 days) and the normal eligibility
determination (usually requiring 2 days) would be performed after the
check was issued--thus saving 11 of the 21 days. However, this
analysis may not be comparable to the Northridge earthquake or other
extraordinarily large disasters. The sheer volume of temporary
housing assistance applications resulting from the Northridge
earthquake dramatically exceeded any previous disaster. In the
absence of the Fast Track process, this large volume could have
caused the average time period for Northridge applicants to take more
than 21 days; if so, then the time savings attributable to Fast Track
would be even larger.
When scheduling inspections, FEMA did not distinguish between
applications from victims that had already received a check under the
Fast Track process and victims who had not. Because the non-Fast
Track applicants had to wait for the inspections of their residences
before receiving assistance, the Fast Track process did not shorten
(or lengthen) the time between the application and receipt of funds
for these applicants.
FAST TRACK PROVIDED
INTANGIBLE BENEFITS
---------------------------------------------------------- Letter :5.2
Most of the FEMA officials contacted for this review stated that
expedited check issuance was not the primary benefit of Fast Track.
Rather, they cited the intangible benefits of assuring shaken
disaster victims that help was forthcoming and helping dissipate the
threat of unruly crowds at disaster application centers. According
to the officials, the Fast Track process enabled FEMA to tell victims
and the media that checks were being issued and sent--not that
applications were simply being processed by a government bureaucracy.
We did not talk directly to any of the Northridge earthquake victims
to identify the process's advantages and disadvantages partly because
of the time lapse since they received assistance and their potential
inability to know whether they had been "Fast Tracked." However, a
FEMA customer survey after the earthquake found a general sense of
satisfaction with the agency's overall disaster response. Most
respondents (63 percent) felt that FEMA should have been able to get
a check to them within 2 weeks, but two-thirds of those felt that a
check received during the second week was sufficient. Seventy-four
percent expressed satisfaction with how quickly they received
assistance. Slightly over half the respondents (56 percent) felt
that the amount of housing assistance they received was insufficient,
40 percent thought it was just right, and 4 percent said it was more
than enough.
FAST TRACK PROVIDES LESS
CONTROL OVER DISBURSEMENT OF
FEDERAL FUNDS
---------------------------------------------------------- Letter :5.3
The primary concern with the Fast Track process cited by FEMA
officials is the knowledge that some funding will be disbursed to
ineligible recipients, thus requiring subsequent recovery efforts.
FEMA's follow-up report on the Northridge earthquake noted the
trade-off between the cost of debt collection and the benefits of
expedited assistance.
FEMA ultimately designated for recovery 6.7 percent ($9.6 million of
$143 million) of the temporary housing assistance provided under the
Fast Track process for 3,856 Northridge earthquake applicants. This
figure excludes some ineligible payments made to disaster victims who
voluntarily returned the funds. (Because of limitations in its
information systems, FEMA could not readily provide the amount of
payments voluntarily returned.) However, as noted above, the Fast
Track process contributed to FEMA's decision not to seek recovery of
some payments that normally would have been recovered. Therefore, a
smaller proportion of Northridge temporary housing assistance
payments--including Fast Track payments--were designated for recovery
than otherwise.
NORTHRIDGE PAYMENTS WERE
DESIGNATED FOR RECOVERY
FOR THREE PRIMARY REASONS
-------------------------------------------------------- Letter :5.3.1
FEMA identified three major reasons for recovering payments to
ineligible recipients: (1) damage to residences was insufficient to
qualify them for assistance, (2) the payee received duplicate damage
reimbursements from insurance payments, and (3) the damaged residence
was not the recipient's primary residence.
The extent to which an applicant is found to be ineligible generally
appears as narrative from the inspector on the inspection form, such
as a comment that the damage was insufficient to make the residence
uninhabitable or that the applicant's damages were covered by
insurance. Other ineligible applicants may be found during the
processing of the application, such as duplicate applications from
the same individual or duplicate applications for the same residence.
FEMA HAS RECOVERED ABOUT
40 PERCENT OF THE $9.6
MILLION DESIGNATED
-------------------------------------------------------- Letter :5.3.2
FEMA's National Processing Services Center, which handles assistance
to applicants, begins the recovery process by sending an ineligible
recipient three letters--one every 30 days--requesting the return of
disaster funding. If there is no response from the recipient, the
case is referred to FEMA's Disaster Finance Center, where penalties
and interest begin to accrue on the debt and three additional letters
are sent over a period of 4 months. Subsequently, the cases are
turned over to a collection agency and the Treasury Department.
Nearly all currently overdue Fast Track payments from the Northridge
disaster designated for recovery have reached this point. The
Treasury Department then begins garnishing the debt from the
recipient's federal payments (e.g., social security checks, income
tax refunds, etc.). Table 1 shows the status of FEMA's efforts to
recover the funds as of September 11, 1997.
Table 1
Status of Fast Track Payments Designated
for Recovery
Description Amount
---------------------------------------- ----------------------------
Recovered
----------------------------------------------------------------------
Paid in full to Disaster Finance Center $2,305,255
Payments received on payment plans 667,803
Other collections\a 1,006,549
Subtotal 3,979,607
Under review 122,292
Written off as uncollectible 116,301
Remainder
----------------------------------------------------------------------
Unpaid amounts on payment plans and 500,311
partial recoveries
In default 4,826,324
Bankruptcies 36,207
Subtotal 5,362,842
======================================================================
Total $9,581,042
----------------------------------------------------------------------
\a Includes partial collections from grantees found eligible for a
portion of their grant, partial collections on bankruptcies, partial
collections on hardship and other forgiveness requests, etc. FEMA
estimates that a small percentage, perhaps 5 percent, represents a
determination that the recipient was eligible, rather than a recovery
of funds.
Source: GAO's analysis of FEMA's Disaster Finance Center data.
It should be noted that while the data in table 1 reflect only those
payments made under the Fast Track process, the status of the funds
may not reflect the fact that they were made under the Fast Track
process. For example, the table includes some payments designated
for recovery because the recipient later received insurance proceeds
for the same needs. Such payments were made under both the regular
housing assistance and Fast Track processes and designated for
recovery regardless of whether they were made under the Fast Track
process. Furthermore, the above figures represent only those
recoveries made after the cases were turned over to the Disaster
Finance Center for collection. As noted above, some recipients
voluntarily returned payments; hence, there was no need for the
Disaster Finance Center's involvement. FEMA advised us that because
the payment data in its database are unreliable, it could not provide
reliable information on the amounts returned voluntarily.
FEMA officials were reluctant to estimate the likelihood of
additional recoveries because they have so little experience with the
newly revised federal recovery process. Prior to Northridge, each
FEMA region handled its own recovery efforts. At about the same time
as Northridge, the recovery process was centralized at FEMA's
Disaster Finance Center near Berryville, Virginia. Also, until
recently, FEMA referred its uncollectible debts to the Internal
Revenue Service only. Now they are referred to both the Department
of the Treasury for offset and the Department of Justice for possible
prosecution. FEMA officials said they do not yet have enough
experience on the Treasury Department's success rate under the new
procedures and are also still in the process of learning what type of
information the Justice Department needs before it feels it has a
prosecutable case.
FEMA officials pointed out that it takes some time before the
Processing Center concludes that payments designated for recovery are
bad debts and turns them over to the Finance Center. Additionally,
some time was probably lost in transferring the collection
responsibility from FEMA's regional offices to the Finance Center.
Also, until recently, cases were referred to the Internal Revenue
Service only once a year, and it would take upwards of another year
before there was a tax return to apply the debt against.
FEMA RELIES ON STATES TO ENSURE
THAT CRISIS- COUNSELING FUNDS
ARE USED APPROPRIATELY
------------------------------------------------------------ Letter :6
FEMA provides crisis-counseling funding for screening and diagnosing
individuals, short-term crisis counseling, community outreach,
consultation, and education services. To receive grants, states must
demonstrate that existing state and local resources are inadequate
and provide estimates of the number of individuals affected, the
types of assistance needed, and their estimated costs. There are two
crisis-counseling programs--the immediate services program and the
regular program. For approved applications under the immediate
services program, the FEMA Regional Director or designee makes funds
available to the state for disbursement to its department of mental
health. Under the regular program, after approval, funds are
transferred from FEMA's headquarters to CMHS for distribution through
the grants management process. While FEMA participates in site
visits to service providers, agency officials said that FEMA relies
largely on CMHS and the states (the grantees) to ensure that
crisis-counseling funds are used and accounted for appropriately.
Detailed periodic and final reports on activities and costs are
submitted to CMHS and FEMA. For the distribution of funds provided
after the Northridge earthquake, FEMA officials said that they
visited all service providers, and CMHS officials evaluated the
providers' accounting procedures and controls and found them to be
satisfactory.
ELIGIBLE CRISIS-COUNSELING
ACTIVITIES
---------------------------------------------------------- Letter :6.1
FEMA's crisis-counseling program is specifically authorized by
section 416 of the Stafford Act (42 U.S.C. 5183), which states that
"The President is authorized to provide professional counseling
services, including financial assistance to State or local
agencies or private mental health organizations to provide such
services or training of disaster workers, to victims of major
disasters in order to relieve mental health problems caused or
aggravated by such major disaster or its aftermath."
According to CMHS officials, much of the services provided are of an
outreach nature, such as visiting homes, schools, disaster
application centers, and senior citizens homes.
FEMA's draft crisis-counseling program handbook, prepared as a
reference for state and local government, states that eligible
activities under the immediate services program include screening,
diagnostic, and crisis-counseling techniques, as well as outreach
services, such as public information and community networking, which
can be applied to meet mental health needs immediately after a major
disaster. The immediate services program runs for 60 days, but
extensions, generally of 30 days, may be granted if requested by the
state. The regular program funds further screening and diagnostic
techniques, short-term crisis counseling, community outreach,
consultation, and education services that can be applied to meet
mental health needs precipitated by the disaster. Prolonged
psychotherapy measures are not eligible for program funding. The
regular program generally runs for up to 9 months following the
disaster.
Individuals are eligible for crisis-counseling services if they were
residents of the designated disaster area or were located in the area
at the time of the disaster and if they have problems of a
psychological or emotional nature caused or aggravated by the
disaster. A state's application for crisis-counseling funds must
certify that existing state and local resources are inadequate and
identify what the mental health needs are. Although it can be
adjusted upward or downward on the basis of specific information, a
formula has been developed to estimate the number of persons in need
of crisis-counseling assistance on the basis of past experience. The
formula takes into account the number of fatalities, injuries, homes
destroyed or damaged, and unemployment resulting from the disaster.
CMHS AWARDS AND OVERSEES
GRANTS
---------------------------------------------------------- Letter :6.2
As provided in FEMA's instructions, FEMA makes the funds available to
CMHS, which awards crisis-counseling grants to states--normally to
the state's department of mental health. The states, in turn,
disburse funds to the service providers and local government. CMHS
provides the primary federal oversight by reviewing and evaluating
the application and reports submitted by state agencies.
Both the application and periodic reporting processes for the regular
program are detailed and comprehensive. The application provides
estimates of the nature of the need, the number of people needing
assistance, and detailed cost estimates. The reports provide
information on, among other things, the numbers of people that
received assistance, the types of problems that victims experienced,
and the actual program costs incurred. In addition, FEMA's
instructions for the program provide that CMHS and FEMA are to make a
joint site visit early in the project to ensure that the program is
being administered according to the approved application.
According to FEMA officials, other program controls include possible
audits performed under the Single Audit Act or by the Inspector
General.
CRISIS COUNSELING AT
NORTHRIDGE
---------------------------------------------------------- Letter :6.3
Following the Northridge earthquake, the state of California applied
for $12.8 million in immediate-services-program funding for Los
Angeles and Ventura counties on January 31, 1994; FEMA approved the
funding on February 1. (In March, the state requested a funding
increase to $13.6 million, which FEMA approved.) The regular 9-month
program was approved for an additional $22.4 million. Together, the
approved funding totaled $36 million. Not all of the approved funds
were used, however; actual expenditures totaled about $32 million.
According to CMHS officials, they made more visits to Northridge than
is normally the case because of the relatively large amount of money
involved. CMHS and FEMA personnel both considered state and local
handling of the program to be exemplary. CMHS' records indicate at
least four visits to state and local agencies and service providers
by CMHS and FEMA personnel, plus an additional visit by CMHS' Acting
Grants Management Officer specifically to review the control and use
of the funds. The report on that particular visit stated in part
that
"There did not appear to be any weaknesses in the relationship
and flow of funds to and from providers."
"At the Ventura County site, accounting records were reviewed to
ensure compliance with [federal] policies and procedures and
allowability of expenditures. . . . No deficiencies were
observed in the accounting system or records reviewed."
Similar comments were made regarding Los Angeles County.
CONCLUSIONS
------------------------------------------------------------ Letter :7
The nature of the Fast Track process--providing disaster victims with
expedited disaster housing assistance without first verifying their
eligibility--represents a trade-off between the risk of delaying
needed aid to certain disaster victims and the risk of disbursing
funds to ineligible recipients or in excess of recipients' needs.
The absence of established guidance required FEMA to implement the
process on an ad hoc basis following the Northridge earthquake in a
crisis atmosphere less conducive to the careful consideration of
alternatives. A future large-scale disaster could engender a need
for the Fast Track process. If so, FEMA's continuing lack of
guidance for implementing it could allow continued inequitable
treatment of disaster victims and the provision of more temporary
housing assistance than warranted. These problems could be lessened
by establishing formal guidance for the process and incorporating it
into the directive for the temporary housing assistance program.
FEMA's Office of Inspector General reached similar conclusions in its
January 1993 report on Hurricane Andrew. Also, FEMA's after-action
report on Northridge stated a need to develop guidance "that
clarif[ies] assistance requirements and conditions under which fast
tracking will occur."
RECOMMENDATION
------------------------------------------------------------ Letter :8
The Director of FEMA should develop written guidance for the Fast
Track process that
-- specifies when and under what circumstances the process will be
used and
-- explains how to implement the process, including identifying
eligible victims and avoiding payments in excess of needs.
AGENCY COMMENTS
------------------------------------------------------------ Letter :9
We provided FEMA with a draft copy of this report for review and
comment. In its written comments, FEMA said that the report's
description of the problems faced in providing assistance for the
Northridge earthquake victims was comprehensive and balanced. FEMA
agreed with our recommendation that guidance should be developed for
the Fast Track process, stating that the agency would establish
formal guidance for the process and incorporate it into the guidance
for the temporary housing program. FEMA also commented that in the
last 3 years, it has strengthened its application registration and
processing capabilities by building and refining three
teleregistration and processing centers and has strengthened its
inspection capability by establishing three national inspection
service contracts to train inspectors. In addition, FEMA mentioned
that it is raising the threshold at which it will consider
implementing the Fast Track process. FEMA also suggested some
revisions to our report for technical accuracy, which have been
incorporated where appropriate. FEMA's written comments are
contained in appendix V.
SCOPE AND METHODOLOGY
----------------------------------------------------------- Letter :10
To examine the authority and rationale for the Fast Track process, we
reviewed the legislation authorizing the disaster assistance housing
program; the Stafford Act, as amended; and FEMA's regulations for
implementing temporary housing assistance (44 C.F.R. � 206.101). We
also requested from FEMA an explanation of its legal basis to
implement the process. (See app. III for FEMA's written response.)
To examine FEMA's experience with the Fast Track process in
Northridge, including whether FEMA adopted its Inspector General's
previous recommendations on the Fast Track process and how FEMA
determined the geographic areas included in Fast Track, we
interviewed FEMA officials from FEMA's headquarters; FEMA's OIG
office; the Disaster Finance Center and the National Processing
Services Center at Mt. Weather, Virginia; and the Disaster Field
Office in Pasadena, California (which was responsible for
administering FEMA's assistance to Northridge earthquake victims).
We reviewed OIG's prior studies on the housing program, Fast Track,
and crisis-counseling program, and information used by the Disaster
Field Office in determining the geographic areas included in Fast
Track. We also reviewed FEMA's news releases, internal memorandums
on implementing the Fast Track process, and post-disaster internal
assessments.
To examine the advantages and disadvantages of Fast Track, we
interviewed officials from FEMA's OIG; FEMA's Response and Recovery
Directorate, including the National Processing Services Center; the
Disaster Finance Center; the Disaster Field Office in Pasadena; and
the state of California's Office of Emergency Services. We also
reviewed press articles, FEMA's news releases, internal memos on
implementing the Fast Track process, post-disaster internal
assessments, and a FEMA customer satisfaction survey conducted after
the Northridge disaster. For information on the amounts of erroneous
payments and subsequent recoveries, we relied primarily on data that
we were provided with from the Disaster Finance Center's database
containing financial information on recovery efforts. FEMA's
National Processing Services Center's ADAMS database contained
information on additional recoveries, but we were unable to extract
this information from the ADAMS database. Our information thus omits
some early cases in which disaster victims returned housing
assistance funds. The archiving of paper documentation of housing
assistance applications, inspections, and grants to an unstaffed
repository near San Francisco limited our review to the information
contained in these databases. Additionally, both FEMA's Inspector
General and program staff advised us that the ADAMS database was
prone to inaccuracies and had a tendency to "crash" or take
inordinate amounts of time when doing broad-based informational
searches.
To examine FEMA's criteria and process for using crisis-counseling
funds and ensuring that they were used for their authorized purpose,
we interviewed officials from FEMA's headquarters (including OIG) and
its Pasadena field office; and the Department of Health and Human
Services' Center for Mental Health Studies. We examined numerous
reports and studies, including FEMA's regulations and guidance for
implementing the crisis-counseling program; California's
crisis-counseling grant requests, application materials, and internal
program memos; and final program and expenditure reports.
To identify whether other federal disaster assistance programs
provide assistance for victims prior to determining applicant
eligibility, we contacted program officials within the Departments of
Housing and Urban Development, Agriculture, Commerce, and Health and
Human Services; the Environmental Protection Agency; and the Small
Business Administration. Additionally, we reviewed FEMA's catalog of
federal disaster assistance programs, drew on our prior work on HUD
and Agriculture disaster assistance programs, and reviewed guidance
for implementing their programs. We performed our work from March
through September 1997 in accordance with generally accepted
government auditing standards.
--------------------------------------------------------- Letter :10.1
We are sending copies of this report to appropriate congressional
committees; the Director, FEMA; the Secretary of Health and Human
Services; the Secretary of Agriculture; the Secretary of HUD; and the
Director, Office of Management and Budget. We will make copies
available to other interested parties upon request.
If you or your staff have any questions, please call me on (202)
512-7631. Major contributors to this report are listed in appendix
VI.
Sincerely yours,
Judy A. England-Joseph
Director, Housing and Community
Development Issues
FEDERAL PROGRAMS THAT PROVIDE
DISASTER ASSISTANCE PRIOR TO
VERIFYING APPLICANT ELIGIBILITY
=========================================================== Appendix I
We identified two federal programs, in addition to the Federal
Emergency Management Agency's (FEMA) Fast Track process for its
temporary housing assistance program, that provide disaster
assistance for individuals prior to verifying their eligibility: the
Department of Agriculture's disaster food stamp program and the
Department of Housing and Urban Development's (HUD) disaster housing
program. Both programs may relax their initial requirements for
verifying applicants' eligibility, including income requirements,
with subsequent reviews of applicants' files to identify eligibility
problems and, if necessary, take recovery actions.\1 In both
cases--as with the Fast Track program--the intent is to get the
assistance to victims as quickly as possible.
Under the first program, the Department of Agriculture provides
disaster food stamps for eligible victims. When a state applies for
assistance, the Secretary of Agriculture may approve the issuance of
food stamps for up to 30 days to qualifying households within the
disaster area. The disaster food stamp program is different from
Agriculture's regular food stamp program in that certain criteria
used in determining eligibility for the disaster program are relaxed
when determining eligibility. For example, regular requirements to
verify criteria such as residency in the disaster area (as opposed to
the project area for the regular program), work requirements,
household members' social security number, and the availability of
financial resources, are either not included as criteria or verified
"where possible." After the food stamps have been distributed, the
applicants' files are then reviewed to identify problems, such as
whether applicants received duplicate benefits. The state agency in
charge of disseminating the assistance conducts this post-disaster
review of a 10-percent sample of cases, up to a maximum sample size
of 1,200 cases.
The second program is administered by HUD, which provides housing
assistance to disaster victims in the form of rental certificates or
vouchers that are used by eligible families to rent housing units in
privately owned rental housing. The assisted households may live in
rental units of their choice as long as the units meet HUD's
standards for rent and quality. Generally, local public housing
agencies administer the program, providing landlords with rent
payments in compliance with a housing assistance payment contract
between HUD and the owner. Two significant differences between the
FEMA and HUD housing assistance programs are that the HUD program
contains income eligibility requirements--the program is targeted
only to very-low-income families--and it generally provides the
assistance over a longer period of time. HUD's income eligibility
requirements are based on annual gross income and family size, and
the assistance is guaranteed for a period of up to 18 months.
While HUD normally verifies the income eligibility requirements of
applicants, for severe disasters such as the Northridge earthquake,
the Department allowed housing agencies to issue housing certificates
without first fully verifying the applicants' income eligibility.
For the Northridge disaster, housing agencies were given 3 months
from the time the assistance was provided to verify a victim's income
eligibility. The victims were notified that their assistance could
be adjusted or terminated if the deferred verification found that
they were ineligible. In response to congressional inquiries, HUD
stated that delaying the verification helped allow the Department to
provide housing assistance for victims during the first few days
after the disaster.
--------------------
\1 According to a HUD official, as of mid-July 1997, the aftermaths
of the Northridge earthquake and Hurricane Andrew were the only times
that HUD relaxed its initial requirements for verifying the
eligibility of applicants. HUD took this action so it could quickly
meet the housing needs of an overwhelming number of disaster victims.
DEFINITION OF ESTIMATED MODIFIED
MERCALLI EARTHQUAKE INTENSITIES
========================================================== Appendix II
Intensity Definition
--------- ------------------------------------------------------------------------------
12 Damage nearly total. Large rock masses displaced. Lines of sight and level
distorted. Objects thrown into the air.
11 Railroad rails bent greatly. Underground pipelines completely out of service.
10 Most masonry and frame structures destroyed with their foundations. Some well-
built wooden structures and bridges destroyed. Serious damage to dams, dikes,
and embankments. Large landslides. Water thrown on banks of canals, rivers,
lakes, etc. Sand and mud shifted horizontally on beaches and flat land.
Railroad rails bent slightly.
9 General panic. Low-quality masonry destroyed; good-quality masonry seriously
damaged. Frame structures, if not bolted, shifted off foundations. Frames
racked. Serious damage to reservoirs. Underground pipes broken. Conspicuous
cracks in ground. In alluviated areas, sand and mud ejected, earthquake
fountains and sand craters.
8 Steering of motor cars affected. Damage to ordinary-quality masonry; partial
collapse. Some damage to good-quality masonry but not to reinforced masonry.
Fall of stucco and some masonry walls. Twisting/falling of chimneys, factory
stacks, monuments, towers, elevated tanks. Frame houses moved on foundations
if not bolted down; loose panel walls thrown out. Decayed piling broken off.
Branches broken from trees. Changes in flow or temperature of springs and
wells. Cracks in wet ground and on steep slopes.
7 Difficult to stand. Shaking noticed by drivers of motor cars. Hanging objects
quiver. Furniture broken. Damage to low-quality masonry, including cracks.
Weak chimneys broken at roof line. Fall of plaster, loose bricks, stones,
tiles, cornices. Some cracks in ordinary-quality masonry. Waves on ponds;
water turbid with mud. Small slides and caving in along sand or gravel banks.
Large bells ring. Concrete irrigation ditches damaged.
6 Shaking felt by all. Many frightened and run outdoors. Persons walk
unsteadily. Windows, dishes, glassware broken, knickknacks, books, etc., off
shelves. Pictures fall off walls. Furniture moved or overturned. Weak plaster
and low-quality masonry cracked. Small bells ring (church, school). Trees,
bushes shaken (visible or heard to rustle).
5 Shaking felt outdoors. Duration estimated. Sleepers wakened. Liquids
disturbed; some spilled. Small unstable objects displaced or upset. Doors
swing open, close; shutters, pictures move. Pendulum clocks stop, start,
change rate.
4 Hanging objects swing. Vibration like passing of heavy trucks; sensation of a
jolt like a ball striking the walls. Standing motor cars rock. Windows,
dishes, doors rattle. Glasses clink. Crockery clashes. In the upper range of
Modified Mercalli Intensity (MMI) level 4, wooden walls and frames creak.
3 Shaking felt indoors. Hanging objects swing. Vibrations like passing of light
trucks. Duration estimated. May not be recognized as earthquake.
2 Shaking felt by persons at rest, on upper floors, or favorably placed.
1 Shaking not felt. Marginal and long-period effects of large earthquakes.
-----------------------------------------------------------------------------------------
(See figure in printed edition.)Appendix III
LETTER FROM FEMA ON LEGAL
AUTHORITY FOR FAST TRACK PROCESS
========================================================== Appendix II
(See figure in printed edition.)
(See figure in printed edition.)
ANALYSIS OF PAYMENTS DESIGNATED
FOR RECOVERY AND ERRORS IN ZIP
CODE DESIGNATION
========================================================== Appendix IV
We analyzed the payments that FEMA designated for recovery to
determine if they were concentrated in zone improvement plan (ZIP)
codes that were erroneously designated for the Fast Track process.
FEMA decided to use the Fast Track process for applicants residing in
ZIP code areas with an MMI level of 8 or above. Our analysis showed
that the inclusion of ZIP codes that did not meet this criterion in
Fast Track did not have a significant effect on payments designated
for recovery. Ninety-six percent of the disbursements still subject
to recovery were made to applicants in ZIP codes of MMI intensities
of at least 8. Table IV.1 shows, for the cases still subject to
recovery, that 96 percent of the grants were in appropriately
designated ZIP codes, as categorized by the MMI shaking intensity.
(An analysis of the data developed for all grants designated for
recovery and reported on by FEMA's Inspector General gives much the
same result.\1
Table IV.1
Payments Designated for Recovery by ZIP
Code
Dollar
amount of
disbursement
MMI s still Percentage
shaking subject to of Cumulative
intensity recovery total percentage
---------------------------- ------------ ------------ ------------
Intensity 10 $3,787,736 62.6 62.6
Intensity 9 1,071,240 17.7 80.3
Intensity 8 949,606 15.7 96.0
Intensity 7 131,485 2.2 98.2
Intensity 6 92,833 1.5 99.7
Less than intensity 6 2,300 - 99.7
Indeterminate 10,851 0.2 99.9
======================================================================
Total $6,046,051 99.9 99.9\a
----------------------------------------------------------------------
\a Does not add because of rounding.
Source: GAO's analysis of FEMA's March 1997 data.
Thus, it appears that a more accurate designation of eligible ZIP
codes would not have significantly reduced inappropriate
disbursements at Northridge. Many of the errors may have been data
entry errors rather than mistakes in selecting ZIP codes.
(See figure in printed edition.)Appendix V
--------------------
\1 Letter dated March 27, 1997, from FEMA's Inspector General to
Senator John McCain.
COMMENTS FROM THE FEDERAL
EMERGENCY MANAGEMENT AGENCY
========================================================== Appendix IV
to FEMA's comments 1-12, see GAO's comment 1.
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
The following are GAO's comments on the Federal Emergency Management
Agency's letter dated September 25, 1997.
GAO'S COMMENTS
-------------------------------------------------------- Appendix IV:1
1. GAO revised the report to address FEMA's comments numbered 1
through 12.
2. FEMA's current policy does provide for the award of home repair
funds when damages are more than a $100 minimum. However, our report
notes that FEMA's IG reported that FEMA was accepting damages of over
$100 as evidence of an uninhabitable house, and that FEMA was also
paying for repairs apparently not related to making the residence
habitable, such as carpet replacement, rain gutters, drywall
finishing, wall tiles, and paint. Because the statement is that of
the FEMA IG, rather than GAO, we did not change the language
involved.
3. FEMA's updated figures were confirmed with table 1.
4. GAO revised the report to address FEMA's comment.
5. In the agency comment section on page 23 of the report, we note
FEMA's comments about its recent efforts to strengthen its
registration, inspection, and processing capability for future
disasters and to raise the threshold at which FEMA would consider
implementing the Fast Track process.
MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix VI
RESOURCES, COMMUNITY, AND ECONOMIC
DEVELOPMENT DIVISION
Dave Wood, Assistant Director
Paul Bryant, Senior Evaluator
Tim Baden, Senior Evaluator
OFFICE OF THE GENERAL COUNSEL
John McGrail, Senior Attorney
RELATED GAO PRODUCTS
Disaster Assistance: Improvements Needed in Determining Eligibility
for Public Assistance (GAO/RCED-96-113, May 23, 1996).
Disaster Assistance: Information on Expenditures and Proposals to
Improve Effectiveness and Reduce Future Costs (GAO/T-95-140, Mar.
16, 1995).
GAO Work on Disaster Assistance (GAO/RCED-94-293R, Aug. 31, 1994).
Los Angeles Earthquake: Opinions of Officials on Federal Impediments
to Rebuilding (GAO/RCED-94-193, June 17, 1994).
Disaster Management: Improving the Nation's Response to Catastrophic
Disasters (GAO/RCED-93-186, July 23, 1993).
*** End of document. ***