Testimony

Before the Subcommittee on VA, HUD, and

Independent Agencies, Committee on Appropriations,

U.S. Senate

United States General Accounting Office

GAO

Hearing Held on

May 16, 2001

Statement Submitted on

May 15, 2001

FLOOD INSURANCE

Emerging Opportunity to

Better Measure Certain

Results of the National

Flood Insurance Program

Statement for the Record by

JayEtta Hecker, Director,

Physical Infrastructure Issues

GAO-01-736T
Page 1 GAO-01-736T

Mr. Chairman and Members of the Subcommittee:

We are pleased to provide a statement for the record discussing the

preliminary results of our ongoing review of the National Flood Insurance

Program (NFIP). According to the Federal Emergency Management

Agency (FEMA), floods have collectively been the most destructive natural

hazard in terms of economic loss to the nation. From fiscal year 1992

through fiscal year 1999, 20 major flooding disasters caused over $97

billion in damages. The recent flooding in the Midwest again demonstrated

the destructive nature of this hazard to the nation.

The NFIP is administered by FEMA’s Federal Insurance Administration

(FIA) and Mitigation Directorate. This program, which includes building

standards aimed at minimizing flood losses, is a major component of the

federal government’s efforts to provide flood-related assistance. Other

major components are low-interest loans provided by the Small Business

Administration and individual and family grants provided by FEMA. As

you know, we are reviewing aspects of the NFIP at the request of this

Subcommittee and the Senate Committee on Banking, Housing, and Urban

Affairs and its Subcommittee on Economic Policy. We plan to report the

results of our assessment this fall.

Our statement today will focus on issues associated with measuring the

performance of the NFIP. Specifically, we will address (1) whether FEMA

could better evaluate the program’s results by adding to the performance

goals it currently uses a goal tied to rates of participation in the program—

the percentage of structures in flood-prone areas that are insured; and (2)

what obstacles and opportunities exist for measuring these participation

rates.1

 To meet these objectives, we reviewed FEMA reports that provide

some information on participation rates, analyzed FEMA’s performance

goals, and interviewed officials from FEMA and other federal agencies on

mapping technologies that can help determine participation rates. This

statement will also summarize other work we have under way at FEMA.

 1

Our work on the NFIP also includes reviewing the policies and procedures that federal

depository institution regulators, Government Sponsored Enterprises, and federal lending

agencies and loan guarantors have developed to monitor and enforce lenders’ compliance

with the mandatory flood insurance purchase requirement. We are also assessing whether

there are any gaps in information and responsibilities in the processes that may impede

lenders’ compliance. Our report will include any recommendations or options we can

identify to improve controls over lenders’ compliance.
Page 2 GAO-01-736T

In summary, we found the following:

FEMA has a number of performance goals aimed at improving the results

of the NFIP, including increasing the number of insurance policies in

force. While these goals provide valuable insights into how well the NFIP’s

mission of reducing flood-related losses is being carried out, they do not

assess the degree to which the most vulnerable residents—those living in

flood-prone areas—participate in the program. Capturing data on the

numbers of uninsured and insured structures in flood-prone areas can

provide FEMA with another indication of how effectively the program is

penetrating those areas most at risk of flooding, whether the financial

consequences of floods in these areas are increasing or decreasing, and

where marketing efforts can better be targeted.

However, before participation rates can be used to measure the success of

the NFIP, better data are needed on the total number of structures in

flood-prone areas. While FIA tracks data on the number of insurance

policies in these areas, data on the overall number of structures are

incomplete and inaccurate. Some communities are developing more

accurate data on the number of structures in flood-prone areas. FEMA is

also working to improve the quality of its data on the number of structures

in flood-prone areas and is participating in the development of new

mapping technologies that could facilitate the collection of such data. The

cost of using the new technologies to gather data on the number of

structures is not fully known, but this expense will be shared through

partnerships with federal, state, and local agencies.

The NFIP seeks to minimize human suffering and flood-related property

losses by making flood insurance available on reasonable terms and

encouraging its purchase by people who need flood insurance

protection—particularly those living in flood-prone areas known as special

flood hazard areas (SFHA).2

 Prior to the flood insurance program’s

inception, private insurance companies generally did not offer coverage

for flood disasters because of the high risks involved, such as high-risk

homeowners being more likely to purchase flood insurance.

 2

An SFHA is an area determined by FEMA to have a 1-percent or greater chance of being

flooded in any given year—these areas are also called 100-year flood plains. Flood

insurance for federally related mortgages is required only in SFHAs located in communities

that participate in the NFIP.

Background
Page 3 GAO-01-736T

The National Flood Insurance Act of 1968 (P.L. 90-448) established the

program to identify SFHAs, make flood insurance available to property

owners living in communities that joined the program,3 and encourage

floodplain management efforts to mitigate flood hazards and thereby

reduce federal expenditures on disaster assistance. In order for a

community to join the program, any structures built within an SFHA after

it has been identified as such are required to be built to the program’s

building standards, which are aimed at minimizing flood losses. FEMA

estimates that its implementation of the program’s standards for new

construction is now saving about $1 billion annually in flood damage

avoided.

The 1973 Flood Disaster Protection Act (P.L. 93-234) required flood

insurance for borrowers whose mortgages are on structures located in

SFHAs in participating communities and are originated, guaranteed, or

serviced by federal agencies or federally regulated institutions.4

Subsequently, the National Flood Insurance Reform Act of 1994 (P.L. 103-

325) directed federal regulators of lending institutions to assess penalties

on any regulated lending institution found to have a pattern or practice of

violating the act. Violations include failing to require flood insurance

coverage for properties in SFHAs used to secure mortgage loans. In

addition, the act mandated that regulated lenders (1) purchase flood

insurance for borrowers who are required to have it but fail to purchase it

and (2) escrow funds for flood insurance premiums if other funds are also

escrowed. The owners of properties in SFHAs with no mortgages or

properties with mortgages held by unregulated lenders are not legally

required to buy flood insurance. Because risk levels are the same for

homeowners in SFHAs regardless of whether flood insurance is required,

FEMA encourages all homeowners residing in SFHAs to buy flood

insurance.

 3

A participating community is any community that voluntarily elects to participate in the

NFIP and adopts and enforces floodplain management regulations and building codes that

are consistent with the standards of the NFIP. In exchange, NFIP flood insurance becomes

available for most residential and commercial buildings in the community. If FEMA

discovers that a participating community is not complying with the NFIP, it may suspend

that community from the program. As of May 10, 2001, there were 19,635 participating

communities, 278 suspended communities, and 5 communities on probation. There were

also 1,713 communities that have been mapped and contain floodplains, but do not

participate in the program.

4

A federally regulated institution means any bank, savings and loan association, credit

union, farm credit bank, federal land bank association, production credit association, or

similar institution subject to the supervision of a federal entity for lending regulation.
Page 4 GAO-01-736T

FEMA’s Mitigation Directorate maintains and updates flood insurance rate

maps (FIRM),5

 which identify the geographic boundaries of SFHAs. FIRMs

are derived from base maps, which show the basic geographic and

political boundaries of a community. Various mapping technologies are

used to establish flood elevations on FIRMs and to delineate the

boundaries of SFHAs. Base maps are generally obtained from local

communities or the U.S. Geological Survey (USGS). While flood maps

should be updated as necessary to remain accurate, approximately 63

percent of the nation’s 100,000 flood maps are at least 10 years old.

Consequently, the Mitigation Directorate has developed a Flood Map

Modernization Plan to update the maps and convert them to a digital

format.6

 Digital mapping processes, along with other technologies, will

improve the collection of data on structures in SFHAs and allow for the

electronic distribution of these data through the Internet and on CD-ROM.

In accordance with the Government Performance and Results Act

(GPRA),7 FEMA has established various goals and strategies to determine

the success of the NFIP in fulfilling its mission to minimize property losses

after flood disasters and to reduce losses from future disasters. According

to FEMA officials, these goals allow the agency to monitor its progress in

meeting its performance goals and address key outcomes.

While the results achieved under these goals—increasing the number of

insurance policies in force and reducing flood-related losses—provide

valuable insights into how well the NFIP’s mission is being accomplished,

they do not gauge participation in the program by the most vulnerable

residents—those living in SFHAs. Participation rates—the percentage of

structures in SFHAs that are insured—are an effective way to measure the

results of the NFIP because they are objective, measurable, and

 5

A FIRM is the official map of a community on which FEMA has delineated both the SFHAs

and the risk premium zones applicable to the community. FIRMs are used for both

insurance and floodplain management purposes.

6

 In our report Disaster Assistance: Opportunities to Improve Cost-Effectiveness

Determinations for Mitigation Grants (GAO/RCED-99-236, Aug. 4, 1999), we pointed out

that many of FEMA’s maps are out of date or incomplete and that analysts conducting costbenefit determinations must rely on evidence from local officials or residents to establish

the frequency and severity of a flood. Our report contained a recommendation aimed at

revising flood hazard map information.

7

GPRA seeks to shift the focus of government decision-making and accountability from

activities to results.

Emerging Opportunity

to Better Measure the

NFIP’s Results
Page 5 GAO-01-736T

quantifiable. By using participation rates to measure performance, FEMA

could assess other program results, such as the extent to which the most

vulnerable residents are participating in the program; determine whether

the financial risk to the government from floods is increasing or

decreasing; and focus marketing and compliance activities to maximize

program participation in SFHAs.

Like other federal agencies, FEMA is mandated under GPRA to develop

annual performance plans that link the agency’s long-term strategic

planning to its daily activities. FEMA established three performance goals

that pertain to the flood insurance program. These goals include reducing

flood losses, increasing the number of flood insurance policies sold, and

improving the program’s financial status. These endeavors are part of

FEMA’s mission to protect lives and reduce losses from future disasters

through insurance and mitigation efforts.

Table 1 describes FEMA’s fiscal year 2002 Performance Plan goals for the

NFIP and the strategies by which the agency intends to accomplish these

goals.

Performance Goals Strive

to Measure Success in

Achieving FEMA’s Mission
Page 6 GAO-01-736T

Table 1: FEMA’s Fiscal Year 2002 Performance Plan

Performance goal Strategies

Flood-Loss Reduction–Collect, validate,

and refine building and flood-loss data.

Confirm that the reduction in estimated

losses from NFIP activities exceeds $1

billion.

• Apply insurance coverage and premium rates as an economic incentive or disincentive

to reinforce mitigation through building requirements that reflect sound floodplain

management.

• Conduct a floodplain management program including technical assistance and

monitoring.

• Conduct a comprehensive review of NFIP to measure accomplishments and increase

effectiveness and efficiency.

Flood Insurance Policy Growth–Increase

the number of NFIP policies in force by 5

percent.

• Conduct comprehensive marketing and advertising campaigns to increase awareness

and promote policy sales.

• Coordinate mandatory flood insurance purchase requirements with regulatory and

lending institutions.

• Continue outreach efforts to create partners in the real estate community.

• Develop a market-segmented approach to increasing policies in force that balances the

risks incurred by growth.

• Promote changes to program processes that simplify the sale and purchase of

insurance.

• Continue promotion of flood mitigation.

Repetitive Loss, Subsidy Reduction, and

Operations Modernization—Improve

NFIP’s combined loss-and-expense

ratioa

 by 1 percent.

• Identify and target repetitive-loss properties for select insurance and mitigation actions.

• Develop and implement proposals to reduce the subsidy provided to certain properties.

• Continue implementation of the business improvement process begun at the end of

fiscal year 1999.

a

NFIP’s combined loss-and-expense ratio is the sum of claims paid plus expenses divided by the total

premium income. A ratio of less than 1 means a net profit on insurance operations. A ratio greater

than 1 represents a net loss.

Source: FEMA, Final Annual Performance Plan, Fiscal Year 2002.

In developing annual performance goals, agencies should focus on the

results they expect their programs to achieve—the differences the

programs will make in people’s lives. The three NFIP performance goals

address the program’s objectives of minimizing human suffering and

property losses caused by floods. However, opportunities are developing

for FEMA to obtain valuable information about the program’s success

through analysis of the rate of participation for those communities

involved in the program. The participation rate is obtained by dividing the

number of properties located in SFHAs with flood insurance by the total

number of properties in these SFHAs. This information would allow FEMA

to assess whether the program is penetrating those areas most at risk of

flooding, determine whether the financial risks to the government in these

areas are increasing or decreasing, and better target marketing efforts to

increase participation. In other words, through analysis of participation

rates, FEMA would be better able to maximize the effectiveness and

efficiency of the program in protecting lives and reducing financial losses.

Information on

Participation Rates Could

Better Measure Program

Results
Page 7 GAO-01-736T

FEMA currently collects data on the number of active flood insurance

policies. Its goal is to increase the number of NFIP policies in force by 5

percent annually. While FEMA tracks the growth in the number of active

policies, its estimates of the number of households located in SFHAs

without flood insurance coverage vary.

A DeKalb County, Georgia, study illustrates why participation-rate data

can be a more useful measure of the program’s success than a tally of

policies in force. According to the study, the number of policies in force in

DeKalb County grew from the previous year by 13 percent in 1998 and by

17 percent in 1999 but fell to 3 percent in 2000. In fiscal year 1999, DeKalb

County officials conducted a study of NFIP participation. This study was

initiated to provide information about flood hazards, prevention, and

mitigation. Local officials made flood-zone determinations on every

structure in the county using FIRMs, tax maps, and limited geographic

information system technology. This effort resulted in the creation of an

electronic database of the addresses of all structures in the SFHAs.

According to the data collected, there were 17,078 buildings in the SFHAs,

of which 3,145, or 18 percent, had flood insurance. Thus, while an analysis

of the number of policies in force showed significant growth in 1998 and

1999, these data did not capture the fact that fewer than 20 percent of the

homeowners in DeKalb County’s SFHAs had flood insurance.

FEMA’s policy growth target also does not take into account whether the

policy growth is greater or less than the population change in DeKalb

County’s SFHAs. For example, a 5-percent increase in the number of

policies at a time when the SFHA’s population is increasing by 20 percent

may not represent program success for DeKalb County or any other

community participating in the NFIP. Nor does the policy growth target

take into account changes that occur when flood maps are updated, which

could result in the addition of some structures to an SFHA. Such

information is important for communities like DeKalb County, where new

maps took effect this month.

Knowledge of DeKalb County’s participation rate would also help FEMA

better market its flood insurance program there. As noted in table 1,

marketing and educational outreach efforts are two of FEMA’s strategies

to increase the number of policies in force. A 5-percent increase in the

number of policies might lead to the erroneous conclusion that DeKalb

County did not need additional marketing or outreach campaigns to

increase public awareness of flood insurance. A participation rate of 18

percent, however, might indicate that, among other things, additional
Page 8 GAO-01-736T

marketing and educational outreach was necessary for DeKalb County

residents.

Increasing the share of structures in SFHAs with flood insurance would

provide added income to the NFIP’s insurance fund and decrease the

financial burden that flooding places on the federal government and the

citizens who are victims of floods when uninsured structures suffer flood

damage and may qualify for other forms of federal disaster relief.

Moreover, increased participation would provide a broader base of

policyholders so that the primary objective of insurance—the pooling of

risk—would be more fully realized. FIA officials agree that program

participation rates are a useful measure that can provide insights for

measuring the program’s success, including the effectiveness of marketing.

The data currently available to determine flood insurance participation

rates within SFHAs are not always accurate or complete. While FIA

maintains data on the number of flood insurance policies, the information

it has on the total number of structures within SFHAs is poor, according to

FIA’s Acting Administrator. FIA acknowledges weaknesses in its estimates

of the total number of structures within SFHAs nationwide and is taking

steps to obtain more accurate data. New technologies are also becoming

available that may be used to estimate the number of structures within

floodplains, thereby increasing the reliability of the data needed to

determine participation rates. Similarly, local communities are

increasingly using these technologies to obtain a more reliable count of

the number of structures within SFHAs. While the cost of obtaining more

reliable data is not fully known, FEMA is engaging in partnerships to test

new technologies that will allow it to share the costs with local

communities and other federal agencies.

Two numbers are needed to determine participation rates in the NFIP—

the number of insured structures and the total number of structures

located within SFHAs. When flood insurance policies are sold, private

insurance companies that have agreements with FIA to sell NFIP policies

collect information on the insured structure, such as whether it is located

within an SFHA, its address, and the name of the mortgage lender. They

report this information to FIA, which maintains a database on the number

of flood insurance policies in force including the number in SFHAs.

FEMA also maintains a database containing estimates of the number of

structures within SFHAs. However, FIA’s Acting Administrator

Available

Participation-Rate

Data Not Always

Accurate, But

Technology Promises

Improvement

Key Data Needed to

Determine Participation

Rates Are Incomplete and

Inaccurate
Page 9 GAO-01-736T

acknowledges that the data on both the national and local community

levels are of varying quality. FEMA has been unable to identify one

definitive source of information on the number of structures within SFHAs

but is taking steps to obtain more reliable information.8

FEMA collects data for its Biennial Report on the number of structures

within SFHAs from local communities participating in the NFIP. Every 2

years, participating communities report on, among other things, the

number of structures within SFHAs as well as within the entire

community. However, communities do not always report or provide

accurate information. According to a Mitigation Directorate official, about

10 percent of the communities do not report any information.

Consequently, older data on the number of structures in these

communities are used. Moreover, the communities that do report such

information do not always update or report accurate data, since they use

different ways to determine the number of structures within SFHAs. For

example, some communities have submitted reports showing no increase

in the number of structures, but significant increases in population. In

other cases, communities reported more structures within the SFHA than

within the entire community. According to this official, smaller rural

communities may rely on local officials to use their personal knowledge or

conduct drive-bys to estimate the number of structures within the SFHA.

In contrast, large urban areas typically use technologies such as

geographic information systems9

 (GIS) to estimate the number of

structures within the SFHA.

FIA officials also told us they have information on the number of

structures in SFHAs from other databases, but the accuracy of these data

is also low. For example, FEMA has a database that estimates the number

of structures in SFHAs nationally at six to eight million. However, FIA

officials told us that these data are based on the assumption that there is a

 8

 FEMA is developing a Flood Module as part of its HAZUS natural hazard loss estimation

methodology, which will be available in late 2002. Among other things, the model will be

able to provide estimates of numbers of structures in flood hazard areas that will probably

be more accurate than the data currently available. This information will allow FEMA to

develop a more accurate estimate of market penetration at the national level and possibly

at the state and community level.

9

A geographic information system is a network of computers, software, and data that

automate various features of a geographic area for mapping. Geographically referenced

data are represented as different layers in a GIS system, where each layer holds data about

a particular feature. Each feature is then linked to a position on the graphical image of a

map.
Page 10 GAO-01-736T

uniform distribution of structures in SFHAs. Other agencies, such as the

U.S. Bureau of the Census, maintain data on street names, addresses, and

locations, but their data are not in a format that is useful for determining

the number of structures in SFHAs.

Similarly, data on the total number of structures cannot be captured from

FIRMs, which FEMA currently uses to identify SFHAs, because FEMA’s

Mitigation Directorate does not include data on structures on these maps.

Existing FIRMs identify only the boundaries of SFHAs, streams, and

selected roads. Furthermore, FEMA’s Mitigation Directorate does not use

FIRMs to identify structures because (1) FEMA’s regulations on floodplain

mapping do not require the depiction of structures on FIRMs; (2) the map

scales used for FIRMs are too small to legibly show structures, and

enlarging the scales would be cost prohibitive; and (3) the information

available on the location of structures is inconsistent.

Four studies conducted between 1997 and 2000 that were designed to

examine compliance with the mandatory purchase of flood insurance

provide some information on participation rates within SFHAs. One study

was conducted by FEMA’s Inspector General (IG), one was sponsored by

FEMA, and private companies conducted the remaining two. Each of the

studies was limited to a few communities; none produced nationally

representative results or included all of the structures in the appropriate

SFHAs in their analysis. See table 2 for a synopsis of each of these four

studies.
Page 11 GAO-01-736T

Table 2: Studies on NFIP Participation

Study Scope Methodology Findings

FEMA IG, August 2000 Residences built in 16 communities

in 10 states (AL, DE, FL, KY, LA,

MD, MO, NC, NE, and NJ) after the

National Flood Insurance Reform

Act of 1994.

Screened addresses through the

FIA policy database; determined

whether there was a lien with a

regulated lender or an exemption

from the insurance requirement.

30 percent of homes

sampled did not have flood

insurance;

10 percent of homes

sampled should have had

flood insurance but did not.

Geotrac, 1997 Grand Forks, ND properties totally

within SFHA and with post-1994

Reform Act mortgages.

Screened addresses through the

FIA policy database and local

property records system.

28 percent of homes

sampled did not have flood

insurance.

FEMA Post-Disaster

Compliance Study, 1999

11 counties in Vermont following

two presidentially declared flood

disasters.

Identified disaster assistance

applicants, determined which

lived in a local SFHA, and

determined which applicants had

flood insurance. Assessed

whether those without flood

insurance had a mortgage from a

regulated lender.

84 percent of homes

sampled did not have flood

insurance; at least 45 percent

of homes sampled should

have had flood insurance.

Strategic Advocacy Group,

1999

2 counties in Kentucky following

presidentially declared flood

disasters.

Identified mortgaged parcels of

land in SFHAs; compared these

to FIA’s policy database.

Analyzed mortgages made

before and after the Reform Act.

70 percent of the sample of

homes mortgaged prior to the

1994 Reform Act, which

required lenders to ensure

the purchase of flood

insurance when required, did

not have flood insurance; 48

percent of the sample of

homes mortgaged after the

Reform Act did not have

flood insurance.

Source: GAO’s compilation of NFIP participation studies.

While these studies provide some useful information, they are of limited

value in understanding the percentage of structures in SFHAs covered by

flood insurance.

several current mapping technologies can be used to facilitate the

collection of data on the number of structures in SFHAs. These

technologies can be used not only to show buildings and houses on maps

but also to pinpoint the exact location of such structures. Combining these

technologies with the digital flood maps that FEMA is already producing

would allow for increased accuracy in the identification of structures

within SFHAs and the calculation of participation rates.

For example, USGS has produced computer-generated images of aerial

photographs—that is, pictures taken from airplanes of the land below—for

about 74 percent of the United States. These images are called digital

Technologies Can Improve

the Accuracy of Data Used

to Determine Participation

Rates
Page 12 GAO-01-736T

orthophoto quadrangles (DOQ), and essentially combine the

characteristics of a photograph with the geometric qualities of a map. FIA

currently uses these images to produce some if its flood maps. While

DOQs show pictures of structures, each structure must be digitized in

order to be identified by a geographic information system.

Local communities are also beginning to use these emerging technologies,

although to widely differing degrees. In DeKalb County, Georgia, local

officials have purchased DOQs of its 270 square miles from a contractor

and digitized the structures in the photos. The county plans to

geographically reference each of the structures to create a base map that

shows the accurate location of structures. The county can then lay digital

flood-maps over its base maps to determine the number of structures in

the local SFHAs. According to county officials, once this technology is in

place, it will be easy to determine the number of structures in local SFHAs.

NFIP participation rates will also be easy to calculate. A DeKalb County

official told us that this digitized mapping technology has many practical

applications for the county, including engineering, planning and zoning,

crime analysis, and disaster recovery, and it will allow maps to be

generated for presentations at public hearings and other meetings.

FEMA officials told us that similar efforts are occurring in Charlotte, North

Carolina, and Louisville, Kentucky. A 1998 survey by the National States

Geographic Information Council and the Federal Geographic Data

Committee found that 69 percent of the GIS data users from state,

regional, and local governments responding to its survey create, update,

integrate, and distribute digital geographic data. This indicates that a

number of localities have some technology available to create digital base

maps and that the potential exists for localities to use such technology to

identify structures within SFHAs.

However, FIA officials told us that the number of communities that

currently have detailed data available is small. They also told us that as

more FIRMs are produced digitally and more communities improve the

ability of their mapping technologies to collect data on properties and

buildings, measuring the number of structures located within SFHAs will

become easier and more efficient.

The costs of using technology to accurately identify the number of

structures in SFHAs are not fully known. In March 2000, FEMA estimated

the total costs to modernize flood maps from fiscal year 2001 through

fiscal year 2007 to be $773 million above expected annual funding levels,

The Costs of Technology

Are Not Fully Known, but

Will Be Shared
Page 13 GAO-01-736T

with digitization and map maintenance costs alone totaling $156 million.10

The modernization of maps includes converting paper flood maps to a

digital format, which is the first step in using available technology to

identify the number of structures within SFHAs. FEMA continues to refine

the cost estimate as it updates its projection of needs and improves its

cost data, including the impacts on costs of partnerships with

communities and other local, regional, state, and federal agencies, and

new technologies.

The partnerships that FEMA has developed with state, local, and other

federal agencies should reduce some of its costs to modernize its flood

maps. Along with enabling the agency to share some of the costs to

modernize flood maps, the partnerships will facilitate the development of

technology that can be used to estimate the number of structures within

SFHAs. For example, through FEMA’s Cooperating Technical Partners

initiative, 62 partnerships had been developed with local communities as

of September 2000. Through this effort, communities, states, and regional

agencies perform all or portions of data collection and mapping tasks to

create their own FIRMs. An FIA official told us that the cost benefits to

FEMA from this effort have not yet been determined.

FEMA has also entered into partnerships with other federal agencies to

fund cooperatively the production of DOQs and high-accuracy elevation

data. As discussed previously, DOQs provide detailed images of land,

including the location of houses. Elevation data are useful because they

help make flood maps more accurate. Both of these technologies can be

manipulated with geographic information systems to more accurately

identify the number of structures within SFHAs. While FIA has factored in

the costs of cooperatively producing DOQs with other agencies in its

mapping modernization cost estimate, funding arrangements to produce

elevation data with other federal agencies have not yet been determined.

 10FEMA’s IG has previously questioned the soundness of FEMA’s then $750 million

estimate to modernize flood maps. While acknowledging that FEMA took into account

some of the new cost-saving partnerships and technologies when preparing its cost

estimate, the IG asserts that FEMA did not, in some instances, verify data, use reliable data,

or establish a sound basis for some assumptions. Moreover, the IG also stated that FEMA

did not fully factor in savings that could be realized from technology. The IG recommended

that FEMA include in its mapping modernization plan the cost impact of partnerships, new

mapping techniques, and technological advancements. See Audit of FEMA’s Cost Estimate

for Implementing the Flood Map Modernization Plan (H-09-00, September, 2000).
Page 14 GAO-01-736T

Program participation rates are an effective way to gain insights into and

improve the performance of the NFIP program. Incorporating

participation rates into FEMA’s goals can provide results that are in line

with GPRA—objective, measurable, and quantifiable. While it will be many

years before the data needed to determine national participation rates

become available, some communities are already collecting such data.

These communities are using technologies that allow them to count the

number of structures in SFHAs and some are using these technologies to

determine participation rates. As our preceding discussion of DeKalb

County, Georgia, demonstrates, such community-level data can provide

FIA with useful information on the degree of participation by residents

living in SFHAs.

In addition to our work on the NFIP, we have two other studies under way

involving FEMA. The first responds to your request, in the September 16,

1999, Senate Report (106-161) accompanying the fiscal year 2000

appropriations bill, that we evaluate FEMA’s processes for ensuring that

disaster assistance funds are used effectively and efficiently. This report,

which we expect to issue this summer, will provide information on (1) the

adequacy of the criteria FEMA employs to determine if a presidential

disaster declaration is warranted and the consistency with which FEMA

applies these criteria and (2) the policies and procedures FEMA has

developed to ensure that individual Public Assistance Program projects in

disaster areas meet eligibility requirements.

We also plan to issue a report in late summer that looks at all federal

agencies involved in combating terrorism—including FEMA—with a

specific emphasis on (1) the overall framework for managing federal

agencies’ efforts; (2) the status of efforts to develop a national strategy,

plans, and guidance; (3) the federal government’s capabilities to respond

to a terrorist incident; (4) federal assistance to state and local

governments to prepare for an incident; and (5) the federal structure for

developing and implementing a strategy to combat cyber-based terrorism.

For future information on this testimony, please contact JayEtta Hecker at

(202) 512-2834. Individuals making key contributions to this testimony

included Martha Chow, Lawrence Cluff, Kerry Hawranek, Signora May,

John McGrail, Lisa Moore, Robert Procaccini, and John Strauss.

Observations

Contact and

Acknowledgments
Page 15 GAO-01-736T

Combating Terrorism: FEMA Continues to Make Progress in Coordinating

Preparedness and Response (GAO-01-15, Mar. 20, 2001).

Disaster Relief Fund: FEMA’s Estimates of Funding Requirements Can Be

Improved (GAO/RCED-00-182, Aug. 29, 2000).

Observations on the Federal Emergency Management Agency’s Fiscal Year

1999 Performance Report and Fiscal Year 2001 Performance Plan

(GAO/RCED-00-210R, June 30, 2000).

Disaster Assistance: Issues Related to the Development of FEMA’s

Insurance Requirements (GAO/GGD/OGC-00-62, Feb. 25, 2000).

Flood Insurance: Information on Financial Aspects of the National Flood

Insurance Program (GAO/T-RCED-00-23, Oct. 27, 1999).

Flood Insurance: Information on Financial Aspects of the National Flood

Insurance Program (GAO/T-RCED-99-280, Aug. 25, 1999).

Disaster Assistance: Opportunities to Improve Cost-Effectiveness

Determinations for Mitigation Grants (GAO/RCED-99-236, Aug. 4, 1999).

Disaster Assistance: Improvements Needed in Determining Eligibility for

Public Assistance (GAO/RCED-96-113, May 23, 1996).

Flood Insurance: Financial Resources May Not Be Sufficient to Meet

Future Expected Losses (GAO/RCED-94-80, Mar. 21, 1994).

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