Report to the Subcommittee on VA,

HUD, and Independent Agencies,

Committee on Appropriations, U.S.

Senate

United States General Accounting Office

GAO

August 2001 DISASTER

ASSISTANCE

Improvement Needed

in Disaster

Declaration Criteria

and Eligibility

Assurance Procedures

GAO-01-837
Page i GAO-01-837 Disaster Assistance

Letter 1

Results in Brief 2

Background 3

Criteria for Assessing State and Local Response Capability Do Not

Adequately Reflect Capacity 9

FEMA Has Developed Criteria to Better Ensure Project Eligibility,

but Some Implementation Problems Remain 15

Conclusions and Recommendations 21

Agency Comments and Our Evaluation 22

Scope and Methodology 23

Appendix I Efforts to Develop Criteria for Evaluating

Governors’ Requests for Presidential Disaster

Declarations 25

Appendix II Comments From the Federal Emergency

Management Agency 29

Appendix III GAO Contacts and Staff Acknowledgments 34

Figures

Figure 1: Presidential Disaster Declarations and FEMA’s Public

Assistance Costs, Fiscal Years 1991-2000 4

Figure 2: Total Costs for the Public Assistance, Individual

Assistance, and Hazard Mitigation Programs for

Presidential Disaster Declarations, Fiscal Years 1991-2000. 7

Abbreviations

FEMA Federal Emergency Management Agency

NEMIS National Emergency Management Information System

Contents
Page 1 GAO-01-837 Disaster Assistance

August 31, 2001

The Honorable Barbara A. Mikulski

Chair

The Honorable Christopher S. Bond

Ranking Minority Member

Subcommittee on VA, HUD, and

 Independent Agencies

Committee on Appropriations

United States Senate

Since 1990, FEMA has expended over $27 billion in disaster assistance,

over half of which was spent for Public Assistance projects such as repairs

of roads, government buildings, utilities, and hospitals damaged in

declared disasters. FEMA has established criteria that it uses to determine

whether to (1) recommend that the President declare a disaster and, once

a disaster has been declared, (2) approve and fund Public Assistance

projects. However, over the past decade, the President, the Congress,

FEMA’s Inspector General, and GAO have expressed concerns over the

adequacy and application of these criteria. As the President noted in his

fiscal year 2002 budget proposal, the lack of clear and meaningful criteria

for recommending disaster declarations puts FEMA at risk of providing

federal funds to some states that do not need assistance, while ignoring

the legitimate needs of others.

This Committee asked us to review FEMA’s processes for recommending a

disaster declaration and for ensuring that only eligible Public Assistance

projects are funded.

As agreed with your offices, this report assesses (1) the adequacy of the

current criteria used to determine whether a disaster exceeds state or

local capability to respond effectively and a presidential disaster

declaration should therefore be recommended and (2) the progress FEMA

has made in ensuring that only eligible projects within a declared disaster

area are funded. FEMA provides disaster assistance grants through its

Public Assistance, Hazard Mitigation, and Individual Assistance programs.

This report focuses on the Public Assistance program because it provides

the most funding for disaster assistance. To assess the adequacy of the

criteria FEMA uses to recommend a presidential disaster declaration, we

analyzed available data on damage estimates to determine whether

disasters met the statewide financial criteria for recommending a disaster

declaration and estimated how the use of other financial measures of state

United States General Accounting Office

Washington, DC 20548
Page 2 GAO-01-837 Disaster Assistance

fiscal capacity would affect declaration recommendations. We also

examined applicable laws, regulations, and past reports by GAO, FEMA’s

Inspector General, and others. To determine whether FEMA’s procedures

ensure that projects meet eligibility requirements, we interviewed agency

officials and reviewed relevant documentation and data from the agency’s

National Emergency Management Information System (NEMIS). Our

scope and methodology are described further starting on page 23 of this

report.

The Stafford Act (P. L. 93-288) requires a finding that conditions are

beyond state and local capability to respond effectively before major

disaster assistance from the federal government is warranted. The law,

however, specifically prohibits FEMA from denying federal assistance

“solely by virtue of an arithmetic formula or sliding scale based on income

or population.”1

 In 1999, FEMA published formal criteria for

recommending presidential approval of disaster declarations. These

criteria include both minimum financial thresholds and other qualitative

measures that FEMA applies in deciding whether to recommend

presidential approval. Under its current financial thresholds, FEMA can

recommend a disaster declaration if preliminary estimates of the damage

exceed $1.04 per capita statewide and $1 million in total. FEMA’s other

criteria include qualitative factors such as the heavy impact of a disaster

on a particular area or the occurrence of recent multiple disasters in the

same area. These criteria are not necessarily indicative of a state’s ability

to pay for the damage because they do not consider the substantial

differences in states’ financial capacities to respond when disasters occur.

As a result, federal funds may be provided for some disasters when they

are not needed—a result that would be inconsistent with the Stafford Act’s

intent.

While FEMA has made substantial progress in developing clear criteria for

determining individual projects’ eligibility, problems with applying the

criteria remain. In part, these problems may persist because many of the

staff assigned to disaster field offices who make eligibility decisions are

temporary and may not have the skills and training needed to make

appropriate decisions. FEMA has developed a credentialing program to

establish qualifications and training requirements for these staff but has

not implemented this program. According to FEMA officials, budgetary

 1

42 U.S.C. 5163.

Results in Brief
Page 3 GAO-01-837 Disaster Assistance

and programmatic factors have delayed implementation. In addition,

FEMA’s review process does not ensure that all projects are reviewed by

the most knowledgeable officials. FEMA also lacks centralized, quantified

information that would be useful for managing the Public Assistance

program. Its information system—essentially an electronic filing cabinet—

stores information project by project and does not provide effectively for

programwide analysis. Furthermore, according to FEMA officials, the

system is unreliable and difficult to use. As a result, data are lost or never

entered. FEMA’s reliance on temporary staff who often lack experience

with the system or training in its use may exacerbate these problems.

We are recommending actions designed to improve FEMA assessment of

state or local capability to respond to a disaster and to ensure the

appropriate application of project eligibility criteria within FEMA’s Public

Assistance program. These actions include (1) developing criteria that

more accurately reflect the affected state and local governments’

capability to respond to a disaster, (2) improving the processes for

reviewing proposed disaster projects to better ensure they meet eligibility

requirements, (3) assigning a higher budget priority to implementing a

credentialing and training program for federal disaster staff, and (4)

establishing a plan to identify recurring problems and take appropriate

actions.

FEMA found our observations about the disaster declaration process

timely and valuable for its review of disaster declaration criteria. The

agency also stated that its current procedures were designed to ensure

appropriate review and validation of proposed projects for eligibility

considerations. While we acknowledge the intent of these procedures, our

review found areas where the procedures did not always accomplish their

intent.

Over the last several years, the Congress has expressed concern over the

number and costs of disaster declarations. GAO has also identified the

cost of disaster assistance as one of FEMA’s major management

challenges. Figure 1 depicts the number of major disasters declared since

fiscal year 1991 and FEMA’s share of the Public Assistance program costs

for projects associated with them.

Background
Page 4 GAO-01-837 Disaster Assistance

Figure 1: Presidential Disaster Declarations and FEMA’s Public Assistance Costs,

Fiscal Years 1991-2000

Note: The costs shown are the Public Assistance funding provided to states for completed projects

and for incomplete projects whose costs have been estimated. Dollars are adjusted for inflation.

Approximately $4.6 billion in fiscal year 1994 is attributable to the Northridge, California, earthquake.

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

The Robert T. Stafford Disaster Relief and Emergency Assistance Act (the

Stafford Act), as amended,2

 establishes the process for states to request a

presidential disaster declaration. The Stafford Act requires that “requests

for a declaration by the President that a major disaster or emergency

exists shall be made by the Governor of the affected state.”3

 As part of the

request to the President, a governor must affirm that the state’s emergency

 2

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

3

A state also includes the District of Columbia, Puerto Rico, the Virgin Islands, Guam, and

American Samoa.
Page 5 GAO-01-837 Disaster Assistance

plan has been implemented4 and the situation is of “such severity and

magnitude that effective response is beyond the capabilities of the State

and the affected local governments and that Federal assistance is

necessary.”5

Before a governor asks for disaster assistance, federal, state, and local

officials normally conduct a joint preliminary damage assessment. FEMA

is responsible for recommending to the President whether to declare a

disaster and trigger the availability of funds as provided for in the Stafford

Act. FEMA uses the damage assessment data in preparing its

recommendation to the President.6

 When an obviously severe or

catastrophic event occurs, a disaster may be declared before the

preliminary damage assessment is completed.

In response to a governor’s request, the President may declare that a major

disaster or emergency exists.7

 This declaration activates numerous

assistance programs from FEMA and may also trigger programs operated

by other federal agencies, such as the Departments of Agriculture and

Labor, the Federal Highway Administration, the Small Business

Administration, and the U.S. Army Corps of Engineers, to assist a state in

its response and recovery efforts.8

 The federal disaster assistance provided

 4

Under terms of the Stafford Act, to be eligible for disaster assistance, each state must have

submitted a plan that sets forth “a comprehensive and detailed State program for

preparation against and assistance following, emergencies and major disasters,” including

provisions for assisting individuals, businesses, and local governments, as well as for

training emergency staff and establishing necessary regulations and procedures. (42 U.S.C.

sec. 5131.)

5

42 U.S.C. sec. 5170.

6

FEMA also uses the data from the damage assessment to determine what resources are

necessary to respond to the disaster, including the personnel required to staff FEMA’s

disaster field offices and the resources needed from other federal agencies involved in the

disaster response.

7

If the President declares an emergency, rather than a major disaster, the federal response

is limited to the immediate and short-term assistance that is necessary to save lives, protect

property and public health and safety, or lessen or avert the threat of a catastrophe.

FEMA’s expenditures may not exceed $5 million under an emergency declaration, unless

the Congress is notified of the nature and extent of the assistance requirements.

Approximately seven emergencies, averaging about $7 million, have been declared annually

over the past decade. Our focus is on disaster, not emergency, declarations.

8

Some agencies, including the Department of Agriculture, the Small Business

Administration, and the Federal Highway Administration, have the authority to initiate

certain emergency assistance efforts without a presidential disaster declaration.
Page 6 GAO-01-837 Disaster Assistance

under a major disaster declaration has no dollar limit. FEMA provides

assistance through one or more of the following grant programs:

• Public Assistance provides aid to state government agencies; local

governments; Indian tribes, authorized tribal organizations, and Alaskan

Native villages; and private nonprofit organizations or institutions that

provide certain services otherwise performed by a government agency.

Assistance is provided for projects such as debris removal, emergency

protective measures to preserve life and property, and repair and

replacement of damaged structures, such as buildings, utilities, roads and

bridges, recreational facilities, and water-control facilities (e.g., dikes and

levees).

• Individual Assistance provides for the necessary expenses and serious

needs of disaster victims that cannot be met through insurance or lowinterest Small Business Administration loans. FEMA provides temporary

housing assistance to individuals whose homes are unlivable because of a

disaster. Other available services include crisis counseling to help relieve

any grieving, stress, or mental health problems caused or aggravated by

the disaster or its aftermath. FEMA provides unemployment compensation

and can cover a percentage of the medical, dental, and funeral expenses

that are incurred as a result of a disaster.

• The Hazard Mitigation Program provides additional funding (currently up

to 15 percent of total federal aid for recovery from the disaster)9

 to states

to assist communities in implementing long-term measures to help reduce

the potential risk of future damages to facilities.

Figure 2 shows the obligations for each of these three general programs

for fiscal years 1991 through 2000. As this figure indicates, the Public

Assistance program is the largest of the three grant categories, in terms of

dollars expended.

 9

Under recent amendments to the Stafford Act, funding for mitigation can be increased to

20 percent for states that meet enhanced planning criteria. FEMA is currently developing

regulations to implement this provision.
Page 7 GAO-01-837 Disaster Assistance

Figure 2: Total Costs for the Public Assistance, Individual Assistance, and Hazard

Mitigation Programs for Presidential Disaster Declarations, Fiscal Years 1991-2000.

Note: The costs shown are the Public Assistance funding provided to states for completed projects

and for incomplete projects whose costs have been estimated. Dollars are adjusted for inflation.

Approximately $4.6 billion in fiscal year 1994 is attributable to the Northridge, California, earthquake.

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

Not all programs are activated for every disaster. The determination to

activate a program is based on the needs identified during the joint

preliminary damage assessment. For instance, some declarations may

provide only Individual Assistance grants and others only Public

Assistance grants. Hazard Mitigation grants, on the other hand, are

available for most declarations.

In addition to its central role in recommending to the President whether to

declare a disaster, FEMA has primary responsibility for coordinating the

federal response when a disaster is declared. Typically, this response

consists of providing grants to assist state and local governments and

certain private nonprofit organizations to alleviate the damage resulting
Page 8 GAO-01-837 Disaster Assistance

from such disasters. Once a federal disaster is declared, FEMA usually

establishes a field office at or near the disaster site. This office is generally

staffed with a crew of permanent, full-time FEMA employees; a cadre of

temporary reserve staff, also referred to as disaster assistance employees;

and the state’s emergency management personnel. Damage estimates for

each project, known as project worksheets, can be prepared either by

FEMA staff or by personnel from applicants, such as state agencies,

communities and certain nonprofit organizations. Full-time FEMA staff

then review these project worksheets for final approval.

To facilitate their review, approval, and funding, projects are divided into

two groups. Projects are considered small if their estimated cost does not

exceed $50,600.10 If a FEMA employee or state representative prepares a

worksheet for a small project and it passes all appropriate reviews, it is

funded according to its estimated costs. However, if an applicant prepares

a project worksheet, FEMA or state officials may verify the accuracy of

the claims by validating the project’s cost and eligibility.11 Typically,

officials validate a sample of an applicant’s small projects before

approving the funding for them. Large disaster projects, whose estimated

costs exceed $50,600, are funded incrementally as work on each phase is

completed. In all cases, the states, as the grantees, are responsible for

disbursing FEMA funds to the applicants and for certifying that all costs

were appropriate and that work on the project was completed in

accordance with the approved project estimates.

The Stafford Act sets the federal share for the Public Assistance program

at no less than 75 percent of eligible costs of a disaster. The President can

increase the federal share for the Public Assistance program if it is

determined that the disaster costs greatly exceed a state’s financial

capabilities. The federal share can sometimes reach 100 percent for

emergency work, for limited periods, if it is deemed necessary to prevent

further damage, protect human lives, or both. FEMA officials indicated

they are reluctant to recommend a 100-percent federal share for projects

because this percentage provides no incentives for the states to control

costs.

 10This value applies to projects funded in fiscal year 2001. It is adjusted for inflation

annually.

11An applicant may be a local municipality, state agency, public utility, or certain private

nonprofit entities within designated counties or equivalent official boundaries of the state.
Page 9 GAO-01-837 Disaster Assistance

To better use disaster resources and devolve major management

responsibility for the Public Assistance program to the states, the Director

of FEMA implemented a pilot project in 2000 to allow those states that

have the capability to do so to manage the Public Assistance segment of

their own small disasters.12 Under this Public Assistance pilot project, the

states and affected communities make all project eligibility determinations

and ensure that all disaster projects comply with current codes and

standards, as well as with federal laws, regulations, and FEMA policies. To

participate in this pilot project, a state must, in FEMA’s view, be capable of

managing its own disaster recovery program, have a sound financial

accounting system to track disaster projects, and enter into an operational

agreement with FEMA that defines its roles and responsibilities.13

In 1999, FEMA published its criteria for evaluating a governor’s request for

a disaster declaration. For the Public Assistance program, FEMA identified

two specific financial thresholds, as well as several other less specific

criteria, such as severe local impact, previous actions taken that helped

mitigate the disaster damages, and the overall impact of multiple recent

disasters in the state. Any or all of these, as well as “other relevant

information,” can be used to determine whether a disaster declaration

should be recommended under the Public Assistance program.

FEMA’s explicit financial thresholds are less accurate measures of a

state’s true ability to respond effectively to a disaster than other available

financial measures. In responding to congressional interest in more

objective disaster declaration criteria, FEMA set two financial thresholds

to be considered in evaluating when a disaster has exceeded a state’s

capacity to respond without federal assistance. First, it estimates the percapita impact of the disaster damages in the state through the preliminary

damage assessment process. In 1999, FEMA set a figure of $1.00 per capita

as a critical threshold that might warrant federal assistance. This figure,

which is currently $1.04, is adjusted annually for inflation. Secondly, it set

 12Small disasters are defined as those whose estimated infrastructure damages do not

exceed an estimate of $15 million (Public Assistance projects) and do not exceed $2 per

capita statewide.

13As of May 2001, three states were participating in the pilot project: Florida, Arizona, and

Oklahoma.

Criteria for Assessing

State and Local

Response Capability

Do Not Adequately

Reflect Capacity

FEMA’s Financial

Thresholds Are Poor

Proxies for a State’s Fiscal

Capacity
Page 10 GAO-01-837 Disaster Assistance

a $1 million threshold for statewide Public Assistance damages. This

threshold, however, is not adjusted for inflation.

In 1986, FEMA proposed the $1.00-per-capita threshold as a means of

gauging state fiscal capacity. The measure was based on the 1983 percapita personal income nationwide, then estimated at $11,667. FEMA

thought it reasonable “that a State would be capable of providing $1.00 for

each resident of that State to cover the costs of State efforts to alleviate

the damage which results from a disaster situation,” inasmuch as this

amount was roughly equivalent to 0.1 percent of estimated General Fund

expenditures by states.14 FEMA proposed to adjust this figure each year by

the ratio of each state’s personal income to the nationwide average, thus

making it more sensitive to interstate differences over time. This proposal

met with opposition from state and local officials and resulted in a

provision in the Stafford Act that prohibited denying federal disaster

assistance “solely by virtue of an arithmetic formula or sliding scale based

on income or population.”15 Nevertheless, the unadjusted $1.00-per-capita

threshold continued to be used informally as part of FEMA’s preliminary

damage assessment efforts.

In 1998, FEMA submitted a concept paper for consideration by state

emergency managers. In the paper, the agency recommended that the percapita threshold be set at $1.51. This figure accounted for inflation since

1986, but was no longer linked to average state tax expenditures as the

1986 threshold had been. In response to comments from state emergency

management officials, FEMA used the $1.00-per-capita threshold when it

published its formal criteria in 1999. It further provided that adjustments

based on annual inflation be made and applied uniformly to states.

A state’s capacity to respond to a disaster using state resources depends

on several factors, the most important of which is perhaps the underlying

strength of the state’s tax base and whether that base is expanding or in

decline. A state’s tax base represents the resource base against which it

can draw to fund its public services needs, including the necessary repairs

that arise in the wake of a disaster. An expanding economy also provides

more potential revenues than one that is flat or in decline.

 1451 Fed. Reg. 75, p. 13333 (4/18/86).

1542 U.S.C. 5163.

FEMA’s Development of the

Per-Capita Criterion

Measures of State Capability
Page 11 GAO-01-837 Disaster Assistance

A readily available indicator of states’ funding capacities and one

commonly used in many formula grant programs is state per-capita

personal income. Per-capita income provides a quantitative measure of

income received by state residents. As such it provides a reasonable

starting point for gauging a state’s capacity to bear the burden of making

the necessary repairs in the aftermath of a major disaster. Per-capita

personal income is commonly used in federal grant programs as a basis for

sharing program costs between states and the federal government.

Better measures of a state’s fiscal capacity, however, exist. Per-capita

personal income, while providing a reasonable indication of state funding

capacity, has a number of defects as well. In the past, we have found percapita income to be a relatively poor indicator of a state’s fiscal capacity

because it does not comprehensively measure income potentially subject

to state taxation. For example, it does not include income produced in a

state unless it is received as income by a state resident. Thus, profits

retained by corporations for business investment, though potentially

subject to state taxation, are not included in a state per-capita income

measure because they do not represent income received by state

residents. We have previously reported that Total Taxable Resources

(TTR), a measure developed by the U. S. Department of the Treasury, is a

better measure of state funding capacity in that it provides a more

comprehensive measure of the resources that are potentially subject to

state taxation.16 For example, TTR includes much of the business income

that does not become part of the income flow to state residents,

undistributed corporate profits, and rents and interest payments made by

businesses to out-of-state stock owners. This more comprehensive

indicator of state funding capacity is currently used to target federal aid to

low-capacity states under the Substance Abuse and Mental Health Service

Administration’s block grant programs.17 In the case of FEMA’s Public

Assistance program, adjustments for TTR in setting the threshold for a

disaster declaration would result in a more realistic estimate of a state’s

ability to respond to a disaster. If, instead of setting a uniform $1.00-percapita threshold, FEMA had set the average threshold at $1.00 but allowed

 16See, for example, Federal Grants: Design Improvements Could Help Federal Resources

Go Further (GAO/AIMD-97-7, Dec. 18, 1996).

1742 U.S.C. 300x-33; 42 U.S.C. 300x-7. In its 1986 notice of proposed rulemaking, FEMA

acknowledged that TTR “may well provide an improved method of determining State

capability in the future,” but was under review. Thus FEMA considered it too early to judge

its appropriateness.
Page 12 GAO-01-837 Disaster Assistance

it to vary according to state TTR estimates, the Tennessee threshold, for

example, would have been $0.88 in 1998,18 while Washington State’s would

have been $1.05 per capita.

TTR also has the advantage of providing a more sensitive adjustment for

growth over time in a state’s fiscal capacity than does adjustment for

inflation based on personal income. For example, TTR in the United States

is estimated to have grown from $4.4 trillion in 1986 to $9.9 trillion in 1998.

If the $1.00-per-capita threshold proposed in 1986 had been adjusted at

this rate in 1998, the financial threshold would have been $2.24 per capita

(rather than the $1.51 inflation-adjusted figure proposed by FEMA and the

$1.04 threshold currently in effect). Furthermore, since TTR provides

estimates of each state’s fiscal capacity, adjustments for TTR growth

would vary by state. For example, if adjusted for the TTR growth rates

from 1986 to 1998, the financial threshold for disaster declarations in

Tennessee would be $2.35 per capita, and in Washington State would be

$2.65 per capita.

We believe that implementing TTR would not be a violation of the

statutory prohibition against basing aid solely on an arithmetic formula or

sliding scale based on income or population. Rather, TTR provides a more

refined measure of a state’s capacity to respond to a disaster than FEMA’s

existing $1.04-per-capita measure. It is our expectation that FEMA would

continue to take into account several criteria in deciding, for any given

incident, whether to recommend a disaster declaration to the President.

When FEMA published its declaration criteria in 1999, it maintained that

the $1.00-per-capita measure was not a violation of the statutory

prohibition because the agency examines all the other listed criteria when

it decides whether to recommend a disaster declaration. We agree and

believe that the use of TTR or some other more sensitive measure in place

of the per-capita measure, together with other criteria such as those

identified in the regulations, would be consistent with the statute.

In its 1999 regulations, FEMA established a second quantitative measure of

a state’s ability to respond to disasters. The agency set a $1 million

statewide damage criterion as an indicator that disaster damages might

require federal assistance. As a rationale for setting this threshold, FEMA

cited its “belief that we can reasonably expect even the lowest population

 181998 is the latest year for which TTR estimates are currently available.

Statewide Damage Criterion
Page 13 GAO-01-837 Disaster Assistance

states to cover this level of public assistance damage.”19 In effect, this

criterion set the per-capita threshold at greater than $1.00 for those seven

states with populations under 1 million. FEMA also made no provisions to

adjust this threshold for future inflation.

In its 1999 regulations, FEMA identified five other factors that it considers

in evaluating a governor’s request for a Public Assistance disaster

declaration:

• Localized impacts. FEMA considers the extent to which damages are

concentrated heavily at the county or local government level even if the

statewide per-capita criterion is not met. According to FEMA, this

consideration is particularly relevant where critical facilities are involved

or where localized per-capita damages might be “extremely high.” FEMA

offers no specific threshold for localized per-capita impact but remarks

that the agency has seen damages “in the tens or even hundreds of dollars

per capita” in situations where the statewide per-capita threshold was not

met.

• Insurance coverage in force. FEMA reduces the grant by the amount of

insurance coverage that “is in force or should have been in force as

required by law or regulation” when the disaster occurred. As discussed in

appendix I, insurance coverage for Public Assistance grants is currently

only a postdisaster condition of receiving a grant; that is, if grant recipients

do not currently have insurance, they must agree to procure it as a

condition of receiving federal assistance. FEMA is now attempting to

define a minimum level of insurance coverage that would be reasonable to

require public entities to maintain in order to be eligible for public

assistance.20 The issue is still under review.

• Hazard mitigation. FEMA attempts to encourage mitigation efforts to

avert or reduce damages from future disasters by explicitly considering

previous mitigation efforts that may have reduced the damages from the

current disaster. FEMA suggests that a state that has made such efforts in

the past is more likely to receive disaster assistance when the estimated

Public Assistance damages fall below the per-capita criterion.

 1944 C.F.R. 206.48.

20FEMA published an advanced notice of proposed rulemaking soliciting comments on

options to address insurance issues in the Public Assistance program on February 23, 2000

(65 Fed. Reg. 36, 8927-8931). It published a summary of the comments it received on

October 2, 2000 (65 Fed. Reg. 191, 58720-58721).

FEMA’s Other Qualitative

Criteria and Their Impact

on Decisions
Page 14 GAO-01-837 Disaster Assistance

• Recent multiple disasters. In evaluating a governor’s request for

assistance, FEMA also considers the cumulative impact that disasters in

the previous 12 months may have had on the state’s or locality’s ability to

respond effectively. FEMA includes both Stafford Act and state-declared

disasters and the extent to which the state has spent its own funds.

• Other federal assistance programs. FEMA also considers other

federal sources of disaster relief that might more appropriately meet the

needs created by the disaster. Disaster relief in various forms is also

available under the programs of a number of federal agencies, including

the Federal Highway Administration, the Department of Agriculture, and

the Small Business Administration.21

A disaster declaration can be recommended on the basis of any of these

criteria, as well as of “other relevant,” but unspecified, information.

We analyzed the 79 major presidential disaster declarations that were

issued in the 2 years since FEMA published its revised regulations and in

which Public Assistance grants were made available.22 Sixty of those

disaster declarations—about 76 percent—met the statewide per-capita

dollar thresholds for a presidential disaster declaration; in all but four

cases the damages were estimated to be greater than $1 million.23

However, some disasters were declared when the per-capita damage was

substantially less than $1. In one case, FEMA cited significant localized

impact as the reason for recommending a disaster declaration when the

preliminary estimates indicated a statewide per-capita cost of $0.17. In

another case, the state had incurred damages amounting to $0.12 per

capita, but the declaration was based on the occurrence of several earlier

disasters. These declarations may well have been justified in the

circumstances peculiar to these disasters and consistent with existing

regulations. However, they illustrate the latitude afforded FEMA by its

subjective and nonspecific criteria for determining whether an effective

 21While FEMA may consider this factor in evaluating a request, it has not always adhered to

it in funding individual projects. FEMA’s Inspector General has found a number of

instances in which assistance provided by FEMA would have been more appropriately

provided by a different federal agency or the same assistance was provided by both. See

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

22There were 93 major presidential disaster declarations in fiscal years 1999 and 2000; of

those, 14 declarations were for Individual Assistance only.

23Two of the cases with damages below $1 million met the per-capita threshold.
Page 15 GAO-01-837 Disaster Assistance

response to a disaster is beyond the capabilities of the state and the

affected local governments.24

Our finding that 76 percent of disasters declared in 1999 and 2000 met the

$1.00 per-capita criterion may reflect some improvement over the earlier

findings of FEMA’s Inspector General. (See app. I.) In 1999 the Inspector

General reported that only 60 percent of disasters from 1988 through 1998

met this criterion. This change may be attributable to FEMA’s 1999

publication of formal declaration criteria. However, because disasters are

extremely variable in their occurrence and severity and our available

sample was restricted to a 2-year period, such attribution may be

premature.

Our May 1996 report on FEMA’s Public Assistance program identified

many weaknesses and made several recommendations to strengthen the

program, especially its processes for determining project eligibility.25 In

addition, FEMA’s Office of Inspector General noted weaknesses in FEMA’s

ability to establish project eligibility. Those reports also noted that, in

addition to having accurate, useful, and readily available policies and

procedures, FEMA employees—especially temporary employees—should

receive training in the appropriate application of the latest policies and

information systems. To address these problems, FEMA redesigned the

Public Assistance program and implemented the changes in October 1998.

As part of this redesign, FEMA developed and disseminated numerous

regulations, policies, procedures, user manuals, and guides. FEMA also

developed a new training curriculum for its permanent and temporary

staff.

While there is evidence that staff regularly use the new policies and

procedures, some eligibility problems persist. These may in part be due to

the lack of a formal credentialing mechanism to ensure that staff

authorized to review and approve Public Assistance projects or obligate

federal funds have received adequate training. The recent emphasis on

devolving the management of small disasters from FEMA to the states

increases the importance of FEMA’s processes and controls over disaster

 2442 U.S.C. sec. 5170.

25Disaster Assistance: Improvements Needed in Determining Eligibility for Public

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

FEMA Has Developed

Criteria to Better

Ensure Project

Eligibility, but Some

Implementation

Problems Remain
Page 16 GAO-01-837 Disaster Assistance

projects to help ensure that they meet eligibility criteria and federal funds

are spent efficiently and effectively.

Our 1996 report noted the need for clearer eligibility criteria to improve

the accuracy and consistency of eligibility determinations for individual

projects once a disaster has been declared. It stated that “FEMA officials

may have to make subjective judgments because the criteria lack

specificity and/or concrete examples.” For example, officials at FEMA’s

regional offices noted problems in “determining the standards (building

codes) that are applicable to repair/restoration work,” a process that

affects decisions on whether a facility should be repaired or replaced. Our

report also stated that the criteria had not been systematically updated

and disseminated and that some decisions were unofficial and unwritten.

We concluded that clearer criteria were essential because FEMA relies on

temporary personnel with limited training to prepare its project

worksheets. Furthermore, as the magnitude of disaster damage increased,

it was more likely that FEMA would have to call on additional, possibly

less thoroughly trained, temporary employees, who were likely to be less

familiar with the eligibility rules and regulations.

When FEMA redesigned its Public Assistance program, it addressed the

identified shortcomings by revising or developing its program guidance,

which included policies, standard operating procedures, handbooks,

guides, digests, and fact sheets. FEMA has developed or revised Public

Assistance policies in 35 areas or topics since the program’s redesign in

1998. The new and revised publications were distributed to FEMA’s

regional offices to make them available to the personnel staffing disaster

field offices. In addition, FEMA placed the documents on its Web site for

easy access. These publications include (1) an easy-to-read summary of

program policies; (2) a guide describing the provision and application of

procedures for program grants and an index of relevant portions of

pertinent regulations and legislation; (3) an applicant handbook containing

questions and answers on how to apply for a program grant; and (4) a

guide for planning, mobilizing, and controlling large-scale debris clearance

and disposal operations.

To document its business processes and ensure that all personnel are

familiar with its current doctrine, FEMA has continually reviewed and, as

necessary, revised its standard operating procedures. FEMA’s Web site

lists these procedures and, in some cases, provides details on them. For

example, at the time of our review, the Web site contained procedures on

(1) the roles and responsibilities of a Public Assistance Coordinator, (2)

FEMA Has Developed

Eligibility Policies and

Disseminated Them to

Field Staff
Page 17 GAO-01-837 Disaster Assistance

how to conduct a kickoff meeting, (3) the process for project formulation,

(4) the procedures used to validate small projects, (5) immediate needs

funding, and (6) how to use the cost-estimating format for large projects.

According to the FEMA staff we contacted, those tools are used and

viewed as useful in every field office. Several regional managers said they

had noticed an increased reliance on this guidance and a corresponding

decrease in the tendency of employees to “shoot from the hip” when

deciding on a project’s eligibility under the Public Assistance program.

While FEMA has taken actions to address the issues identified in our 1996

report, FEMA officials believe that congressional direction would be

needed for the agency to change two policies our 1996 report questioned.

These include eliminating the eligibility for (1) revenue-generating

nonprofit organizations, (2) facilities not actively used to deliver

government services, (3) postdisaster beach renourishment, as well as

increasing the damage threshold for replacing a facility.26

Despite the efforts that FEMA has made to improve its criteria, eligibility

problems persist. FEMA’s Office of Inspector General audits a sample of

disaster assistance recipients each year. We reviewed the 281 audits

conducted during fiscal years 1998 through 2000 that involved Public

Assistance grants. These audits found 226 cases of ineligible or

questionable claims. In nearly half of these cases, the Inspector General

found that FEMA had paid duplicate claims for reimbursement for disaster

projects or claims for reimbursement for projects that should have been

funded by another agency.27 For example, some of the costs for disaster

projects were found to be already covered by a private or government

insurance policy or the costs were covered under programs managed by

other federal agencies, such as the Federal Highway Administration. The

persistence of these problems may in part be due to uneven staff training,

the use of a nonformal process to review proposed projects, the

inadequate or untimely review of completed projects, and the use of a

 26FEMA will now pay to replace rather than repair buildings if the repair costs would be

more than 50 percent of the estimated replacement cost.

27FEMA requires grantees to maintain their records for 3 years following the closeout of a

disaster in order to facilitate any audits or reviews of project files. Most of the financial

audits we reviewed were of projects that were completed prior to the 1999 revisions to the

Public Assistance program.

Despite Improved Criteria,

Project Eligibility

Problems Still Exist
Page 18 GAO-01-837 Disaster Assistance

management information system that makes reviews of programwide

effectiveness difficult.

FEMA recognizes the need to ensure that its employees, particularly the

temporary reserve staff in its disaster field offices, receive training in the

appropriate application of the latest policies and information systems. To

meet this need, the agency designed a credentialing program with

minimum standards for the disaster personnel who make program and

cost eligibility decisions that obligate federal funds for disaster projects.

However, it has not implemented the program. In addition, according to

FEMA officials, the agency does not have a single system that maintains

up-to-date information on the training and work experiences of its disaster

staff.

In fiscal year 1999, FEMA developed a comprehensive credentialing plan

that provided a framework for evaluating the knowledge, skills, and

abilities of its staff—including its permanent full-time employees as well as

its temporary Disaster Assistance Employees—who are deployed during a

disaster. FEMA expected that this plan would ensure that its employees

would have the basic qualifications to perform their jobs and would make

Public Assistance managers, applicants, and the public more confident

about their performance in the field. According to FEMA officials,

although the credentialing program was formulated, it has not been

implemented because of budget constraints and programmatic issues that

need to be resolved, such as the number of job proficiency levels within

job titles.

FEMA offers training for its Public Assistance staff at its Emergency

Management Institute in Emmitsburg, Maryland. FEMA also offers to

conduct training at a field office at the start of its disaster response effort.

The Public Assistance budget for training has decreased from about $1.9

million for fiscal year 1999 to $725,000 for fiscal year 2001. In our review of

several FEMA internal studies of the operations of individual disaster field

offices during 1999 and 2000, we noted that field office training either was

not timely or was not offered at all. Because the majority of disaster

personnel are temporary reserve staff, providing training at a field office is

the only viable means to train them.

According to FEMA officials, the agency currently does not have a single

system that maintains up-to-date information on the training and work

experiences of its disaster staff. For example, according to available data

on formal training, only 20 percent of the staff have received training on

FEMA Staff May Not

Receive Critical Training
Page 19 GAO-01-837 Disaster Assistance

NEMIS—the management information system staff are expected to use to

document disaster projects—and only one region had over half of its staff

trained to use the system. Agency officials told us that this measure does

not capture the informal training that disaster staff receive in briefings,

refresher courses, and condensed courses while at the disaster field office.

Nevertheless, without implementing a comprehensive credentialing plan

that tracks the training and experience of its employees, FEMA cannot

ensure that all of its disaster personnel are appropriately prepared to make

project eligibility determinations.

FEMA has not established a formal process for reviewing project

worksheets to ensure that special considerations—such as environmental

or historic issues, insurance coverage, or flood control—are addressed

before the worksheets are approved. Although the agency has established

procedures for applicants or FEMA staff to prepare the worksheets, it has

left the review process up to the judgment of the FEMA staff in charge.

According to a FEMA official, the agency has not formalized the review

process because it wants to avoid a time-consuming sequence of reviews

and fund projects as quickly as possible. We agree that eligible projects

should be funded quickly, but some controls are necessary to ensure that

proposed projects meet FEMA’s eligibility criteria and their associated

costs are reasonable. During our review of project worksheets for a

disaster in Nevada, we found that most of those for flood control projects

had not been reviewed by a specialist on contract from the Army Corps of

Engineers for that purpose. As a result, FEMA had no assurance that the

proposed projects should be funded by FEMA instead of being referred to

the U.S. Army Corps of Engineers. FEMA’s efforts to encourage more

applicants to prepare their own project worksheets increase the

importance of a systematic review process to ensure that proposed

projects meet the agency’s criteria for eligibility and cost reasonableness

before federal funds are obligated.

We found that small disaster projects do not always receive appropriate

and timely validation of their estimated costs and that large projects are

frequently not certified upon completion. Over 83 percent of Public

Assistance projects are considered to be small projects and have been

funded solely on the basis of their initial cost estimates. That funding is

fixed, regardless of the final cost the applicant actually incurs. FEMA

reserves the right to validate 20 percent of an applicant’s small projects to

ensure that all costs are eligible and reasonable. In our file reviews,

FEMA Lacks a Formal

Process for Reviewing

Project Worksheets

Validation and

Certification of Public

Assistance Projects Can Be

Perfunctory or Untimely
Page 20 GAO-01-837 Disaster Assistance

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

staff.

FEMA relies on the states to review completed large projects (those

exceeding $50,600) to certify that the applicant has completed the

proposed work. FEMA reviews the project after its completion and may

adjust the dollar amount of the grant to reflect the actual cost of the

eligible work. We found, however, that states, because of their limited

staff, often have large backlogs of projects awaiting final review.

According to staff at 9 of FEMA’s 10 regional offices, about 50 percent of

the state emergency management offices do not regularly submit their

required quarterly reports on the certification of large projects. Most of

them report that their heavy workload and/or lack of resources preclude

them from certifying the completion of large projects promptly. As a

result, FEMA’s review is delayed and the agency cannot ensure that the

funds already expended on uncertified projects were reasonable and in

compliance with applicable regulations and policies.

While FEMA’s primary information system—NEMIS—helps the agency

manage projects during a disaster, opportunities exist to further develop

the system as a management of the Public Assistance program. To help

FEMA management achieve its program performance goals, NEMIS should

have sound internal management controls. However, we found instances

in which the system’s activity, application and quality controls are limited.

Although NEMIS collects and can provide information project by project,

it provides only limited data for effective programwide analyses. In

addition, the system does not automatically verify certain information that

has been entered, and it can be unreliable, time-consuming, and difficult to

use in a remote disaster environment, according to FEMA officials. Project

data may be lost or not entered as a result. Finally, FEMA’s reliance on

temporary staff who may lack experience with the system or training in its

use threatens the quality of the information it contains.

NEMIS is an agencywide system of hardware, software,

telecommunications, and applications. It is designed to provide a new

technology base to FEMA and its partners to carry out emergency

management efforts. Its purpose is to support disaster staff in the field and

to maximize the distribution of project worksheet information to Public

Assistance grant applicants and regional office staff. According to FEMA

officials, NEMIS allows concurrent and remote reviews of project

worksheets that are developed in the field, thus improving their timeliness

FEMA’s Information

System Provides Limited

Management Information

for the Public Assistance

Program
Page 21 GAO-01-837 Disaster Assistance

and quality. It also provides a single source of all project information that

is useful for any necessary subsequent review.

However, while NEMIS can provide information on a project-by-project

basis, it is severely limited in its ability to provide higher-level information

that will help FEMA management to review the agency’s performance

against measures and indicators for the Public Assistance program. FEMA

officials informed us that field staff must enter all modifications to project

worksheets-–including changes to project cost estimates—by entering

them into a narrative field. As a result, it would be difficult for FEMA

management to perform automated analyses of summary information in

order to track the programwide costs of project modifications or assess

the impact of revised Public Assistance policies.

In addition, while the Public Assistance function of NEMIS has been

upgraded since the system was implemented in August 1998, system

problems still cause delays and inaccuracies in entering project

information. Our review of FEMA’s internal evaluations of disaster field

office operations found many complaints from federal and state disaster

personnel that the system is difficult to use or often is not working at all.

As a result, data are not entered promptly or may not be entered at all. The

Public Assistance portion of NEMIS also lacks common verification

processes. For example, dates of key activities and reviews can be entered

incorrectly because the system lacks automated error-checking processes

to validate entries. Finally, because many field office staff are not trained

to use NEMIS, information for the same disaster could be inconsistently

entered from site to site and person to person. The potential for

inconsistency impedes FEMA’s ability to have an accurate overview of its

Public Assistance processes, performance, and field staff’s efforts.

Insufficient staff training could also lead staff to spend more time using

the system than would otherwise be the case and thus decrease their

productivity.

The criteria FEMA uses for determining whether to recommend a

presidential disaster declaration give the agency great flexibility to

respond promptly to a wide variety of natural disasters. However, they are

not necessarily indicative of state or local capability to respond effectively

to a disaster without federal assistance. For this reason, we recommend

that the Director of FEMA develop more objective and specific criteria to

assess the capabilities of state and local governments to respond to a

disaster. Specifically, the Director should consider replacing the per-capita

measure of state capability with a more sensitive measure, such as a

Conclusions and

Recommendations
Page 22 GAO-01-837 Disaster Assistance

state’s total taxable resources. The Director should further consider

whether a more sensitive measure would eliminate the need for a

statewide $1 million threshold. At a minimum, the Director should

consider adjusting the threshold for inflation and providing a more

detailed rationale for whatever threshold is chosen.

While FEMA has clarified its criteria for individual project eligibility, it still

experiences problems with the application of the criteria. Given the

magnitude of the funds involved, we recommend that the Director of

FEMA do the following:

• Develop internal control processes for ensuring appropriate reviews of

disaster project worksheets—especially when specialists’ reviews are

required—to ensure that proposed projects meet eligibility requirements

before receiving final approval and funding.

• Reconsider budgetary priorities to determine if a higher priority should be

assigned to implementing a credentialing and training program for federal

disaster staff that focuses on the knowledge, skills, and abilities needed

for each of the various roles involved in disaster management.

• Establish a plan to identify recurring problems identified by internal and

external audits and take appropriate actions to minimize their recurrence.

We provided FEMA with a draft of this report for its review and comment.

FEMA found our observations about the disaster declaration process

timely and valuable for its review of disaster declaration criteria. FEMA

also commented that its current procedures were designed to ensure that

the eligibility of proposed projects is appropriately reviewed and

validated. While we acknowledge that this is the intent of these

procedures, our review found areas where the procedures did not always

accomplish their intent.

In response to our concerns that all disaster staff may not receive

appropriate preparation for making project eligibility determinations,

FEMA stated that all disaster staff have attended its basic training class,

which provides such instruction. We believe, however, that FEMA should

consider giving higher priority to implementing a credentialing program

such as the one the agency has designed. The program would establish

both training and experience requirements appropriate for federal disaster

staff in all job positions.

Finally, FEMA responded to our assessment of the availability of FEMA

eligibility review processes and procedures, stating that formal approval

Agency Comments

and Our Evaluation
Page 23 GAO-01-837 Disaster Assistance

procedures exist for projects with special considerations. Our analysis

found, however, that the requirements for appropriate reviews by

specialists are not always followed. In the flood control cases we referred

to, we found no evidence of review by a flood control specialist, although

the review queue called for such a review and the Public Assistance

Coordinator approved the project. We have modified our original language

to recommend that FEMA develop internal controls to ensure consistent

compliance with its eligibility review processes.

FEMA suggested additional technical clarifications that we incorporated

into the report, as appropriate. The full text of FEMA’s comments can be

found in appendix II.

To review the adequacy of the criteria FEMA uses to formulate a

recommendation to the President on whether a presidential disaster

declaration is warranted and is consistent with regulatory requirements,

we reviewed (1) the applicable laws, regulations, and FEMA policies on

conducting preliminary damage assessments; (2) FEMA’s efforts to

develop criteria for reviewing requests of presidential disaster

declarations; and (3) relevant GAO and FEMA Office of Inspector General

reports. In addition, we analyzed available data on damage estimates to

identify any minimum criteria that might have been used to recommend a

disaster declaration. We also analyzed available data on damage estimates

to determine whether disasters met statewide financial criteria for

recommending a disaster declaration. We did not, however, perform

independent assessments of the degree to which individual disasters met

other qualitative criteria, such as significant localized impact or a recent

history of multiple disasters.

To determine whether FEMA ensures that proposed Public Assistance

projects meet eligibility criteria, we (1) reviewed FEMA’s Public

Assistance program policies, procedures, and guidance; (2) assessed the

extent to which the program’s policies and procedures were disseminated

and made available to staff that make eligibility determinations; (3)

analyzed the availability of the training provided to staff; and (4) reviewed

files on selected projects and interviewed managers and staff to assess

how effectively the program’s policies and procedures were used to

determine eligibility. We also reviewed FEMA’s internal controls and

oversight processes to determine whether they provided adequate

assurance that disaster funds were consistently used in an effective and

efficient manner. For instance, we (1) looked for any oversight or reviews

to verify that project worksheets prepared for proposed projects complied

Scope and

Methodology
Page 24 GAO-01-837 Disaster Assistance

with policy; (2) reviewed the timeliness and adequacy of efforts to validate

and certify completed projects and (3) assessed FEMA’s efforts to identify

recurring systemic problems and take corrective actions to minimize them

in future disasters. In addition, we obtained access to the program’s case

management file to review the available documentation supporting project

eligibility determinations.

In conducting our review, we interviewed officials in FEMA’s Response

and Recovery Directorate, Infrastructure Support Division in Washington,

D.C., and the equivalent FEMA personnel in three regional offices –

Atlanta, Georgia; Denton, Texas; and San Francisco, California. In

addition, we conducted a structured telephone interview with the

Infrastructure Branch chiefs in 9 of FEMA’s 10 regional offices and its

Caribbean office. We also interviewed officials from FEMA’s Information

Technology Services Directorate and auditors from its Office of Inspector

General. We performed our work from August 2000 through August 2001

in accordance with generally accepted government auditing standards.

We are sending copies of this report to the appropriate congressional

committees; the Director of the Federal Emergency Management Agency;

and the Director of the Office of Management and Budget. We will also

make copies available to others upon request.

If you have any questions about this report, please contact Robert E. White

or me at (202) 512-2834.

JayEtta Z. Hecker

Director, Physical Infrastructure Issues
Appendix I: Efforts to Develop Criteria for

Evaluating Governors’ Requests for

Presidential Disaster Declarations

Page 25 GAO-01-837 Disaster Assistance

Over the last several years, the Congress has tried several times to have

FEMA establish clear criteria for evaluating a governor’s request for a

disaster declaration by better defining the state’s capability to respond to a

disaster. In 1993, the House Appropriations Committee noted “the

tendency on the part of the Federal government to declare more and more

disasters to be eligible for disaster assistance funds” and directed FEMA to

provide a detailed cost/benefit analysis to the Committee by October 1,

1993.1 FEMA responded, in September 1993, that a reliable cost/benefit

analysis of the disaster declaration process would not be possible. In

addition, the Vice President’s National Performance Review noted that

FEMA needed to develop objective indicators of what constituted a major

disaster. The National Performance Review further noted that those

indicators should account for both the costs of the disaster and a state’s

ability to meet those costs.

The Senate Bipartisan Task Force on Funding Disaster Relief, established

by Public Law 103-211, noted in its report that one approach to modifying

federal disaster assistance and possibly reducing federal disaster

assistance costs would be to establish “more explicit and/or stringent

criteria for providing Federal disaster assistance.”2

 That report also cited a

1994 FEMA Office of Inspector General report stating that (1) neither a

governor’s findings nor FEMA’s analysis of capability were supported by

standard factual data or related to published criteria and (2) FEMA’s

process did not ensure equity in disaster decisions because the agency did

not always review requests for declarations in the context of previous

declarations.3

In September 1995,4 we reported that although the Stafford Act did not

specify criteria for evaluating a governor’s request for a declaration, FEMA

used an informal process that generally considered various factors in

making a recommendation to the President. Some of the factors FEMA

considered were

 1

House of Representatives Report 103-150 (1993), p. 66.

2

Federal Disaster Assistance: Information for the Bipartisan Task Force on Funding

Disaster Relief, U.S. Senate, Nov. 1994.

3

Disaster Declaration Decisions: Staff Support by FEMA, Inspection Report I-02-93, May

17, 1994.

4

Disaster Assistance: Information on Declarations for Urban and Rural Areas

(GAO/RCED-95-242, Sept. 14, 1995).

Appendix I: Efforts to Develop Criteria for

Evaluating Governors’ Requests for

Presidential Disaster Declarations
Appendix I: Efforts to Develop Criteria for

Evaluating Governors’ Requests for

Presidential Disaster Declarations

Page 26 GAO-01-837 Disaster Assistance

• the number of homes that were destroyed or sustained major damage,

• the extent to which the damage was concentrated or dispersed,

• the total estimated cost to repair the damage,

• the extent to which the damage was covered by insurance,

• the level of assistance available from other federal agencies,

• the state and local governments’ abilities to deal with disasters,

• the level of assistance available from voluntary organizations,

• the extent of health and safety problems, and

• the extent of damage to facilities providing essential services (e.g., medical

and police services and utilities).

The Senate Appropriations Committee remarked on the lack of specific

disaster declaration criteria in its report on FEMA’s appropriations for

fiscal year 1999.5

 In that report, the Committee directed FEMA to make

several administrative changes to reduce disaster relief costs, including

the development of specific disaster declaration criteria.

To develop specific declaration criteria, FEMA formed a working group

with the National Emergency Management Association.6

 However, FEMA

faced a legislative restriction precluding any geographic area from

receiving assistance “solely by virtue of an arithmetic formula or sliding

scale based on income or population.”7

 This working group developed

several indicators for evaluating governors’ requests for disaster

declarations and issued these indicators as a concept paper in September

1998. On January 26, 1999, FEMA published the proposed declaration

criteria in the Federal Register. Those proposed rules were similar to the

indicators FEMA had used informally.

At the request of the Senate Appropriations Subcommittee, FEMA’s Office

of Inspector General reviewed the proposed regulations and issued a

report in March 1999.8

 The report questioned FEMA’s use of a fixed percapita figure as a means to determine a state’s capability and noted that,

without the means to measure this capability, FEMA’s ability to determine

whether disaster assistance was warranted was “hampered if not negated

 5

Senate Report 105-216 (1998), p. 87.

6

The National Emergency Management Association is a professional association of

emergency management directors from states and U.S. territories.

7

42 U.S.C, sec. 5163.

8

Review of Governors’ Disaster Requests (I-02-99, Mar. 22, 1999).
Appendix I: Efforts to Develop Criteria for

Evaluating Governors’ Requests for

Presidential Disaster Declarations

Page 27 GAO-01-837 Disaster Assistance

altogether.” The report recommended that FEMA use total taxable

resources9

 in place of its per-capita cost measure to better reflect the

state’s economic health and ability to raise public revenues to cover the

costs of a disaster. Additionally, the report identified numerous ways to

improve the proposed declaration regulations, including

• publishing a county-level per-capita measure that could be used as an

indicator to better establish the disaster’s localized impact;

• specifying how FEMA intended to determine the amount of insurance

coverage and the source(s) of its information, as well as clarifying how

insurance deductibles would be measured;

• citing the criteria that would be used when considering state and local

mitigation measures to evaluate the need for assistance, including recordkeeping requirements to support states’ claims; and

• prescribing a limit on the impact of multiple past disasters, including

further defining what other events and emergencies could be included or

excluded from FEMA’s declaration evaluation, as well as establishing state

record-keeping requirements.

The Inspector General’s report further noted that a significant number of

disasters were declared, even though the estimated costs of disaster

damage fell below the statewide financial thresholds historically used by

FEMA. Specifically, the report stated it examined 192 declarations for the

10-year period from October 1988 through September 1998 and found that

40 percent were declared even though the state per-capita damage figure

had not met FEMA’s statewide financial threshold of $1 per capita of

damages. The report also identified the following as most common factors

for recommending a declaration when the disaster cost estimates were

below the minimum financial criteria. These included

• Special populations (e.g., poor, elderly) lived in affected areas.

• Preliminary damage assessments were ongoing, and the cost estimates

were not yet complete.

• The disaster had a heavy localized impact.

 9

Total Taxable Resources (TTR) is a measure defined by the Department of the Treasury

that takes into account all income either received by state residents or produced in a state.

We have suggested applying this method to federal grant formulas in other areas, such as

education or health, to better reflect a state’s economic health and the ability to raise

revenues. See, for example, School Finance: Trends in U.S. Education Spending

(GAO/HEHS-95-235, Sept. 15, 1995) and Budget Issues: Budgetary Implications of Selected

GAO Work for Fiscal Year 2001 (GAO/OCG-00-8, Mar. 31, 2000).
Appendix I: Efforts to Develop Criteria for

Evaluating Governors’ Requests for

Presidential Disaster Declarations

Page 28 GAO-01-837 Disaster Assistance

• The state had no assistance program.

Despite the Inspector General’s report and other criticisms, FEMA

published its final rule on September 1, 1999. The criteria for disaster

declarations remained substantially unchanged from those the agency

proposed in January.

FEMA has also begun to address the issue of insurance requirements for

public buildings. In July 1999, FEMA submitted draft regulations to the

Office of Management and Budget proposing that, under the Public

Assistance program, grant funding for buildings damaged in a disaster be

made available only to state and local agencies and other public entities

that maintain specified minimum levels of insurance coverage. Currently,

the Public Assistance program requires insurance coverage only as a

postdisaster condition. If a public facility is not insured when a disaster

strikes, the responsible agency must agree to procure insurance against

future disasters as a condition for receiving FEMA assistance. After

receiving comments from us and others, FEMA decided to wait for the

completion of a comprehensive study of what insurance requirements are

reasonable before proceeding further.10

In its report on FEMA’s fiscal year 2000 appropriations, the Senate

Appropriations Committee also expressed concern that the indicators the

agency proposed to guide declaration recommendations were “no more

stringent than those used in the past.”11 The Committee further noted that

it expected FEMA to apply the criteria it had published in a consistent

manner and to strengthen the criteria over time, while recognizing the

need to maintain some flexibility for unique circumstances.

 10We addressed some concerns about FEMA’s rulemaking procedures in developing this

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

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

11Senate Report 106-161 (1999), p. 99.
Appendix II: Comments From the Federal

Emergency Management Agency

Page 29 GAO-01-837 Disaster Assistance

Appendix II: Comments From the Federal

Emergency Management Agency

See comment 5.

Now on page 13.

See comment 4.

Now on page 12.

See comment 3.

Now on page 6.

See comment 2.

Now on page 5.

See comment 1.

Now on pages 3 and 4.
Appendix II: Comments From the Federal

Emergency Management Agency

Page 30 GAO-01-837 Disaster Assistance

See comment 11.

Now on page 19.

See comment 10.

Now on page 19.

See comment 9.

Now on page 19.

See comment 8.

Now on page 18.

See comment 8.

Now on page 17.

See comment 6.

Now on page 17.
Appendix II: Comments From the Federal

Emergency Management Agency

Page 31 GAO-01-837 Disaster Assistance

See comment 9.

Now on page 22.

See comment 12.

Now on page 21.
Appendix II: Comments From the Federal

Emergency Management Agency

Page 32 GAO-01-837 Disaster Assistance

The following are GAO’s comments on the Federal Emergency

Management Agency’s letter dated August 17, 2001.

1. While figure 1 indicates that the number and estimated cost of

disasters involving Public Assistance funding have both declined

recently, we note that, because disasters are extremely variable in

their frequency and severity, it is premature to suggest that the recent

decline in their number and cost constitutes a downward trend that

could be expected to continue. Furthermore, our intent is to ensure

that the criteria for both disaster declarations and eligibility

determinations are appropriate to each case, independent of any

trends in the aggregate cost of disasters.

2. The draft has been modified to clarify the relationship between a

disaster declaration and other federal assistance programs.

3. Suggested deletion accepted.

4. Sentence has been clarified.

5. Word inserted.

6. Suggested examples included.

7. See response to comment 8.

8. As our report recommended, we believe that FEMA should consider

giving higher priority to implementing a credentialing program such as

the one the agency has designed. The program would establish both

training and experience requirements appropriate to each level of

federal disaster staff. Such a program would also include a

comprehensive recordkeeping system that would ensure that all staff

meet these requirements.

9. The requirement that all projects with special considerations receive

appropriate reviews by specialists is apparently not always followed.

For example, in a major disaster we refer to, we found no evidence of

review by a flood control specialist, although the review queue called

for such a review and the Public Assistance Coordinator approved the

projects.

GAO Comments
Appendix II: Comments From the Federal

Emergency Management Agency

Page 33 GAO-01-837 Disaster Assistance

10. See response to comment 9. The final sentence has been modified to

clarify the respective roles of FEMA and the U.S. Army Corps of

Engineers.

11. Under FEMA procedures, the reviewer is required to complete a

validation worksheet identifying the projects reviewed and any

associated eligibility and cost variances. Our case review of both paper

files and NEMIS records found very few validation worksheets. FEMA

field personnel also acknowledged that the validation process is not

always conducted as required.

12. Word deleted.

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

focus on compliance with, rather than the development of, a policy

that ensures appropriate specialist reviews.
Appendix III: GAO Contacts and Staff

Acknowledgments

Page 34 GAO-01-837 Disaster Assistance

Robert E. White, (202) 512-5463

Jerry Fastrup, (202) 512-7211

In addition to those named above, Patricia Moore, Richard B. Smith,

Thomas Barger, Jr., Curtis L. Groves, and John Vocino made key

contributions to this report.

Appendix III: GAO Contacts and Staff

Acknowledgments

GAO Contacts

Acknowledgments

(385868)
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