Disaster Recovery: Past Experiences Offer Recovery Lessons for Hurricanes Ike and Gustav and Future Disasters
Published: 2009-03-03T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Recovery from major disasters is a complex undertaking that involves the combined efforts of federal, state, and local government in order to succeed. While the federal government provides a significant amount of financial and technical assistance for recovery, state and local jurisdictions work closely with federal agencies to secure and make use of those resources. This testimony describes lessons and insights that GAO has identified from review of past disasters, which may be useful to inform recovery efforts in the wake of Hurricanes Ike and Gustav, as well as disasters yet to come. These lessons come from two reports GAO recently released last fall on disaster recovery. The first draws on the experiences of communities that have recovered from previous major disasters in order to help inform recovery efforts in the wake of Hurricanes Ike and Gustav as well as the 2008 Midwest floods. The second examines the implementation of the Federal Emergency Management Agency's (FEMA) Public Assistance grant program and identifies several actions that the Department of Homeland Security can take to improve operations of that program. These include improving information sharing and enhancing continuity and communication. Commenting on a draft of that report, the department generally agreed with our recommendations. In doing this work, GAO interviewed federal, state, and local officials involved in recovery and reviewed relevant documents, data, and laws.
section_title: What GAO Found
paragraphs: Lessons from past disasters provide a potentially valuable source of information for all levels of government as they seek to meet the many challenges of recovering from a major disaster. For affected state and local jurisdictions, good practices to consider include the following: (1) Creating a clear, implementable, and timely recovery plan can provide communities with a road map for the recovery process. Just 2 months after the 1995 Kobe earthquake in Japan, the city created a recovery plan with these elements. (2) Providing financial and technical capacity facilitates jurisdictions' ability to implement federal disaster programs. For example, loans and technical assistance provided after past disasters helped communities better navigate the wide range of federal disaster programs. (3) Implementing business recovery strategies to minimize business relocations helps small businesses adapt to postdisaster market conditions. For example, to encourage businesses to remain in the city Grand Forks after the 1997 flood, the city forgave loans for businesses that stayed in the city. (4) Adopting a comprehensive approach toward combating fraud, waste, and abuse protects both disaster victims from contractor fraud and public funds from fraudulent applicants. Controls to combat such activities before, during, and after a disaster can deter such activities, including instances of contractor fraud. On the federal level, experiences with FEMA's Public Assistance grant program after the 2005 Gulf Coast hurricanes illustrated a variety of challenges in the day-to-day operation of the program that could be faced again by Gulf Coast states recoveringfrom Hurricanes Ike and Gustav or other disasters in the future. These include the following: (1) Challenges using program flexibilities to respond to the postdisaster needs of grant applicants and determining project scope. For example, applicants reported needing additional flexibility when rebuilding to address significant population changes after the storm. (2) Challenges in sharing information among federal, state, and local officials during project development that at times slowed the process. For example, some applicants in Louisiana told us of the need to repeatedly resubmit key project documents because of the lack of an effective system to share such documentation. Opportunities exist for the federal government to further refine FEMA's Public Assistance grant program to better address these and other challenges as recovery continues on the Gulf Coast and in advance of future disasters.

section_title: Letter
paragraphs: Recovery from major disasters is a complex undertaking that involves the  combined efforts of all levels of government in order to succeed. While the  federal government provides a significant amount of financial and  technical assistance for recovery, state and local jurisdictions work closely  with federal agencies to secure and make use of those resources. With this  in mind and as requested, my testimony today describes a number of  lessons and insights that we have identified from our work on past  disasters that may be useful to inform the actions of federal, state, and  local government as they work to meet the challenging process of  recovering after Hurricanes Ike and Gustav as well as other disasters yet  to come.
My statement is primarily based on two recently released reports that are  part of a body of work GAO has developed regarding disaster recovery. In  September 2008, we identified lessons from the experiences of  communities that have recovered from previous major disasters in order  to help inform recovery efforts in the wake of Hurricanes Ike and Gustav  as well as the 2008 Midwest floods. This past December, we examined the  implementation of the Federal Emergency Management Agency’s (FEMA)  Public Assistance grant program after the 2005 Gulf Coast hurricanes and  identified several actions that the Department of Homeland Security can  take to improve the operations of the program. In commenting on a draft  of that report, the department generally agreed with our  recommendations.
We conducted our reviews in accordance with generally accepted  government auditing standards. Those standards require that we plan and  perform the audit to obtain sufficient, appropriate evidence to provide a  reasonable basis for our findings and conclusions based on our audit  objectives. We believe that the evidence obtained provides a reasonable  basis for our findings and conclusions based on our audit objectives.
subsections: section_title: Past Disasters Offer Recovery Insights for State and Local Governments
paragraphs: While the federal government provides significant financial assistance  after major disasters, state and local governments play the lead role in  disaster recovery. Experiences from past disasters can provide states and  local communities with potential good practices to consider. These  practices are creating a recovery plan; building state and local capacity to  use federal disaster assistance programs; supporting business recovery;  and combating fraud, waste, and abuse of government programs. Because  each disaster is distinctive and the resources and capacities of every  community differ, each jurisdiction will need to consider whether and how  to apply these insights to its own specific circumstances.
subsections: section_title: Create a Clear, Implementable, and Timely Recovery Plan
paragraphs: A recovery plan can provide state and local governments with a valuable  tool to document and communicate recovery goals, decisions, and  priorities—in effect, they can provide a roadmap for the recovery process.  Just as important, the very process of developing these plans provides an  opportunity for recovering jurisdictions to involve the community in  identifying recovery goals and priorities. In our review of recovery plans  created after past disasters, we have identified certain characteristics that  facilitated the recovery process.
Identify clear goals for recovery. A plan containing clear goals can  provide direction and specific objectives for a recovering community to  focus on and strive for. Clear goals can also help state and local  governments prioritize projects, allocate resources, and establish a basis  for subsequent evaluations about the recovery. After the 1995 earthquake  in Kobe, Japan, jurisdictions identified specific recovery goals in their  plans, such as the rebuilding of all damaged housing units in 3 years and  removing all temporary housing within 5 years. These goals were critical  for helping to coordinate the wide range of participants involved in  recovery. Additionally, these goals allowed the government to  communicate its recovery progress with the public. Each month,  information on progress made toward achieving those goals was provided  to the public online and to the media at press conferences. Finally, these  goals provided a basis for evaluations conducted by local governments,  which enabled policymakers to measure the region’s progress toward  recovery, identify needed changes to existing policies, and learn lessons  for future disasters.
Include detailed information to facilitate implementation. Including  detailed implementation information in recovery plans can help  communities realize recovery goals. Implementable recovery plans specify  objectives and tasks, clarify roles and responsibilities, and identify  potential funding sources. Accordingly, the recovery plan created by the  City of Grand Forks, North Dakota, after the 1997 Red River flood  contained these elements. First, the plan outlined broad recovery goals,  which were linked to a number of objectives and tasks that would help to  realize those broad goals. The plan also identified a target completion date  for each task so the city could better manage related activities. Second,  Grand Fork’s plan assigned personnel to each task to carry out that  activity. By clarifying the roles and responsibilities for those who would be  involved in accomplishing specific tasks, the plan provided detailed  information to facilitate implementation. Third, the Grand Forks plan  identified funding sources for each recovery task. It also included a  financing matrix, which presented various funding sources for each task  along with target completion dates. A city evaluation found that these plan  characteristics allowed the city to conceive and formulate projects in  collaboration with the city council and other governmental  representatives. It also helped Grand Forks meet its recovery goals as well  as adhere to federal and state disaster assistance funding laws and  regulations.
Establish plans in a timely manner. The prompt completion of  recovery plans help to facilitate the ensuing recovery process by providing  a clear framework early on. Creating plans in a timely manner can be a  challenge after disasters, as was the case in New Orleans after the   2005 hurricanes. However, jurisdictions affected by the Kobe earthquake  devised a strategy to ensure that recovery plans were finalized promptly  after the 1995 earthquake. These local jurisdictions had a relatively short  amount of time in which to submit proposals for the national budget that  would be considered for the coming year. Facing this deadline, officials  developed a two-phase planning strategy. First, they completed a plan  within 2 months of the earthquake that identified broad recovery goals to  provide a basis for budget requests. Second, six months after the  earthquake, local Japanese officials collaborated with citizens to develop  more detailed recovery plans. This two-phase planning process enabled  the jurisdictions to meet their tight national budget submission deadline   while allowing additional time for communities to develop specific  recovery strategies.
section_title: Build State and Local Capacity for Implementing Federal Disaster Programs
paragraphs: Given the lead role that state and local governments play in disaster  recovery, their ability to act effectively directly affects recovery after a  major disaster. While the federal government plays a key supporting role  by providing financial assistance through a range of programs, state and  local governments may need certain capacities—such as having financial  resources and technical know-how—to effectively take advantage of that  assistance.
Enhance financial capacity. The widespread destruction caused by  major disasters can impose significant financial burdens on the state and  local governments, such as creating unbudgeted expenses while at the  same time decimating the local tax base. In addition, federal disaster  programs often require state and local governments to match a portion of  the assistance they receive. In the past, affected jurisdictions have used  loans from a variety of sources to enhance local financial capacity. For  example, after the 1997 Red River flood, the Bank of North Dakota  provided a line of credit of over $44 million to the City of Grand Forks.  The city used this loan to meet FEMA matching requirements, provide  cash flow for the city government’s operating expenses, and fund recovery  projects that commenced before the arrival of financial assistance.
Strengthen technical capacity. State and local governments face the  challenge of implementing the wide range of federal disaster programs.  Some of these federal programs require a certain amount of technical  know-how to navigate. For example, FEMA’s Public Assistance grant  program has complicated paperwork requirements and multistage  application processes that can place considerable demands on applicants.  To strengthen their technical capacity to implement this program after the  2005 Gulf Coast hurricanes, FEMA and Mississippi state officials used  federal funding to obtain an online accounting system that tracked and  facilitated the sharing of operational documents. In doing so, FEMA and  the state reduced the burden on applicants of meeting Public Assistance  grant program requirements, gained immediate access to key documents  that helped officials make project approvals, and relieved the  documentation and resulting human capital responsibilities that applicants  faced during project development.
section_title: Implement Strategies for Business Recovery
paragraphs: Business recovery is a key element of a community’s recovery after a  major disaster. Small businesses are vital to a community’s economic  health, yet are especially vulnerable to disasters because they often lack  resources to sustain financial loss and have less capacity to withstand  market changes. Federal, state, and local governments have developed  strategies to facilitate business recovery, including several targeted at  small businesses.
Provide technical assistance to help businesses adapt to  postdisaster market conditions. Major disasters can change  communities in ways that require businesses to adapt. The ability of  business owners to recognize change and adapt to the postdisaster market  for goods and services can help those firms attain long-term viability after  a disaster. Recognizing this after the 1994 Northridge earthquake,   Los Angeles officials assisted neighborhood businesses in adapting to  short- and long-term changes, using a combination of federal, state, and  local funds. Specifically, a local nonprofit provided direct technical  assistance to affected businesses such as counseling them on how to  obtain government assistance and providing strategies for how to adapt to  the changed business environment. This information was disseminated  through door-to-door canvassing in affected areas to reach out to business  owners and conferences to teach owners how to market their businesses  given the changed demographics.
Create strategies to minimize business relocation and the loss of  customer base. Widespread business relocations after a disaster can  hinder recovery. Local governments have devised strategies to retain  businesses after past disasters. For example, after the Red River flood, the  City of Grand Forks used the Department of Housing and Urban  Development’s Community Development Block Grant funds to provide  $1.75 million in loans to businesses. A feature of this program was that it  forgave 40 percent of the loan principle of businesses that were still  operating in the community for 3 years. According to a local official, over  70 percent of businesses that received this loan stayed in Grand Forks for  3 years. Another local strategy taken to minimize business relocation was  implemented after the 1989 Loma Prieta earthquake. The City of   Santa Cruz constructed large aluminum and fabric pavilions where local  businesses that suffered damage relocated. City officials stated that these  pavilions helped to mitigate the impact of the earthquake on small  businesses by enabling them to continue operations and thereby maintain  their customer base.
section_title: Adopt a Comprehensive Approach to Combating Fraud, Waste, and Abuse
paragraphs: A persistent challenge facing government at all levels is the risk of fraud,  waste, and abuse of funds targeted for disaster assistance. The influx of  financial assistance available after a major disaster provides increased  opportunities for such activities. Both disaster victims and public funds  are at risk. We identified two actions that state and local governments can  take after major disasters to combat the issue of fraud, waste, and abuse.
Create credentialing program to minimize instances of contractor  fraud. Many disaster victims hire contractors to repair or rebuild their  homes using government assistance. Residents are potential targets for  fraud by unscrupulous contractors. To help protect its residents from  contractor fraud after the 1997 Red River flood, the City of Grand Forks  established a required credentialing program for contractors. This  included a “one-stop shop” that served as a mandatory clearinghouse for  contractors that wanted to do business with recovering residents. State  and local officials staffing the clearinghouse carried out a variety of  functions, including checking that contractors had appropriate licenses  and insurance and did not have criminal records. After passing these  checks and completing all the required applications, contractors were  issued photo identification cards that they were required to carry at all  times while working within city limits. In about 2 months, the city issued  approximately 500 new contractor licenses and 2,000 contractor  identification cards through the one-stop shop. During that same period,  officials arrested more than 20 individuals who had outstanding warrants.  In an effort to minimize instances of contractor fraud after the   2008 Midwest floods, the City of Cedar Rapids, Iowa created a similar  contractor certification program modeled after Grand Forks’ program.
Create comprehensive state framework to minimize fraud, waste,  and abuse of federal programs. The need to quickly provide assistance  to victims puts assistance payments at risk to fraudulent applicants who  try to obtain benefits they are not entitled to. Our prior work on FEMA’s  Individuals and Households Program (IHP) payments and the Department  of Homeland Security’s purchase card program showed significant  instances of fraud, waste, and abuse in the wake of the 2005 hurricanes.  We previously estimated improper and potentially fraudulent payments  related to the IHP application process to be approximately $1 billion of the  first $6 billion provided. Additionally, FEMA provided nearly $20 million in  duplicate payments to individuals who registered and received assistance  twice by using the same Social Security numbers and addresses. Because  of the role state governments play in distributing and allocating this  federal assistance, these known vulnerabilities call for states to establish  effective controls to minimize opportunities for individual to defraud the  government. We have previously testified on the need for fraud prevention  controls, fraud detection, monitoring adherence to controls throughout  the entire program life, collection of improper payments, and aggressive  prosecution of individuals committing fraud. Without the creation of such  a fraud protection framework—especially the adoption of fraud  prevention controls—federal programs can end up losing millions or  potentially billions of dollars to fraud, waste, and abuse.
section_title: Challenges with FEMA’s Public Assistance Grant Program After the 2005 Gulf Coast Hurricanes Provide Potential Lessons
paragraphs: The Public Assistance grant program, administered by FEMA, is one of  two key programs the federal government has used to provide federal  rebuilding assistance to Gulf Coast states after the 2005 Gulf Coast  hurricanes. Under this program the federal government provides funds on  a project-by-project basis. We have previously reported that federal, state,  and local officials reported experiencing a wide range of operational  challenges, many of which were magnified because of the large number of  rebuilding projects following the 2005 Gulf Coast hurricanes. Today, I  would like to focus on two broad challenges we identified in that report— those associated with developing Public Assistance projects and those  involving information sharing.
subsections: section_title: Challenges Experienced in Developing Public Assistance Projects
paragraphs: In our recent review of the Public Assistance grant program, we identified  several challenges involving the process of developing projects that at  times contributed to delays and increased costs, particularly for many  large permanent work projects. These included using program flexibilities  to rebuild to the postdisaster needs of grant applicants and determining  the scope of projects.
Limitations in using Public Assistance to rebuild to the  postdisaster needs of grant applicants. Localities experienced  difficulties using the Public Assistance grant program to rebuild in a way  that met their postdisaster needs and conditions. This is because the  program typically provides funds to restore buildings, equipment, or  infrastructure back to the way they were before the disaster. For example  when a community that was in the process of making infrastructure  upgrades prior to the storms wanted to rebuild according to its updated  plans, it experienced challenges using the program. Prior to the 2005 Gulf  Coast hurricanes, local officials in St. Bernard Parish were beginning the  process of consolidating the jurisdiction’s seven separate wastewater and  sewer treatment plants into a single facility in order to meet EPA  compliance rules, among other things. The parish had already begun  construction of the consolidated facilities and had issued a $50 million  bond to fund the project. However, the storms flooded the entire sewer  system and destroyed equipment in all seven treatment plants. When  parish officials applied for Public Assistance funding to repair the  facilities, they sought to structure the project to accomplish their previous  construction goals rather than building a system that they planned to  decommission. These officials reported experiencing challenges obtaining  agreement from FEMA to build their project as a consolidated wastewater  treatment plant instead of seven separate facilities. This challenge, along  with other challenges in obtaining agreement on the scope and cost of the  project, led to over 2 years of delays in starting rebuilding. During that  time, heavy trucks were used to pump and haul sewage as an interim  measure, resulting in a considerable cost as well as damage to the parish’s  roads. According to St. Bernard Parish officials, the temporary measures  have cost the federal government more than $60 million. These officials  estimated that had they been able to move ahead with their original plans,  it would have taken about 1½ years for the new consolidated facility to  become operational. However, more than 2 years after the project was  proposed, rebuilding had not yet begun.
Local governments in the Gulf Coast also needed flexibility in rebuilding to  address postdisaster needs when the population of their neighborhoods  changed significantly from pre-Katrina levels. Consequently, it was  important for their rebuilding projects to take into account new  conditions. For example, in light of postdisaster population changes,  Louisiana’s Recovery School District sought flexibility in the size and  location of the schools to be rebuilt. However, they experienced  challenges with using the Public Assistance grant program to do this  because the program is designed to restore infrastructure back to the  condition, location, and function that existed before the disaster. FEMA  and school district officials ultimately were able to work together to  resolve their differences by moving toward a more flexible approach to  rebuilding.
Difficulties in accurately determining scope of projects. Federal,  state, and local officials also experienced challenges with developing the  scope of work of Gulf Coast recovery projects. During the process of  developing the scope of Gulf Coast projects, officials had difficulty  determining which damage was disaster related and therefore potentially  eligible for coverage under the program. For example, in St. Bernard  Parish, roughly 2 years passed before FEMA and parish field inspection  teams completed identification of eligible damage to approximately 2,500  blocks of local streets. The parish had no records to document the  condition of its streets prior to the 2005 Gulf Coast hurricanes, so  according to state officials, FEMA conducted inspections of each street in  an attempt to distinguish predisaster damage from what was caused  directly as a result of the hurricanes. In contrast, nearby Jefferson Parish  did not encounter similar challenges with distinguishing predisaster  damage from damage directly related to the hurricanes. This is because  the parish maintained a road repair-management information system  (including a road-maintenance plan) prior to the disaster that enabled the  parish to identify preexisting road conditions to FEMA officials, thereby  helping to expedite its road-repair projects.
FEMA plans to incorporate some project development flexibilities into its  regular practices. For example, FEMA’s Public Assistance Catastrophic  Disaster Recovery Concept Plan, finalized in May 2008, recognizes the  need for regulations to allow applicants to more easily tailor projects to  meet postdisaster needs. In September 2008, FEMA officials informed us  that policies to address this issue as well as a range of other initiatives  related to the plan are in development and are expected to be complete by  March 2009.
section_title: Challenges with, and Lessons for, Information Sharing
paragraphs: Because the Public Assistance grant program is complex and requires  collaboration among federal, state, and local officials, effective sharing of  project information is especially important. We identified challenges to  sharing project information among intergovernmental participants during  project development. Federal, state, and local officials involved in the  program in Louisiana reported facing challenges in effectively sharing  critical operational information about projects including documents used  to support scope and cost estimates, such as receipts, invoices, and facility  assessments. For example, some applicants in Louisiana told us of the  need to repeatedly resubmit key project documents because of the lack of  an effective system to share such documentation. This situation was made  worse because key federal and state officials responsible for reviewing  and approving documentation were not primarily located in the same  place. Although FEMA typically colocates with state grantees in order to  facilitate information sharing, FEMA and Louisiana state officials  conducted their work primarily from different cities—approximately 80  miles away.
In Mississippi, federal, state, and local officials adopted strategies that  helped to facilitate the sharing of project information. For example,  following the disaster, FEMA’s Mississippi Transitional Recovery Office  and the state grantee were located in the same office complex in Biloxi,  Mississippi, and officials from these agencies were are also positioned  together throughout the state. They told us that this colocation had  multiple benefits for information sharing and exchange, including the  timely sharing of critical documents and facilitation of daily meetings on  project-development issues. Further, as previously mentioned, FEMA and  Mississippi state officials used Public Assistance funding to secure an  online accounting system that made operational documents associated  with projects readily available to all parties. As a result, FEMA and the  state had immediate access to key documents that helped them to make  project approval decisions and relieve the documentation and resulting  human capital burdens that applicants faced during project development.
To help the Department of Homeland Security improve the operation of  the Public Assistance grant program and build on some of the actions it  has taken, our December 2008 report contained a number of  recommendations, including that FEMA improve collaboration and  information sharing within the Public Assistance process by identifying  and disseminating practices that facilitate more effective communication  among federal, state, and local entities communicating and tracking  project information. In commenting on a draft of our report, the  department generally agreed with our recommendations and noted that  FEMA is making efforts to improve collaboration and information sharing  within the Public Assistance process.
section_title: Conclusions
paragraphs: The insights and lessons gained from the recovery experiences of past  major disasters provide a potentially valuable source to all levels of  government as they seek to meet the many challenges and complexities of  recovering from a major disaster. While there is no one right way for state  and local jurisdictions to manage recovery, the practices I have presented  today provide a basic set of considerations and approaches for  communities recovering from Hurricanes Ike and Gustav as well as  disasters yet to come. For its part, the federal government has been an  active partner in disaster recovery, spending tens of billions of dollars on  efforts to recover from disasters over the last several years. Our work on  one key federal recovery program—FEMA’s Public Assistance grant  program—has identified several specific actions that can be taken to  address the operational challenges that the program faced in the wake of  the 2005 hurricanes. Opportunities exist for the federal government to take  steps in the future to continue to refine this program to better address  these challenges that could be faced again by Gulf Coast states recovering  from Hurricanes Ike and Gustav, and in advance of future disasters.
Mr. Chairman and members of the subcommittee, this concludes my  statement. I would be happy to respond to any questions you may have at  this time.
section_title: Contacts and Acknowledgements
paragraphs: For information about this testimony, please contact Stanley J.  Czerwinski, Director, Strategic Issues, at (202) 512-6806 or  czerwinskis@gao.gov. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this  statement. Major contributors to this testimony include Peter Del Toro,  Assistant Director; Shirley Hwang; and Latesha Love. Susan Etzel,  Christopher Harm, and Michael O’Neill also made key contributions.
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