Hurricanes Katrina and Rita: Unprecedented Challenges Exposed the Individuals and Households Program to Fraud and Abuse; Actions Needed to Reduce Such Problems in Future
Published: 2006-09-27T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In 2005, Hurricanes Katrina and Rita caused unprecedented damage. The Federal Emergency Management Agency's (FEMA's) Individuals and Households Program (IHP), provides direct assistance (temporary housing units) and financial assistance (grant funding for temporary housing and other disaster-related needs) to eligible individuals affected by disasters. Our objectives were to (1) compare the types and amounts of IHP assistance provided to Hurricanes Katrina and Rita victims to other recent hurricanes, (2) describe the challenges FEMA faced by the magnitude of the requests for assistance following Hurricanes Katrina and Rita, and (3) determine the vulnerability of the IHP program to fraud and abuse. GAO determined the extent to which the program was vulnerability to fraud and abuse, by conducting statistical sampling, data mining and undercover operations.
section_title: What GAO Found
paragraphs: For Hurricanes Katrina and Rita, FEMA received more than 2.4 million applications for IHP assistance and distributed $7.0 billion as compared to the six hurricanes that hit the United States in the prior two years and totaled about 1.5 million applications and about $1.5 billion in assistance, respectively. Temporary housing assistance and expedited assistance accounted for much of the increase in IHP expenditures as compared to prior years. Overall, however, although the number of applications was much higher, the percentage approved for non-housing assistance was notably lower for Hurricanes Katrina and Rita than in 2003 and 2004. The magnitude of Hurricanes Katrina and Rita posed challenges in providing assistance to an unprecedented number of victims many of whom were widely dispersed across the country. To address these challenges, FEMA developed new approaches and adapted existing approaches to quickly provide assistance and improve communication with victims. Despite these efforts, management challenges in staffing and training and program restrictions limited the effectiveness and efficiency of the disaster assistance process. FEMA has proposed a number of initiatives to address these problems, but it is too early to determine whether these efforts will effectively address the problems identified. GAO identified the potential for significant fraud and abuse as a result of FEMA's management of the IHP in response to Hurricanes Katrina and Rita. Flaws in the registration process resulted in what GAO estimated to be between $600 million and $1.4 billion in improper and potentially fraudulent payments due to invalid registration data. In addition, duplicate payments were made and FEMA lacked accountability over $2,000 debit cards that were given to disaster victims.

section_title: Letter
paragraphs: Making landfall in late August 2005, Hurricane Katrina was the costliest  hurricane, and one of the deadliest, in U. S. history. In its May 2006 Report,  the Senate Committee on Homeland Security and Governmental Affairs  estimated Hurricane Katrina was responsible for over $150 billion in  damages and over 1,500 deaths, with thousands more reported missing.  Hurricane Katrina devastated much of the Gulf Coast; the storm surge  caused major or catastrophic damage along the coastlines of Alabama,  Mississippi, and Louisiana. About 80 percent of New Orleans, the largest  city affected, was flooded when levees protecting the city broke.  Hurricane Katrina ultimately affected 90,000 square miles, an area almost  as large as the United Kingdom.
Hurricane Rita caused further devastation, making landfall on the Gulf  Coast in September 2005. The most intense Gulf of Mexico hurricane ever  recorded, Rita caused an estimated $9.4 billion in damages—making it the  ninth costliest storm in the U.S. history. The storm killed 7 people directly,  and at least another 55 during evacuations and from indirect effects, such  as carbon monoxide poisoning.
The Robert T. Stafford Disaster Relief and Emergency Assistance Act  (“the Stafford Act”) grants the principal authority for the President to  provide assistance in mitigating, responding to, and preparing for disasters  and emergencies such as earthquakes, hurricanes, floods, tornadoes, and  terrorist acts. The mission of the Federal Emergency Management Agency  (FEMA), within the Department of Homeland Security (DHS), which  administers the Stafford Act, is to reduce loss of life and property and  protect the nation from all types of hazards, through a comprehensive,  risk-based emergency management program. Section 408 of the Stafford  Act, 42 U.S.C. § 5174, is the general authority for the President to provide  assistance to individuals and households. This section encompasses  housing assistance as well as “other needs” assistance, which includes  medical, dental, funeral, personal property, transportation, and other  financial assistance for certain needs arising from a major disaster. These  two types of assistance are administered by FEMA under the Individuals  and Households Program (IHP). The IHP provides housing and “other  needs” assistance (ONA) in the forms of direct assistance (the provision of  temporary housing units) and financial assistance (grant funding for  temporary housing and other disaster-related needs) to eligible disaster  victims. Before providing assistance, FEMA is to conduct inspections of  disaster victims’ homes to verify damage, ownership, and occupancy. As  part of the application process, FEMA refers disaster victims who apply  for assistance and meet established income levels to the Small Business  Administration (SBA). SBA’s Disaster Loan Program is intended to be a  primary resource available to aid in disaster victims’ recovery. Applicants  who are denied loan assistance by SBA or have remaining unmet needs are  sent back to FEMA for an assistance determination of their eligibility for  certain types of other needs assistance.
In light of widespread congressional and public interest in U.S. agencies’  performance in providing assistance to hurricane victims, we prepared  this report under the Comptroller General’s authority to conduct  evaluations on his own initiative to review the events and aftermath  surrounding Hurricanes Katrina and Rita. This report discusses (1) how  the types and amounts of assistance provided to victims of Hurricanes  Katrina and Rita through the IHP compare to other recent hurricanes, (2)  the challenges posed by the magnitude of the requests for assistance  following Hurricanes Katrina and Rita and FEMA’s response to these  challenges, and (3) the vulnerability of the IHP to fraud, and abuse, in the  wake of Hurricanes Katrina and Rita.
To describe the types and amounts of benefits FEMA provided to victims  of Hurricanes Katrina and Rita through IHP in comparison to assistance  provided in other hurricane disasters, we interviewed agency officials and  obtained and analyzed data provided by FEMA’s National Processing  Service Center in Winchester, Virginia. We compared IHP disaster  assistance provided under Hurricanes Katrina and Rita to assistance  provided after other hurricane-related disaster declarations occurring in  calendar years 2003 through 2005, to the extent data were available. We  selected hurricane disaster declarations that occurred either in a single  state or in multiple-states simultaneously since IHP was implemented in  fiscal year 2003 and determined that the data were sufficiently reliable for  the purposes of our review.
To determine the challenges FEMA faced and the actions FEMA took to  respond to these challenges, we interviewed FEMA officials and reviewed  and analyzed federal legislation and regulations applicable to FEMA  disaster assistance programs and relevant FEMA policies, guidance, and  processes including changes to existing IHP processes, procedures, and  assistance during and after the hurricanes. We also analyzed IHP budgets,  staffing, and performance measures, and prior audit reports and  assessments.
To determine the vulnerability of the program to problems of fraud and  abuse, our investigators conducted statistical sampling, data mining and  undercover operations. We interviewed FEMA officials and observed  contract inspectors assessing damaged residential properties in New  Orleans. We reviewed IHP processes and procedures for determining  applicant eligibility for specific types of IHP assistance. Although we did  identify potentially fraudulent, improper, and abusive IHP applications,  our work was not designed to identify, and we cannot determine, the full  extent of fraudulent, improper, and abusive IHP registrations. We  conducted our audit work between January 2006 and September 2006 in  accordance with generally accepted government auditing standards. We  conducted our investigative work between October 2005 and September  2006 in accordance with the standards prescribed by the President’s  Council on Integrity and Efficiency. Our scope and methodology are  discussed in greater detail in appendix I.
subsections: section_title: Background
paragraphs: The purpose of the Stafford Act is to provide an orderly and continuing  means of assistance by the federal government to state and local  governments in carrying out their responsibilities to alleviate the suffering  and damage which results from disasters. The Stafford Act originally was  enacted in 1974 and amended in 1988, 1993, and 2000. The Disaster  Mitigation Act of 2000 established the IHP by combining two previous  disaster grant programs - - the Temporary Housing Assistance and  Individual Family Grant programs. Under the IHP, these programs were  replaced by Housing Assistance and Other Needs Assistance. Looking  specifically at the Housing Assistance component of the IHP, section 408  of the Stafford Act authorizes five types of assistance, of which four are  relevant to disaster victims of Hurricanes Katrina and Rita: (1) Financial assistance to rent temporary housing. FEMA  may provide financial assistance to individuals or households to  rent alternative housing accommodations, existing rental units,  manufactured housing, recreational vehicles, or other readily  fabricated dwellings.(2) “Direct” temporary housing assistance. FEMA may  provide temporary housing units (e.g., mobile homes and travel  trailers), acquired by purchase or lease, directly to disaster victims,  who, because of a lack of available housing resources, would be  unable to make use of financial assistance to rent alternate housing  accommodations. In other words, direct assistance would be  available in situations where rental accommodations are not  available. By statute, direct assistance is limited to an 18-month  period, after which FEMA may charge fair market rent for the  housing unless it extends the 18-month free-of-charge period due  to extraordinary circumstances.(3) Repair assistance. Under this authority, FEMA may provide  financial assistance for the repair of owner-occupied private  residences, utilities, and residential infrastructure damaged by a  major disaster. However, the maximum amount of repair  assistance provided to a household is limited to $5,000, adjusted  annually to reflect changes in the CPI.(4) Replacement assistance. This form of housing assistance  authorizes funding to replace owner-occupied private residences.  The amount of replacement assistance FEMA may provide to a  household is limited to $10,000, adjusted annually to reflect  changes in the CPI. For a victim to receive this assistance, there  must have been at least $10,000 of damage to the dwelling. The  victim may use the assistance toward replacement housing costs.
As of September 25, 2006, proposed legislation was pending before  Congress that would, among other things, eliminate the cap on home  repair and replacement assistance.
FEMA may provide ONA grant funding for public transportation expenses,  medical and dental expenses, and funeral and burial expenses. ONA grant  funding may also be available to replace personal property, repair and  replace vehicles, and reimburse moving and storage expenses under  certain circumstances. The maximum financial amount of housing and  other needs assistance that an individual or household may receive is  capped at $25,000, adjusted annually to reflect changes in the Consumer  Price Index. Eligibility for IHP assistance is determined when an  individual or household applies with FEMA and is based on the amount of  property damage resulting from the disaster.
For disaster victims with financial resources, SBA’s Disaster Loan  Program is intended to be a primary resource available to aid in their  recovery. FEMA refers disaster victims who apply for assistance and meet  established income levels to SBA. Applicants who are denied loan  assistance by SBA or have remaining unmet needs are sent back to FEMA  for an assistance determination of their eligibility for certain types of ONA  grant funding. (We reported on SBA’s efforts to provide disaster loans in  response to the 2005 hurricanes in July 2006 and expect to issue another  report on SBA’s response later this year.) Table 1 provides an overview of  IHP benefits and identifies the ONA benefits that are subject to SBA  disaster loan eligibility.
FEMA manages the IHP primarily through a decentralized structure of  permanent and temporary field offices staffed mostly by contract and  temporary employees. The offices include permanent locations at the  FEMA Recovery Division in FEMA Headquarters, regional offices, National  Processing Service Centers, and temporary locations at Joint Field Offices,  Area Field Offices, and Disaster Recovery Centers. Once the President  declares a major disaster that is eligible for federal assistance, victims in  declared counties must first apply for it with FEMA, by phone, over the  Internet, or in person at a disaster recovery center. Figure 1 shows disaster  victims waiting to speak with temporary disaster staff in October 2005 at a  Disaster Recovery Center in St. Bernard Parish, Louisiana.
Once a FEMA representative records personal information from a disaster  application and provides the applicant with a FEMA application number,  FEMA’s National Emergency Management Information System  automatically determines potential eligibility for designated categories of  assistance. FEMA refers disaster victims who apply for moving and  storage, personal property repair or replacement, and/or vehicle repair or  replacement related grant funding assistance and meet established income  levels to SBA. Applicants who are denied loan assistance by SBA or have  remaining unmet needs are sent back to FEMA for an assistance  determination of their eligibility for certain types of ONA grant funding. To  confirm that the home and personal property sustained damages as  reported in a disaster assistance application, FEMA is to meet with  disaster victims at their homes to conduct individual inspections to verify,  ownership, occupancy, and damage. Figure 2 shows a FEMA inspection  notice on a home in St. Bernard Parish damaged by Hurricane Katrina.
Based on the results of the inspection and determinations made by staff at  the National Processing Service Centers, FEMA approves or denies  housing and/or other needs assistance. (Applicants may be eligible for  either or both types of assistance.) If the applicant qualifies for a grant,  FEMA sends the applicant a check by mail or deposits the grant funds in  the applicant’s bank account. If an applicant is denied, he or she may  appeal the decision by contacting a service center and providing additional  information or clarification. Recipients of IHP assistance must recertify  their continuing need for assistance every 30 to 90 days, depending on the  type of assistance. Additional details about federal disaster assistance and  IHP including the types of and eligibility for benefits, how the program is  structured and implemented and the process for applying for and receiving  program assistance are provided in appendix III.
section_title: IHP Assistance to Victims of Hurricanes Katrina and Rita Far Surpassed Assistance to Victims of 2003 and 2004 Hurricane Seasons
paragraphs: Because of the magnitude of the hurricanes and the extent of the resulting  damage, the total number of applications for, and benefits provided  through IHP in 2005 for Hurricanes Katrina and Rita far exceeded the  combined total of the 2 years since the program was established in 2003.  Two categories of assistance—temporary housing assistance and  expedited assistance---- accounted for much of the significant increase in  IHP expenditures for Hurricanes Katrina and Rita as compared to prior  years. FEMA also provided a much greater amount of assistance for  Hurricanes Katrina and Rita, than in prior years, for specific types of ONA  benefits that are primarily provided only after applicants apply for and are  denied an SBA disaster loan, indicating that the percentage of lower  income applicants may have been a significant portion of total applicants.  While the approval rate for housing assistance was greater than in  previous years, the approval rate for ONA was notably lower for  Hurricanes Katrina and Rita than the 2 previous hurricane seasons;           41 percent as compared to 65 percent in 2003 and 50 percent in 2004.  Accordingly, the percentage of applicants FEMA identified as ineligible for  housing assistance was lower while the percentage of ineligible applicants  for ONA was higher for Hurricanes Katrina and Rita (44 percent) than for  named hurricanes that came ashore in 2004 (31 percent). To establish a  basis for eligibility, FEMA had to conduct a much greater number of  inspections and accordingly, the related cost of those inspections were  greater with Hurricanes Katrina and Rita than in 2003 and 2004 combined.  Although FEMA referred more applicants to SBA for disaster loans for  Hurricanes Katrina and Rita than in the prior 2 years, SBA returned about  the same percentage of disaster loan applicants to FEMA for ONA  consideration.
subsections: section_title: IHP Applications, Benefits and Related Inspection Workload Were Greater for Hurricanes Katrina and Rita than in 2 Preceding Years
paragraphs: FEMA received far more IHP applications, approved more requests for  Housing and Other Needs Assistance, and awarded more grant money in  2005-2006 for Hurricanes Katrina and Rita than for all the hurricanes that  resulted in a disaster declaration in 2004 (Ivan, Charley, Frances, and  Jeanne) and 2003 (Isabel and Claudette) combined. Table 2 shows the  number of applicants approved for both categories of IHP assistance and  the grant award totals—as of August 2006, for Hurricanes Katrina and Rita  and named hurricanes that came ashore in the United States in 2004. The  table also shows the number of applications received by FEMA—as of  September 2006.  The number of applicants and both categories of IHP  assistance for the 2003 named hurricanes were provided by FEMA as of  April 2006.
FEMA data as of August 2006, shows that two categories of assistance— temporary housing assistance and expedited assistance accounted for  much of the significant increase in IHP expenditures for Hurricanes  Katrina and Rita as compared to prior years, as shown in figure 3. FEMA  specifically established a new transitional housing assistance allowance,  as part of temporary housing assistance, to advance to Katrina disaster  victims an amount equal to the initial 3 months of rental payments based  on the national average rent for a 2-bedroom apartment. Expedited  assistance is a pre-inspection disbursement of funds to disaster victims  based on specific criteria such as the severity of the damage. (See glossary  for definitions of all housing and other needs assistance categories.)  Transitional housing assistance that was authorized exclusively for  Hurricane Katrina, was estimated at about $1.3 billion while expedited  assistance for both Hurricanes Katrina and Rita totaled an about             $2.3 billion. By comparison, about $59 million was approved for hurricanes  in 2004, while no expedited assistance was approved for hurricanes in  2003.
In terms of ONA, figure 4 shows that FEMA provided a much greater  amount of income dependent assistance for Hurricanes Katrina and Rita in  2005 than in prior years. Income dependent assistance requires that  eligible applicants initially apply for and be denied assistance from the  SBA Disaster Loan Program and includes expenses for personal property,  moving and storage, and vehicle repair and replacement expenses. For  Hurricanes Katrina and Rita, personal property assistance accounted for  the majority of the income dependent assistance, about $1.8 billion. In  comparison, for the hurricanes in 2003 and 2004, the combined total  income-dependent assistance approved was less than $495 million. Lower  income applicants may have made up a significant portion of those  receiving ONA benefits because income dependent assistance in the form  of personal property assistance was nearly 87 percent of the ONA  approved for victims of hurricanes Katrina and Rita.
section_title: Victims of Hurricanes Katrina and Rita Seek Housing Assistance in Numbers Greater than Those for Other Needs Assistance
paragraphs: As of August 2006, FEMA data shows that for Hurricanes Katrina and Rita  nearly 2 million applicants applied for Housing Assistance while                1.3 million applicants requested ONA. About 67 percent of applicants for  Housing Assistance were approved versus an estimated 41 percent of  applicants approved for ONA. Although during Hurricanes Katrina and  Rita more applicants were approved for ONA, the percentage of approved  applicants was less than for hurricanes in the prior 2 years, whose  approval rates were higher than 50 percent in each year. Accordingly, the  percentage of applicants FEMA identified as ineligible for housing  assistance was lower while the percentage of ineligible applicants for ONA  was higher for Hurricanes Katrina and Rita (44 percent) than for named  hurricanes that came ashore in 2004 (31 percent).
Table 3 shows, by IHP assistance category, the number and percentage of  applicants FEMA considered for IHP assistance as of August 2006 for  hurricanes in 2004 and Hurricanes Katrina and Rita, and for hurricanes in  2003 as of April 2006. In addition, the table shows the number and percent  of approved, ineligible, and pending IHP applicants. It also shows the  number and percent of applicants that appealed FEMA decisions regarding  their IHP assistance, for Hurricanes Katrina, Rita and named hurricanes  that came ashore in 2003 and 2004. The table does not show the number of  IHP applicants who withdrew their application during the evaluation  process.
In order to provide the unprecedented level of disaster assistance, FEMA  had to significantly increase its number of home inspections. As of August  2006, data reported by FEMA indicates that after Hurricanes Katrina and  Rita, about 1.9 million inspections were completed at a cost of  approximately $179.6 million, or about $92 per inspection. For the  hurricanes in 2003 and 2004, FEMA completed about 108,000 and              1.0 million inspections at a cost of about $8.0 million and $70.3 million or  about $74 and $75 per inspection, respectively. In August 2006, FEMA  reported the average time required for completing inspections—the time  between the application for assistance until submission of an inspection  report—after Hurricanes Katrina and Rita was about 33 days and 25 days  respectively. The average time for completing inspections for the  hurricanes in 2003 was 1 to 2 days and in 2004 the average was 4 to 5 days.  A FEMA official stated that the goal for conducting inspections is a 3-day  turnaround time. Figure 5 compares the number of inspections completed  by contractors and the cost of the inspections for the named hurricanes in  our review.
According to a FEMA official, the following factors had an impact on the  higher per inspection costs for Hurricanes Katrina and Rita:    Both of FEMA’s inspection contractors had automatic annual increases  on a per inspection basis built into their contract.
Automatic annual increases from 2004 to 2005 for maintaining on-call  availability were also included in the contracts.
For 2005, FEMA added a new requirement for inspectors to photograph  disaster damage that added to the cost per inspection.
The contractors increased the per inspection cost in December 2005  when FEMA extended the contract beyond the initial 5-year period of  performance.
section_title: Percentage of SBA Disaster Applicants Sent Back to FEMA’s ONA for Hurricanes Katrina and Rita Was Comparable to Those after Hurricanes in 2003 and 2004
paragraphs: For Hurricanes Katrina and Rita, FEMA referred about 2.5 million  applicants to SBA for assistance through its Disaster Loan Program. For  hurricanes in 2003 and 2004, FEMA referred fewer applicants—about  107,000 and 1.3 million applicants respectively, to the SBA. As of August  2006, data reported by FEMA show that nearly 10 percent of applicants  were sent back to FEMA from SBA for ONA consideration. In comparison,  during hurricanes in 2003 and 2004, SBA sent back to FEMA a comparable  percentage of applicants—about 12 percent and 10 percent respectively,  which indicates that SBA’s loan denial rate was relatively consistent  although more applicants were referred for Hurricanes Katrina and Rita  than in the prior 2 years. Figure 6 shows the number of applicants referred  to the SBA for loan assistance and the number of applicants the SBA sent  back to FEMA for ONA in 2003, 2004, and for Hurricanes Katrina and Rita  in 2005.
section_title: FEMA Responded to the Challenges of Hurricanes Katrina and Rita with New Approaches, yet Reported Ongoing Management Challenges Hindered Implementing IHP
paragraphs: Faced with unprecedented challenges in the aftermath of Hurricanes  Katrina and Rita, FEMA devised new approaches and adapted pre-existing  ones to administer the IHP. However, our work and six federal reports we  reviewed pointed to ongoing management challenges which hindered IHP  implementation. These management challenges included a lack of  planning and trained staff, and programmatic restrictions on the uses of  IHP funds that limited FEMA’s flexibility in using IHP assistance in the  most efficient and effective manner. In May 2006, FEMA announced  initiatives to address the problems and recommendations cited in the  various reports. However, it is too early to assess the success of these  initiatives.
subsections: section_title: FEMA Used New Approaches to Address Hurricanes’ Unprecedented Challenges
paragraphs: Hurricanes Katrina and Rita posed numerous unprecedented challenges  for FEMA’s administration of the IHP. These challenges arose from the  sheer number of victims seeking assistance, including many who had lost  key financial, residential, and other documentation in the storms, and the  dispersal of these victims throughout the United States. As a result, FEMA  was also challenged to conduct an unprecedented number of housing  inspections, often with limited or no access to individuals or, in many  cases, to the affected homes. To provide benefits quickly to eligible  victims, communicate with about 2 million applicants scattered across the  country and conduct inspections, FEMA developed a number of new  approaches, as summarized in table 4.
In addition, FEMA adapted several of its traditional approaches to respond  to Hurricanes Katrina and Rita, according to FEMA, as summarized in  table 5.
section_title: Despite New Approaches, Reported Ongoing Management Challenges Hindered Implementing IHP
paragraphs: Each of the assessments of the federal government’s response to  Hurricanes Katrina and Rita we reviewed identified problems in FEMA’s  implementation of IHP during and after the storms. Our review and our  assessment of these reports showed that the agency’s efforts to implement  the IHP were hindered by a lack of planning, trained staff, and program  limitations, despite its new and revised approaches for implementing the  program. A list of these assessments is provided in table 7. In addition, a  summary of Katrina- and Rita-issues related to the IHP addressed in these  reports is identified in appendix IV.
Regarding planning, the DHS Inspector General reported in March 2006  that FEMA lacked final plans that specifically addressed the types of  challenges the agency could be expected to face in catastrophic  circumstances.  For example, because FEMA was unable to immediately  implement IHP assistance to provide funds to transition victims from  short-term lodging, including shelters, hotels and motels to longer-term  housing alternatives such as mobile homes or apartments, FEMA officials  used Public Assistance funds. Normally, public assistance is provided  (under section 403 of the Stafford Act) only for immediate emergency  sheltering efforts to get assistance to individuals and households quickly.  Under normal circumstances, IHP funds provided under Section 408 of the  Act are intended to accommodate the longer-term housing needs of  evacuees up to 18 months. FEMA officials said that many applicants would  have waited months to receive their initial assistance if FEMA had  followed normal IHP processes and procedures under Section 408 and had  to wait until inspections were completed and IHP information and  assistance could be communicated to disaster victims who were dispersed  to all 50 states. However, this use of Public Assistance funds was  problematic, according to the DHS Inspector General’s report. Because  application for assistance is not a requirement for the provision of Public  Assistance under section 403 of the Stafford Act, FEMA did not know  whether disaster victims were actually eligible for assistance as a direct  result of the disaster. This increased the potential for duplication with  other assistance programs since there was no internal mechanism to  determine whether an evacuee had received assistance from the IHP when  interim housing may have already been provided. The interim housing  assistance funded under section 403 was only phased out after FEMA was  able to identify that an evacuee had received IHP funds.
FEMA was aware it needed to plan for large disasters but had problems  getting necessary funding, according to the Senate Homeland Security and  Governmental Affairs Committee’s Katrina Report. FEMA requests for  $100 million for catastrophic planning and an additional $20 million for  catastrophic housing planning in fiscal year 2004 and fiscal year 2005,  respectively, were denied by DHS. Our review of FEMA’s implementation  of IHP showed that FEMA’s reactive approach to planning and  implementing the IHP on a disaster-by-disaster basis is inadequate to deal  with the short-term and long-term needs of affected communities,  particularly for catastrophic disasters when the agency’s resources and  staff are strained. For example, FEMA failed to pre-identify workable sites  and land and take advantage of available housing units from other federal  agencies, according to a February 2006 White House report. We have  ongoing work focusing on the federal role in providing housing assistance  in response to Hurricanes Katrina and Rita.
In terms of trained staff, FEMA lacked the surge capacity to effectively  manage the disaster assistance process. Specifically, according to the  March 2006 DHS Inspector General report, additional trained staff were  needed to (1) provide initial application services at Disaster Recovery and  Call/Processing Centers, (2) process applications and respond to questions  at the National Processing Service Centers, and (3) conduct inspections.  First, according to the DHS Inspector General, disaster victims  experienced delays when they contacted Call Centers or were not able to  speak with anyone. Second, disaster victims experienced delays in  obtaining their eligibility determination, according to FEMA officials  responsible for managing the IHP. Third, inspections were delayed, in part,  because FEMA lacked enough contract inspectors to perform inspections,  according to FEMA. Our analysis found, for example, that inspection times  for Katrina and Rita took an average of two to five times longer compared  to named hurricanes in 2004. FEMA uses inspectors that have a  construction, real estate, or appraisal background, but it is not required,  according to a FEMA Inspection Services Manager. FEMA requires that  each inspector be trained on FEMA standards and policies regarding  program eligibility and that new inspectors undergo background checks.  In most conventional disasters, experienced inspectors are to accompany  new inspectors in the field to ensure that they are meeting FEMA  standards before they are allowed to complete inspections on their own.  We have work underway assessing trends in FEMA’s resources, including  staffing, and their impact on FEMA’s capacity to conduct operations and  plan to report on FEMA’s workforce management efforts later this year.
According to the March 2006 DHS Inspector General report, FEMA was  not able to dedicate its full staffing strength to Hurricane Katrina for three  primary reasons. First, at the time of the disaster, FEMA had personnel  assigned to 38 other disasters not related to Hurricane Katrina. For  example, Hurricane Ophelia in the Carolinas, Hurricane Rita in the Gulf  Coast region, and flooding in the Northeast were declared disasters and  required FEMA resources. Second, an average of 30 percent of FEMA  Disaster Assistance Employees reported they were unavailable to respond  to Katrina or any other disaster during the August 24, 2005 – September 30,  2005 time frame. (Disaster Assistance Employees may be unavailable for  such issues as health or family concerns.) Third, FEMA officials said,  although FEMA was authorized 2,445 staff in August 2005, 389 positions  were vacant and many of these were key leadership positions. The DHS  Inspector’s report included recommendations that FEMA (1) develop a  more comprehensive program to recruit, train, and retain local hires for  use in augmenting FEMA’s Disaster Assistance Employees and permanent  staff, (2) provide training to additional NPSC staff and contractors to  enhance FEMA’s capability to perform evacuee assistance and case  management activities, and (3) develop a disaster workforce plan for  permanent, temporary, and reserve staff that is scalable events regardless  of cause, size, or complexity. FEMA concurred with the  recommendations.
Throughout our review FEMA officials cited their concerns regarding the  lack of agency and contractor staffing resources needed to effectively  implement the program during a catastrophic event. Concerns regarding  training and staffing for disaster response management are long-standing.  In 2003, in our report on major performance and accountability challenges  for FEMA, we noted that FEMA faced challenges to enhance its disaster  assistance training and resource planning. According to the report, FEMA  developed a program in 1999 for evaluating the knowledge, skills, and  abilities of its staff—both permanent and temporary—who are deployed to  respond to a disaster. FEMA expected the program would ensure its  employees would have basic qualifications to perform their jobs, but,  according to FEMA officials, the program was not implemented because of  budget constraints. We also reported that 48 percent of FEMA’s workforce  would be eligible to retire in the next 5 years and this would pose a  challenge for having staff with the skills needed to perform core functions.
Finally, FEMA officials cited legislative and regulatory limitations that  restricted FEMA’s flexibility in implementing the IHP in the aftermath of  Hurricane Katrina. For example,    FEMA’s Federal Coordinating Officer for Louisiana cited the statutory  program’s maximum of $5,000 for home repair as one limitation, noting  that if the $5,000 is not sufficient to fix the home, then FEMA may have  to provide a trailer for temporary housing. He testified that  manufactured housing is not cost-effective and can cost up to $90,000  to $100,000 per mobile home for a group site (including total costs for  site preparation, hauling and installation, and cost of home). He  suggested that in some situations if FEMA were able to give disaster  victims the maximum amount of IHP financial assistance, it would be  more cost-effective because it would allow many of these families to  find permanent housing. However, the Acting Deputy Director for  FEMA’s Recovery Division told us that FEMA only uses manufactured  housing as a last resort, and in the post-Katrina and Rita environment,  housing and the infrastructure that supports the community was  destroyed. As a result, FEMA did not have any alternative other than to  provide manufactured housing.
FEMA officials were unable to use a large supply of federally  controlled housing units that could have been made available for  occupancy by disaster victims with only minor repairs because  reimbursement for repairs to existing available housing units are not  authorized under the current program regulations, according to the  White House report on Hurricane Katrina. As a result, FEMA had to  provide alternative temporary housing such as trailers and other  manufactured housing units, at considerably greater cost, while leaving  other potentially available housing vacant.
A bill, the Natural Disaster Housing Reform Act of 2006, was introduced  May 16, 2006, in the House of Representatives that would provide the  federal government with more flexibility in the provision of short- and  long-term housing after a major disaster.  For example, the bill would  allow the President to offer disaster victims manufactured modular  housing under the IHP if it could be provided at a lower cost than other  readily fabricated dwellings. It would also extend repair assistance under  the IHP, currently available only for owner-occupied residences, so that  renters could repair existing rental units to make them habitable as  alternate housing accommodations. The bill also proposes that the  President may provide financial assistance or direct assistance to  individuals or households to construct permanent or semi-permanent  housing in any area in which the President declared a major disaster or  emergency in connection with Hurricane Katrina of 2005 during the period  beginning on August 28, 2005, and ending on December 31, 2007. Under  the IHP, permanent housing construction is only available for disaster  victims who reside in insular areas or other remote locations.
section_title: Initiatives to Improve IHP Are Ongoing, but Their Impact Is Unknown
paragraphs: In an effort to address the problems and recommendations cited in the  various reports, FEMA announced plans on May 24, 2006, to implement a  number of new approaches to enhance logistics, emergency  communications, situational awareness, housing and victim management.  According to FEMA, the improvements related to IHP include plans to  increase the number of trained staff and revise new policies and  procedures. However, at the time of our review, many of these initiatives  were in the planning or at the early implementation stage. As a result, it  was too early to assess their potential impact on future program  implementation. Specifically, FEMA reported plans to:    Hire a training coordinator to develop a more comprehensive training  program to prepare existing and new personnel for Disaster Recovery  Center assignments. According to FEMA’s Acting Deputy Director for  the Recovery Division, they were still searching for qualified applicants  for the training coordinator position as of August 2006.
Train 3,000 disaster “generalist” surge cadre employees for ready  deployment during the height of the 2006 hurricane season and  increase its capacity to deploy and communicate with the increased  number of disaster employees. According to FEMA, these surge  employees are to form a “generalist” pool of disaster workers and be  trained in a number of basic functions cutting across traditional  program areas including Community Relations, Individual Assistance,  Public Assistance and Logistics. As of August 2006, FEMA said  approximately 1,836 employees had completed the training.
Develop greater contract and contingency surge capabilities to expand  application intake capacity of up to 200,000 per day (during the weeks  following Hurricanes Katrina and Rita, FEMA recorded more than  100,000 applications a day) and expand its Internet-based application  capability by improving accessibility to reduce application wait times  and FEMA Helpline information delays following a major disaster.  According to FEMA officials, the objective of expanding its capabilities  is to have private-sector contracts in place and resources ready to  handle calls within 48 hours of a disaster declaration. In the past,  FEMA had to augment its application intake surge capabilities each  hurricane season especially during 2004 and 2005 a step usually taken  under urgent and compelling needs, through emergency contracts, and  by using Internal Revenue Service personnel. FEMA plans to award the  contract for this initiative in 2007 and, in the interim period, plans to  continue to utilize IRS personnel and redirect existing FEMA staff to  augment application intake capabilities.
Implement a pilot program in the 2006 hurricane season to use Mobile  Registration Intake Centers that can be deployed to emergency shelter  locations or impacted neighborhoods without power or phone service  and provide on-site capability to quickly apply for FEMA assistance.  These units would be capable of providing the public access to the  FEMA disaster assistance program via phone and the internet. FEMA  currently has five vehicles each equipped with 20 telephones and 20  personal computers. As of August 2006, FEMA was in the planning  stage of upgrading each vehicle’s capacity to support 40 telephones and  40 personal computers and has the ability to expand this effort by using  tents with tables and equipment set up near the vehicles. FEMA’s  intention is to evaluate the pilot program at the end of the 2006  hurricane season to determine if they should expand this capability.
Increase contractor staffing capacity for housing inspections from  7,500/per day/per contractor to 20,000/per day/per contractor. FEMA  anticipates that this added capacity will increase the speed and  accuracy of home inspections. FEMA intends to implement the related  requirements with the award of its new inspection contracts tentatively  scheduled for the end of December 2006.
Clarify program policies on the appropriate use and authorization of  emergency sheltering funds (Stafford Act, section 403 assistance) and  individual housing assistance funds (Stafford Act, section 408  assistance) for the disaster victims. As part of this initiative, FEMA  plans to have a draft policy in place for issuing authorization codes to  evacuees for lodging and hotels for the 2006 hurricane season. In  addition, FEMA plans to have a policy for Expedited Assistance that  defines the conditions that must be met before initiating the program.  FEMA issued a strategy for mass sheltering and housing assistance on  July 24, 2006, and plans to develop more detailed policies and  procedures to implement the strategy.
section_title: GAO Audit and Investigative Work Reveals Potential for Fraud and Abuse Related to IHP Applications and Debit Card Use
paragraphs: As we recently reported,  one of the major challenges FEMA faced after  Hurricanes Katrina and Rita was balancing the need to quickly deliver  benefits and services to needy and eligible victims while minimizing  occurrences of fraud and abuse. As we testified in June 2006, an estimated  16 percent, or approximately $1 billion, in FEMA IHP payments were  improper and potentially fraudulent due to invalid application data. (A  copy of our testimony is provided in app. IV.) Additionally, we found that  FEMA made improper or potentially fraudulent IHP payments to  applications containing names and Social Security Numbers of individuals  who were incarcerated at the time of disaster, and paid hotel room  charges for applicants who were also receiving rental assistance  concurrently. We also determined that FEMA had little accountability over  debit card distribution and lacked proper controls over debit card usage.
subsections: section_title: Invalid Applications Provide the Potential for $1 Billion in Potentially Improper Payments
paragraphs: An estimated 16 percent of payments totaling approximately $1 billion  were improper and potentially fraudulent due to invalid applications. The  95-percent confidence interval surrounding the estimate of 16 percent  ranges from 12 percent to 21 percent. The 95-percent confidence interval  surrounding the estimate of $1 billion ranges from $600 million to           $1.4 billion. The estimated amount included payments for expedited  assistance, rental assistance, housing and personal property repair and  replacement, and other necessary and emergency expenses. These  payments were made to (1) applications containing Social Security  Numbers (SSN) that were never issued or belonged to other individuals,  (2) applicants who used bogus damaged addresses, and (3) applicants who  had never lived at the declared damaged addresses or did not live at the  declared damaged address at the time of disaster. These payments were  also made to applications containing information that was duplicative of  other applications already recorded in FEMA’s system. The duplicative  payment failures refer to instances where FEMA made payments to more  than one application with the same damaged property and current  addresses, and the payment selected was associated with the second or  later application. For example, one applicant submitted an application for  the same current and damaged address that was used on another  application, and both received payments for $2,358 of rental assistance on  each application in September 2005. Effective preventive controls for  duplicate applications would have detected that the two applications  shared the same damaged and current address and acted to prevent the  duplicate payments.
Our projection likely understated the total amount of improper and  potentially fraudulent payments because our work was limited to issues  related to misuse and abuse of identity, damaged property address  information, and duplicate payments. Our estimate did not account for  improper and potentially fraudulent payments related to issues such as  identity theft, and whether the applicants received rental assistance they  were not entitled to, received housing and other assistance while incurring  no damage to their property, and/or received FEMA assistance for the  same damages already settled through insurance claims.
Our forensic audit and investigative work found that improper and  potentially fraudulent payments occurred mainly because FEMA did not  validate the identity of all applicants, the physical location of the declared  damaged address, and ownership and occupancy of all applicants at the  time of application. For example, in one case an applicant received $7,328  for expedited and rental assistance even though the applicant had moved  out of the house a month prior to Hurricane Katrina. Examples of other  improper and potentially fraudulent payments included a FEMA payment  of $2,000 to an individual who provided a damaged address that did not  exist, and payment of $2,358 in rental assistance to another individual who  claimed his damaged property was inside a cemetery. We also found that  FEMA made approximately $5.3 million in payments to applicants who  provided a post office box address as their damaged residence. For  example, FEMA paid an applicant $2,748 who had listed a post office box  in Alabama as the damaged property. Follow-up work with local postal  officials revealed that the post office box listed on the application had  been used by individuals linked to other potential fraud schemes.
Our undercover work provided further evidence of the weaknesses in  FEMA’s management of the disaster assistance process. For example,  FEMA provided nearly $6,000 in rental assistance to one of GAO’s  undercover applicants who had applications that declared a bogus  property as the damaged address. These payments continued to be  provided even though verification with third-party records indicated that  the GAO undercover applicant did not live at the damaged address, and  after the Small Business Administration had reported that the damaged  property could not be found. In another example, a FEMA inspector  assigned to inspect a bogus property was not able to find the house  despite numerous attempts to verify the address through the phone book,  the post office, and a physical inspection. Nevertheless, in early 2006  FEMA provided GAO a check for $2,000 for presumed losses sustained by  this property.
Without verifying the identity and primary residence of applicants prior to  IHP payments, it is not surprising that FEMA also made expedited and  rental assistance payments totaling millions of dollars to over 1,000  applications containing information belonging to prison inmates. In other  words, payments were made to applications using the names and SSNs of  individuals who were not displaced as a result of the hurricanes, but rather  were incarcerated at state prisons of the Gulf Coast states (that is,  Louisiana, Texas, Florida, Georgia, Mississippi, and Alabama), or in federal  prisons across the United States when the hurricanes hit the Gulf Coast.  For example, FEMA paid over $20,000 to an inmate who had used a post  office box as his damaged property.
section_title: Duplicative Housing Assistance
paragraphs: Our data mining work also found potentially wasteful and improper rental  assistance payments to individuals who were staying at hotels paid for by  FEMA. In essence, the government paid twice for these individuals’  lodging—first by providing a hotel at no cost and, second, by making  payments to reimburse these individuals for out-of-pocket rent. For  example, FEMA paid an individual $2,358 in rental assistance, while at the  same time paying about $8,000 for the same individual to stay 70 nights— at more than $100 per night—in a hotel in Hawaii. In this particular case,  the duplicate payments were not only wasteful, but they were improper  because the applicant did not live at the damaged property at the time of  the hurricane. Another applicant stayed more than 5 months—at a cost of  $8,000—in hotels paid for by FEMA in California, while also receiving  three rental assistance payments for the two separate disasters totaling  more than $6,700.
These instances occurred because FEMA did not require hotels to collect  FEMA application numbers and SSNs from residents staying in FEMA-paid  for rooms. Without this information, FEMA could not verify if the  applicants were staying in government provided hotels before sending  them rental assistance. Without the ability to identify all IHP applicants  who had already received hotel lodging, FEMA provided duplicate housing  benefits to a number of applicants. Because the hotels and FEMA did not  collect application identification numbers, we were unable to quantify the  magnitude of individuals who received these duplicate benefits. However,  the tens of thousands of dollars that were wasted in the previous examples  are illustrative of the wasteful spending we found through data mining.
section_title: Lack of Accountability over Debit Cards
paragraphs: Finally, we found that FEMA did not institute adequate controls to ensure  accountability over the debit cards. Specifically, FEMA initially paid       $1.5 million for over 750 debit cards that the government could not  determine actually went to help disaster victims. Based on our numerous  inquiries, upon identification of several hundred undistributed cards J.P.  Morgan Chase refunded FEMA $770,000 attributable to the undistributed  cards. Further, we continued to find that debit cards were used for items  or services such as a Caribbean vacation, professional football tickets, and  adult entertainment, which do not appear to be necessary to satisfy  disaster-related needs as defined by FEMA regulations. In commenting on  our draft report, FEMA partially concurred with our recommendation to  increase accountability over debit cards, acknowledging the challenges  inherent in the use of debit cards and stating that the agency has no  current plans to use debit cards.  FEMA said the agency will continue to  evaluate the report’s recommendations to determine whether any further  use may be warranted.
Fraud and error in this program is not new and FEMA has struggled for  some time with the issue of balancing expeditious assistance with  minimizing fraud and improper payments. For example, FEMA’s and later  DHS Office of Inspector General reported problems with the FEMA’s  previous disaster assistance program —the Individual and Family Grants  program—in 2001 and 2004. These previous reports identified problems  related to a lack of inspections to verify property damage, relaxed  requirements to document whether an applicant was eligible for advance  payment of a grant, increasing the likelihood of fraud for the program.  More recently, in May 2005, DHS’s Office of Inspector General reported  shortcomings in FEMA’s administration of IHP and its oversight of  inspections in response to Hurricane Francis. For example, FEMA  designated a county eligible for Individual Assistance programs without a  proper preliminary damage assessment and FEMA’s contractors were not  required to review inspections prior to submission.
section_title: Conclusions
paragraphs: Katrina and Rita were two of the most intense hurricanes ever recorded  during the Atlantic hurricane season. The widespread devastation they  wrought presented unprecedented challenges to all levels of government  and voluntary organizations to help the hundreds of thousands of victims  evacuate, relocate, and get food, shelter, medical care, and other  assistance. As we and others have reported, the unprecedented geographic  scope of the damage, the number of victims who had to be relocated, and  the extent of the devastation clearly overwhelmed both government and  nongovernment relief agencies, resulting in widespread dissatisfaction  with the effectiveness of the preparation and response to the disaster.
FEMA’s processes and systems for registering hurricane victims for  assistance, determining eligibility for IHP assistance, and managing the  IHP were simply overwhelmed, and FEMA was unable to effectively  manage the enormous challenge that the disasters posed for the IHP.  GAO’s audit and that of others found a number of problems with the  program, including a lack of appropriately trained personnel that limited  FEMA’s effective surge capacity, an inability to effectively identify  ineligible and duplicate applications, and consequently the payment of  millions of dollars of assistance to ineligible persons. GAO’s audit and  investigative work found that FEMA did not have an effective fraud  prevention program in place prior to the landfall of Hurricanes Katrina and  Rita. The consequences were that tens of thousands of individuals  received an estimated $600 million to $1.4 billion in potential improper or  fraudulent payments through February 2006. The actual amount may be  higher because our work excluded such issues as identify theft, insurance  fraud, and individuals who had no uninsured losses who may have  received benefits.
In any major disaster FEMA faces the demand to get assistance to eligible  victims, many of whom may have lost everything, expeditiously while also  ensuring that assistance does not go to those who are ineligible. FEMA  recognizes that the problems it encountered in managing the IHP in the  wake of Hurricanes Katrina and Rita need to be addressed and has  announced several initiatives to address those problems. The effect of  those efforts cannot yet be determined, and not all of them were  scheduled to be in effect for the 2006 hurricane season. We believe it is  possible to have effective fraud prevention controls in place while also  getting money to eligible victims quickly. Such controls are far more  effective in ensuring that IHP funds are used properly than efforts to  recoup funds paid to those who were ineligible for assistance.  Recoupment actions are expensive and may recover only pennies on the  dollar because the assistance has already been spent.
section_title: Recommendations for Executive Action
paragraphs: We recommend that the Secretary of the Department of Homeland  Security (DHS) direct the Director of FEMA to take the following actions  to address the improper and potentially fraudulent payments within the  IHP based on the findings in our testimony of June 14, 2006. Many of the  recommendations below are preventive and thus, are intended for the 2007  hurricane season and other future disasters that include IHP assistance  payments. However, whenever appropriate, we have identified  recommendations we believe should also be implemented for the  remaining aspects of assistance for Hurricanes Katrina and Rita.
For all recommendations below, FEMA should fully field test all changes  to provide assurance that all valid applicants are able to apply for and  receive IHP payments. Also, for all recommendations, FEMA must ensure  that there are adequate manual processes in place to allow applicants who  are incorrectly denied assistance to appeal the decision and receive aid. In  addition, we are reemphasizing the importance of implementing the six  recommendations we made previously in our June report. The  recommendations in this report are designed to prevent further payments  from being made on improper and potentially fraudulent Katrina and Rita  applications, to the extent possible recoup Katrina and Rita payments  already identified as fraudulent and improper, and address weaknesses so  that, in future disasters, FEMA can identify fraudulent and improper  applications prior to making payments.
To obtain reasonable assurance that applicants are prevented from  receiving assistance based on invalid damaged addresses, we recommend  that the Secretary of Homeland Security direct the Director of FEMA to  take the following three actions:  Implement changes to its systems and processes to reject damaged  addresses that are PO boxes.
Provide applicants immediate feedback that PO boxes are not valid  damaged addresses.  Implement a process to identify damaged addresses that are not  primary residences, such as commercial mail drops.
To provide reasonable assurance that payments are only made based on a  valid damaged address that was the applicant’s primary residence, we  recommend that the Directors of DHS and FEMA take the following two  actions:  Include, in the design of the address verification process recommended  in our prior report, procedures to validate that the address an applicant  claimed as damaged was the applicant’s primary residence at the time  of the disaster.
Develop and implement processes and procedures to deal with  applications where FEMA or other inspectors have concluded that the  damaged address was bogus. Within this process, FEMA should    Develop timely information sharing procedures between inspectors  working for FEMA and other agencies to provide assurance that  applicants who submitted damaged addresses that inspectors  identified as bogus are not provided disaster assistance.
To prevent and/or detect prisoners from improperly receiving IHP  payments in the future we recommend that the Director of FEMA explore  information sharing agreements with federal and state officials in charge  of maintaining custody over prisoners that could be used to identify  ineligible applications.
To reduce duplicate payments, we recommend that FEMA    Expand the data fields used in the duplicate detection process at the  time of application to restrict applications to one per eligible  household, unless warranted by other circumstances, such as  households displaced to separate locations.
To prevent concurrent payments for lodging (i.e., rental assistance, hotels,  etc.) for which FEMA is financially responsible, we recommend that the  Director of FEMA take the following two actions:    Establish procedures requiring that individuals apply with FEMA prior  to receiving no cost disaster lodging accommodations from federal  agencies or the Red Cross.
Develop procedures to provide reasonable assurance that individuals  staying in FEMA or other no cost lodging are not also provided IHP  rental assistance payments for the time they are in the paid for hotel  rooms.
To increase accountability over debit cards, we recommend that the  Director of FEMA take the following three actions:    Finalize a full reconciliation to link each issued Katrina debit card  recorded by the bank (JP Morgan Chase) to a specific IHP application,    Require that the bank refunds the government for any unaccounted for  funds related to distribution of Katrina-related debit cards, and    Augment procedures for future disasters to provide reasonable  assurance that accountability over debit card distribution occurs at  each custody transfer in the distribution process.
To identify and recoup payments based on improper and potentially  fraudulent Katrina and Rita applications, we recommend that the Director  of FEMA develop a comprehensive strategy—for current and future  disasters—to identify the types of improper applications discussed in this  report and refer them for either collections or additional investigations.
section_title: Agency Comments and Our Evaluation
paragraphs: On September 18, 2006, FEMA provided written comments on a draft of  this report (see appendix II).  FEMA fully concurred with 9 of 13  recommendations, and substantially concurred with the remaining              4 recommendations.  However, FEMA disagreed with our estimate of  fraudulent and improper payments.  FEMA noted that our estimate of        16 percent was substantially higher than their historical estimate of             1 to  3 percent.  However, FEMA’s reported fraud rate of 1 to 3 percent is  not based on an independent, comprehensive statistical sample of the  entire population of individual assistance payments; instead, the                  1 to 3 percent FEMA estimate is simply the amount of overpayments that it  identifies based on its own internal processes and procedures.
FEMA fully agreed with 9 of the 13 recommendations, and stated that it  had taken or plans to take actions to specifically respond to these                9 recommendations.  While we did not evaluate the extent to which the  implementation of these changes would address the weaknesses we  identified with FEMA’s oversight of IHP payments, if they are properly  implemented the changes should address our concerns.  FEMA also  partially concurred with four recommendations related to debit cards and  hotel accommodations.  Regarding our 3 recommendations on debit cards,  FEMA stated that the agency has no current plans to use debit cards and  will continue to evaluate the report’s recommendations to determine  whether any further use may be warranted.  In response to our  recommendation that FEMA establish procedures requiring that  individuals apply with FEMA prior to receiving no cost disaster lodgings  accommodations from federal agencies or the Red Cross, FEMA stated  that the agency has implemented a protocol to ensure that disaster victims  register and obtain an authorization code as a prerequisite for the use of  hotels/motels as transition shelters.  While FEMA cannot impose this  protocol on the Red Cross, FEMA stated that it planned to affirm eligibility  prior to reimbursing the Red Cross.  Our objective in making this  recommendation is to prevent duplicate housing benefits from being  provided to registrants.  Thus, if FEMA’s new process affirms the eligibility  of registrants prior to reimbursing Red Cross, FEMA’s processes would  address the objective of this recommendation.
While FEMA substantially agreed with our recommendations, it disagreed  with the methodology we used to conduct our work, which formed the  basis for many of the 13 recommendations.  Specifically, in light of FEMA’s  repeated representations that 1 to 3 percent of its IHP payments are  fraudulent or improper, FEMA took exception to our estimate that 10 to 22  percent of the payments were based on registrations containing fraudulent  or inaccurate information.  However, it is important to note that FEMA’s  estimate of 1 to 3 percent fraud is not based on an independent,  comprehensive statistical sample of the entire population of individual  assistance payments; instead, it is based on the historical amount of IHP  payments that FEMA places in its internal recoupment process, which  includes overpayments identified through case reviews, system checks,  and hotline tips.  FEMA officials have acknowledged that their estimate is  not based on an in-depth statistical analysis for eligibility or any other type  of fraud.
Further, our estimate is likely understated because it only focused on  payments made to invalid registrations.  Our estimate excluded substantial  potential fraudulent and improper payments caused by such actions as  identity theft, insurance fraud, duplicate government payments for  lodging, or payments without evidence of property damage.  In responding  to our draft report, FEMA also commingled the results of our statistical  sampling with other findings of fraudulent and improper payments that  were not included in our estimate.  For example, the reported fraudulent  and improper payments related to individuals who stayed at FEMA-paid  hotels and received rental assistance payments were not included in our  statistical sample and resultant estimate of 16 percent of fraudulent and  improper payments.
FEMA also questioned whether some payments we categorized in our  statistical sample results as potentially fraudulent and improper, such as  those relating to separated households, were in fact valid payments.   Specifically, FEMA stated that without a “knowledgeable” case by case  analysis, our estimate was not accurate.  We disagree.  We were aware of  FEMA’s separated household’s policy and did not count any payments as  duplicates if they related to families that were displaced to different  locations.  In addition, for our statistical sample we performed a detailed  case by case analysis on sample items that included using all available  audit and investigative tools, background information, and NEMIS data to  ensure conclusions reached were accurate.  For example, we visited  damaged addresses and spoke with IHP applicants, landlords, neighbors,  and postal officials.
FEMA also stated that it has been unable to validate our results because  we had not provided evidence related to our estimate for their review.  We  have not provided details of our sample failures to FEMA because the  cases of fraudulent and improper payments are in the process of being  referred to the Katrina Fraud Task Force for investigation and potential  prosecution, as has been the standard process for other fraud cases  identified though data mining.  Based on agreements with the Katrina  Fraud Task Force, which includes the Department of Homeland Security  Inspector General, all fraud cases will continue to be referred directly to  the Katrina Fraud Task Force to ensure investigations and prosecutions  are not jeopardized.
FEMA also raised concerns with the registrants we reported who had  received duplicate lodging assistance.   FEMA commented that such a  determination can only be made after a knowledgeable case by case  analysis determined the appropriateness of payments.  Our methodology  used to identify data mined examples of the duplicate lodging payments  consisted of comparing hotel receipt information and FEMA’s own  payment data to confirm that the subject received multiple rental  assistance payments at the same time FEMA paid for their hotel room.
We are sending copies of this report to the Secretary of the Department of  Homeland Security, and the Director of Federal Emergency Management  Agency. We will make copies available to others upon request. In addition,  the report will be available at no charge on the GAO Web site at  http://www.gao.gov. Please contact either William Jenkins at (202) 512- 8757 or jenkinswo@gao.gov or Greg Kutz at (202) 512-7455 or  kutzg@gao.gov if you or your staffs have any questions concerning this  report. Key contributors to this report are listed in appendix VI. Contact   points for our Offices of Congressional Relations and Public Affairs may  be found on the last page of this report.
section_title: Appendix I: Scope and Methodology
paragraphs: To evaluate the Federal Emergency Management Agency’s (FEMA)  disaster assistance provided in response to Hurricanes Katrina and Rita  through the Individuals and Households Program (IHP), we assessed (1)  how the types and amounts of assistance provided to victims of  Hurricanes Katrina and Rita compare to other recent hurricanes, (2) the  challenges posed by the magnitude of the requests for assistance following  Hurricanes Katrina and Rita, and FEMA’s response to these challenges,  and (3) the vulnerability of the IHP to fraud and abuse and management  issues in the wake of Hurricanes Katrina and Rita and FEMA’s reported  actions to address any identified problems.
To describe the type and amount of IHP assistance FEMA provided for  Hurricanes Katrina and Rita in comparison to assistance provided in other  hurricane disasters, we interviewed agency officials. We obtained and  analyzed data provided by officials from FEMA’s National Processing  Service Center in Winchester, Virginia, and compared IHP disaster  assistance provided under Hurricanes Katrina and Rita to assistance  provided after other hurricane-related disaster declarations occurring in  calendar years 2003 through 2005, to the extent information was available  from FEMA’s National Processing Service Center’s National Emergency  Management Information System. (FEMA provided data for IHP benefits  paid as of August 2006, and for IHP applications received as of September  2006 for both the named hurricanes that came ashore in 2004 and  Hurricanes Katrina and Rita. The 2003 named hurricane data was provided  by FEMA as of April 2006. A FEMA official told us that changes to the data  for named hurricanes in 2003 from April to August 2006 would be minor  enough to prove statistically insignificant.) We selected these hurricanes  for comparison because they constituted a cross section of disaster  declarations that (1) occurred within the period in which IHP was  implemented, and (2) represented hurricane disaster declarations that  occurred in a single state and those that occurred in multiple states  simultaneously. We assessed the accuracy and reliability of the system by  interviewing agency officials knowledgeable about the data system and by  obtaining from the agency written responses regarding (1) the agency’s  methods of data collection and quality control reviews, (2) practices and  controls over data entry accuracy, and (3) any limitations of the data. We  determined that the data were sufficiently reliable for the purposes of our  engagement.
To determine the programmatic challenges FEMA faced during Hurricanes  Katrina and Rita and agency efforts to address those challenges, we  interviewed FEMA headquarters officials from the Recovery Division and  staff from the agency’s Individual Assistance and Public Assistance  Branches, FEMA staff from the National Processing Service Center and  contract Inspection Services located in Virginia, and Joint Field Office  officials in New Orleans, Louisiana. We observed contract inspectors  assessing damaged residential properties in New Orleans. We also  reviewed and analyzed federal legislation and regulations that are  applicable to FEMA disaster assistance programs prior to and after the  implementation of IHP and relevant FEMA policies, guidance, and  processes. We reviewed and analyzed the agency’s IHP budget, staffing,  and performance measures. We also reviewed prior audit reports and  assessments related to FEMA’s implementation of the IHP.
To assess the vulnerability of the IHP to fraud and abuse and management  issues in the wake of Hurricanes Katrina and Rita and FEMA’s reported  actions to address any identified problems, we estimated the number of  improper and potentially fraudulent payments based on statistical  sampling of payments to examine whether the associated applications  contained invalid Social Security Numbers (SSN), bogus addresses, invalid  primary residence, and duplicate information with another application.  Invalid SSNs refer to instances where the SSNs did not match with the  name provided; the SSNs belonged to deceased individuals; or the SSNs  had never been issued. Bogus addresses refer to instances where audit and  investigative work we performed indicate that the damaged address did  not exist. Invalid primary residences are related to applications where the  applicant had never lived at the damaged address, or did not live at the  damaged address at the time of the hurricanes. Duplicate information  refers to instances where the applications contained information that is  duplicative of another application that received a payment and was earlier  recorded in FEMA’s system. Because we followed a probability procedure  based on random selections, our sample is only one of a large number of  samples that we might have drawn. Since each sample could have  provided different estimates, we express our confidence in the precision  of our particular sample’s results as a 95-percent confidence interval (e.g.,  plus or minus 5 percentage points). This is the interval that would contain  the actual population value for 95-percent of the samples we could have  drawn. As a result, we are 95-percent confident that each of the  confidence intervals in this report will include the true values in the study  population. Also, the 16 percent of payments that was improper and  potentially fraudulent excluded payments that were returned to the U.S.  government by the time of our review. We also reviewed IHP processes  and procedures for determining applicant eligibility for specific types of  IHP assistance and analyzed prior audit reports and assessments. We also  obtained information from FEMA’s Acting Deputy Director of Recovery on  the status of FEMA’s efforts to address the problems identified. Because  we have not tested all aspects of potential fraud, waste and abuse related  to the IHP, the recommendations in this and our prior report do not  represent a comprehensive fraud prevention program.
We conducted our audit work between January 2006 and September 2006  in accordance with generally accepted government auditing standards. We  conducted our investigative work between October 2005 and September  2006 in accordance with the standards prescribed by the President’s  Council on Integrity and Efficiency.
section_title: Appendix II: Comments from the Department of Homeland Security
section_title: Appendix III: Federal Disaster Assistance and Individuals and Households Program Benefits, Structure and Processes
subsections: section_title: FEMA’s IHP is Part of Overall Federal Disaster Assistance
paragraphs: Federal assistance takes many forms—including the direct provision of  goods and services, financial assistance (through insurance, grants, loans,  and direct payments), and technical assistance—and can come from  various sources. The Individuals and Households Program (IHP) is one of  these individual assistance programs funded through the Stafford Act’s  Disaster Relief Fund, as illustrated in the conceptual framework for  federal disaster assistance in the figure 7.
Congress may provide funding for federal disaster assistance to specific  agencies for areas in which they retain expertise. For example, the  Department of Housing and Urban Development administers funds for  economic redevelopment and infrastructure restoration, the Department  of Transportation provides assistance for road restoration, and other  agencies provide assistance for activities such as providing small  businesses disaster assistance loans and public health or medical services  that may be needed in the affected area.
With respect to Stafford Act activities, FEMA administers the Disaster  Relief Fund, which provides for three major categories of aid under the  Stafford Act—assistance to state and local governments through public  and hazard mitigation assistance programs and assistance to individuals  and households.
FEMA’s Public Assistance program provides grants to eligible state and  local governments and specific types of private nonprofit organizations  that provide services of a governmental nature, such as fire  departments, emergency and medical facilities, and educational  institutions, to help cover the costs of emergency response efforts and  work associated with recovering from the disaster. Public Assistance is  typically the most costly disaster assistance provided.
FEMA’s Hazard Mitigation Grant Program provides grants to states,  local governments, and Indian tribes for long-term hazard mitigation  projects after a major disaster declaration. The purpose of the program  is to reduce the loss of life and property in future disasters by funding  mitigation measures during the recovery phase of a natural disaster.
FEMA’s Individual Assistance Program includes among other things, a  crisis counseling program, disaster legal services, and direct and  financial assistance through the IHP. The purpose of the crisis  counseling program is to help relieve any grieving, stress, or mental  health problems caused or aggravated by the disaster or its aftermath.  FEMA also provides free legal counseling through an agreement with  the Young Lawyers Division of the American Bar Association for low- income individuals regarding cases that will not produce a fee. FEMA  provides direct (temporary housing units) and financial assistance  (grant funding for temporary housing and other disaster-related needs)  to individuals and households through the IHP to meet necessary  expenses and serious needs of eligible disaster victims who, as a direct  result of a major disaster, have uninsured or under insured necessary  expenses and serious needs and are unable to meet such needs through  other means.
section_title: FEMA’s IHP Provides Housing and Other Needs Assistance to Disaster Victims Who Meet Eligibility Requirements
paragraphs: Under the IHP, there are two programs which are referred to as the  Housing Assistance program and the Other Needs Assistance (ONA)  program. The Housing Assistance program provides financial assistance  for such things as rental housing, home repair assistance (up to $5,000),  and home replacement assistance (up to $10,000). In addition, for disaster  victims for whom rental accommodations are not available under the  Housing Assistance program, FEMA may provide “direct assistance” in the  form of temporary housing units (e.g., mobile homes and travel trailers),  that FEMA has acquired by purchase or lease. The ONA program also  includes financial assistance for medical, dental, funeral, personal  property, transportation, and other disaster-related expenses that are not  compensated by other means. The IHP is not intended to fully compensate  disaster victims for all losses from damage to real and personal property  that resulted from the disaster or to provide sufficient funds to restore  damaged property to its condition before the disaster. Rather, IHP is  intended to provide assistance in covering expenses not covered by other  means, such as insurance claims and payments or the victim’s own savings  and resources. The maximum amount that an individual or household may  receive is statutorily capped at $25,000, adjusted annually to reflect  changes in the Consumer Price Index. In addition to the financial cap, IHP  assistance is also limited to 18 months beginning on the date the President  declares a major disaster. However, the President may extend this 18- month period if the President determines that due to extraordinary  circumstances an extension would be in the public interest.
Eligibility for IHP assistance is determined when an individual or  household applies with FEMA and is based on the amount of property  damage. To qualify for Housing Assistance, a disaster victim must:    have experienced losses in an area that has been declared a disaster by    have uninsured (or underinsured) needs that cannot be met through    be a citizen of the United States, a non-citizen national, or a qualified  alien, or have a qualifying individual who lives with the disaster victim;    have been living or usually live in the home in the disaster area at the  time of the disaster; and    be unable to live in the home, cannot get to their home due to the  disaster, or the home requires repairs because of damage from the  disaster.
If a disaster victim is eligible for housing assistance from FEMA based  upon the above criteria, grant funds can be used for housing assistance  purposes. Individuals or households who receive the assistance may be  asked to show receipts to prove that it was used for eligible housing  expenses. If an individual is unable to find a rental house or apartment  within a reasonable commuting distance of their damaged home, FEMA  may provide direct assistance in the form of a travel trailer or mobile  home. Direct or financial housing assistance from FEMA does not require  that an applicant file for an Small Business Administration (SBA) disaster  loan and is 100 percent federally funded and administered by the federal  government. While the financial housing assistance is subject to the  $25,000 cap, the cost of direct housing assistance is not subject to the cap.
In contrast, ONA grants are provided in a cost-shared partnership between  FEMA and the state. As part of this partnership, FEMA and the state  engage in annual coordination efforts to determine how the ONA will be  administered in any presidentially-declared disaster in the coming year.
For example, the state establishes award levels related to vehicle repairs,  vehicle replacement, and funeral grants. States may choose the level of  involvement of state officials in administering the program and assume  complete, partial, or no responsibility for administering the program.  Whichever option a state chooses, FEMA provides 75 percent of the grant  funds, and the state is obligated to provide the balance of ONA grant  funds.
To receive ONA grant funds, an applicant must generally meet the  eligibility requirements for housing assistance, must have necessary  expenses or serious needs because of the disaster, and must first apply to  the SBA Disaster Loan Program and either be declined for assistance, or  demonstrate that SBA disaster assistance is insufficient to meet all  disaster-related necessary expenses and serious needs. Applicants who do  not meet a certain income threshold may be excused from the requirement  to complete the SBA disaster loan application. For example, in 2005, a  household of four with an income less than $24,188 would not be required  to complete the SBA loan application.
The types of assistance that may be provided depending on the level of the  applicant’s income are for personal property, transportation, and  moving/storage expenses. Eligibility for medical, dental, funeral and  other/miscellaneous expenses is not dependent on an applicant’s income;  for these categories applicants are referred directly to ONA for assistance.  Specifically, FEMA may provide ONA grant funding to replace personal  property, repair and replace vehicles, and reimburse moving and storage  expenses if an applicant is ineligible for an SBA disaster loan. To receive  ONA grants, for public transportation, medical and dental, and funeral and  burial expenses, disaster victims are not required to apply for an SBA loan  to be eligible and income levels are not subject in determining eligibility.
section_title: FEMA’s Decentralized Structure for Implementing the IHP Relies Primarily on Contract and Temporary Employees
paragraphs: FEMA manages the IHP primarily through a de-centralized structure of  permanent and temporary field offices staffed primarily by contract and  temporary employees. The offices include the FEMA Recovery Division in  FEMA Headquarters, regional offices, National Processing Service  Centers, Joint Field Offices, Area Field Offices, and Disaster Recovery  Centers. The Stafford Act authorizes FEMA to draw upon temporary  personnel for disaster operations.
FEMA’s Recovery Division in Washington, D.C., manages the IHP and as of  August 2006 had about 15 people to develop and issue policies and  procedures for implementing the individual assistance programs. Eight  members of that staff are specifically responsible for managing the IHP. In  FEMA’s 10 regional offices, one or two full-time employees manage  individual assistance programs. The regional office staff may participate in  the preliminary disaster assessment after a disaster to determine what  individual assistance is needed.
FEMA’s National Processing Service Centers (NPSC) provide centralized  disaster application service to FEMA customers and help coordinate with  other assistance programs. The centers are to provide an automated  “teleregistration” service—a toll-free phone bank through which disaster  victims apply for IHP assistance and through which their applications are  processed and their questions answered. The NPSCs are also to assist with  referrals to other assistance programs, process appeals, recertify existing  rental assistance, assist with recovering funds, and respond to  congressional inquiries. As of August 2006, a total of 13 permanent FEMA  employees were working at the NPSCs in the United States and were  supported by several hundred temporary employees (whose numbers can  be increased by 2,000 to 3,000 additional temporary employees for  application processing after a disaster), as well as contract employees.  FEMA operates four NPSCs in Denton, Texas; Puerto Rico; Winchester,  Virginia; and Hyattsville, Maryland.
The Texas NPSC is in charge of caller services including call centers,  and the agency’s quality control program. (Although all NPSCs have  call centers within their offices, the Texas NPSC is in charge of the  general policies and procedures for those call centers, and also sets up  arrangements with the IRS and private companies when FEMA needs  to handle added call volume.)
The Puerto Rico NPSC is also a call center, with a specialty in handling  calls from Spanish speaking applicants. This center has oversight from  the Texas NPSC.
The Virginia NPSC is the central point of contact for the National  Emergency Management Information System, the main  database/automated processing system for IHP application and  benefits determination and processing, the NPSC Coordination Team,  and the Inspection Management contracts.
The Maryland NPSC is responsible for oversight of all mail operations  and receives management oversight from the Virginia NPSC.
At FEMA’s Inspections Services Section, located in the Virginia NPSC, as  of August 2006, one permanent and approximately 35 to 40 temporary  FEMA employees oversee the work of two firms with standing contracts  to perform inspection services. Each firm has about 2,000 inspectors who  visit applicants’ homes to verify disaster-related damages to real and  personal property.
Temporary FEMA field locations are established after a disaster occurs.  FEMA deploys about 600-700 “reservists” or disaster assistance employees  who are deployed at field offices at the state and local levels to augment  full time FEMA staff temporarily re-assigned from FEMA headquarters and  regional offices.
The Joint Field Office is to serve as the temporary headquarters for  disaster response and recovery efforts and is typically located in the  capital of the state where a disaster occurred or in the high impact  area. The joint office houses FEMA, state partners, other federal  agencies, and voluntary agencies. Two key FEMA joint field office  officials direct and coordinate disaster response and recovery  operations for program implementation at the local level. The Federal  Coordinating Officer is responsible for assessing disaster needs,  establishing the joint office and Disaster Recovery Centers and other  possible disaster facilities, and coordinating the administration of  disaster relief. The FEMA operations section chief’s responsibilities  include managing the Human Services Branch that oversees provision  of mass care and food, individual assistance, the coordination of  voluntary agency contributions, and donations. The role of regional  coordinating structures varies depending on the situation. Many  incidents may be coordinated by regional structures primarily using  regional assets. Larger, more complex incidents may require direct  coordination between the joint office and the national level, with  regional structures continuing to play a supporting role. The focal point  for coordination of federal support is the joint field office.
FEMA may also establish Area Field Offices whose staff and  organization is to mirror the joint field office and provide similar  coordination and oversight in support of the joint office at the local  level. The area office reports to the joint office. The area office’s  operational responsibilities are to be delineated by the joint office  which may establish as many area filed offices as deemed necessary  and efficient to the response.
FEMA Disaster Recovery Centers are offices where applicants may go  for information about FEMA and other disaster assistance programs.  Recovery center locations are usually announced in local newspapers  and on local television and radio stations and are established close to  the disaster area, often in schools or armories to be readily accessible  to those in need of assistance. The centers are temporary facilities  jointly operated by the state and FEMA where representatives of  federal agencies, local and state governments, and voluntary relief  organizations provide guidance regarding disaster recovery and  literature on services available, including housing assistance and  individual and household grants information, educational materials,  crisis counseling, assistance in completing applications and answers to  questions, resolution to problems, and referrals to agencies that may  provide further assistance. The number of centers depends on the  magnitude of the disaster and the size of the area included in the  declaration.
section_title: FEMA’s Process for Providing IHP Benefits
paragraphs: Under the Stafford Act, the federal government provides disaster  assistance after a presidential disaster declaration. A presidential disaster  declaration results from a legal process involving specific steps taken by  local, state, and federal governments as generally shown in figure 8.
After a disaster occurs and the state determines that effective response  may exceed both state and local resources, a state is to first request a  preliminary damage assessment. Teams are assembled from individuals  from FEMA, the Small Business Administration, state emergency  management, and the local jurisdiction who are to (1) assess the types of  dwellings affected, (2) assess the probable insurance and income levels of  residents, and (3) estimate the number of individuals affected to determine  potential funding requirements. After the assessment is complete, the  Governor is to determine if federal disaster assistance is needed and, if it  is, he or she is to submit a request to the President through the FEMA  Regional Director who reviews and communicates the request to FEMA’s  Headquarters within the Emergency Preparedness and Response  Directorate. The Directorate’s Undersecretary is to then make a  recommendation to the President, who makes the final decision to declare  a major disaster, an emergency, or deny the request for federal assistance.
section_title: FEMA Provides Disaster Victims with Multiple Means to Apply for Assistance
paragraphs: Once the President declares a disaster and decides to provide federal  disaster assistance, disaster victims in declared counties must first apply  for assistance with FEMA, by phone, in person at a disaster recovery  center, or over the Internet. Typically, an application period is closed 60  days following the date of the disaster declaration. During the application  process, an individual provides personal information including Social  Security number, current and pre-disaster address, a telephone number,  insurance information, total household annual income, and a description  of losses caused by the disaster. After the submission of an application,  FEMA provides applicants with a copy of their application and a program  guide, “Help After a Disaster: Applicant’s Guide to the Individuals and  Households Program.” The document, whose cover is shown in figure 9, is  also available on the Internet.
Once a FEMA representative records personal information from a disaster  application and provides the applicant with a FEMA application number,  FEMA’s National Emergency Management Information System  automatically determines potential eligibility for designated categories of  assistance.
To confirm that damages occurred to the home and personal property as  reported in disaster assistance applications, FEMA is to conduct individual  inspections to verify damage, ownership, and occupancy. Contract  inspectors are to schedule damage inspection appointments with  applicants. The inspections usually take about 30 to 60 minutes, according  to FEMA. Homeowners are not required to be at home at the time of the  inspection, but a designated representative generally must be present and  the applicant must be able to provide proof of ownership and occupancy  to the inspector. This assessment provides a basis to determine how much  assistance an individual/household should receive for housing repair and  replacement and for other needs. If an applicant’s home or its contents  were damaged and the applicant has insurance, they must provide FEMA  with a letter from the insurance company regarding the settlement of the  claim before FEMA issues its inspection report. (If the damages are caused  by flooding and the applicant has flood insurance, FEMA will issue an  inspection report before receiving a copy of the applicant’s flood  insurance decision letter because temporary living expenses are not  covered by flood insurance.)
According to FEMA, the system reportedly determines eligibility for about  90 percent of applicants requesting housing assistance, usually within        10 days of application. FEMA caseworkers are to process the remaining  applications that cannot be automatically processed, to determine an  applicant’s eligibility for disaster assistance based on additional  documentation, for example, documentation of insurance payment; these  applications may take longer to process. If the applicant qualifies for a  grant, FEMA sends the applicant a check by mail or deposits the funds  granted in the applicant’s bank account. FEMA will also send a letter  describing how the applicant is to use the money (for example; repairs to  their home or to rent another house while the applicant makes repairs).  Recipients of IHP assistance must recertify their continuing need for  assistance every 30 to 90 days, depending on the individual circumstances.  FEMA uses three criteria to recertify the applicant.
First, FEMA may provide continued housing assistance (travel trailers  or rental assistance) during the period of assistance, based on need,  and generally only when adequate, alternate housing is not available.
Second, for rental assistance, the applicant must show that he or she  used the previous rental assistance to pay rent by sending copies of  receipts.
Third, the applicant must show he or she is working to find permanent  housing that the applicant can afford. For example, FEMA is to require  applicants to show they are actively seeking affordable housing,  maintain a list of addresses they looked at, including the landlord’s  name and phone number, and specify the reason(s) for not renting the  units. A FEMA Housing Adviser may verify with landlords that a  contact was made by an applicant seeking a rental unit.
Conversely, if FEMA determines that the applicant does not qualify for an  IHP grant, it is to send the applicant a letter explaining why the applicant  was turned down and gives the applicant a chance to appeal the decision.  Applicants who are denied housing and other needs assistance under IHP  have 60 days from the date that FEMA notifies the applicant to appeal the  decision. According to FEMA, common reasons for denial include:    Adequate insurance coverage.    Damage to secondary home, not a primary residence.    Duplicate applications made from the same address.   Inability to prove occupancy or ownership.    More information is needed before the analysis can be completed.
section_title: Appendix IV: Issues Reported Related to FEMA’s IHP Disaster Assistance Provided for Katrina
subsections: section_title: February
paragraphs: GAO, Expedited Assistance for Victims of Hurricanes Katrina and Rita: FEMA’s Control Weaknesses  Exposed the Government to Significant Fraud and Abuse, GAO-06-403T (Washington, D.C.: Feb. 13,  2006).
section_title: Appendix V: GAO’s June 14, 2006 Testimony on Fraud and Abuse of FEMA’s Individual Assistance program
section_title: Appendix VI: GAO Contact and Staff Acknowledgments
paragraphs: William Jenkins, Director, Homeland Security & Justice Issues (202) 512- 8757 (jenkinswo@gao.gov) and Greg Kutz, Managing Director, GAO  Forensic Audits and Special Investigations, (202) 512-7455  (kutzg@gao.gov)
subsections: section_title: Acknowledgments
paragraphs: In addition to the contacts named above, the following individuals from  GAO’s Forensic Audits and Special Investigations and GAO’s Homeland  Security and Justice Team also made contributions to this report: Kord  Basnight, James Berry Jr., Gary Bianchi, Valerie Blyther, Matthew Brown,  Norman Burrell, Willie Commons, Jennifer Costello, Christine Davis,  Katherine Davis, Paul Desaulniers, Steve Donahue, Dennis Fauber,  Christopher Forys, Adam Hatton, Aaron Holling, William O. Jenkins Jr.,  Chris Keisling, Jason Kelly, John Kelly, Sun Kim, Stan Kostyla, Crystal  Lazcano, Tram Le, John Ledford, Jennifer Leone, Barbara Lewis, Gary M.  Malavenda, Marvin McGill, Jonathan Meyer, Gertrude Moreland, Richard  Newbold, Kristen Plungas, Jennifer Popovic, John Ryan, Sidney Schwartz,  Robert Sharpe, Gail Spear, Tuyet-Quan Thai, Patrick Tobo, Matthew  Valenta, Tamika Weerasingha, and Scott Wrightson.
section_title: Glossary
paragraphs: Financial assistance to address the dental costs.
subsections: section_title: Direct Assistance
paragraphs: Financial assistance to address the cost of funeral services, burial,  cremation, and other funeral expenses related to a death caused by the  disaster.
section_title: Expedited Assistance
paragraphs: Expedited assistance provides fast track money in the form of $2,000 in  expedited payments to eligible disaster victims to help with immediate,  emergency needs of food, shelter, clothing and personal necessities.   FEMA changed the maximum amount from $2,000 to $500 on July 24, 2006.
section_title: Funeral Expenses
paragraphs: Money to address the cost of funeral services, burial, cremation, and other  funeral expenses related to a death caused by the disaster.
section_title: Home Replacement Grant
paragraphs: Financial assistance provided to replace the primary residence of an  owner-occupied dwelling if the dwelling was damaged by the disaster and  there was at least $10,000 of damage (as adjusted annually to reflect  changes in the CPI).  The applicant may either replace the dwelling in its  entirety for $10,000 (as adjusted annually to reflect changes in the CPI) or  less, or may use the assistance toward the cost of acquiring a new  permanent residence that is greater in cost than $10,000 (as adjusted  annually to reflect changes in the CPI).
section_title: Home Repair Grant
paragraphs: Financial assistance provided for the repairs of uninsured disaster-related  damages to an owner’s primary residence.  The funds are to help return  owner-occupied primary residences to a safe and sanitary living or  functioning condition.  Repairs may include utilities and residential  infrastructure damaged by a major disaster.
section_title: IHP Other Needs Assistance Categories
paragraphs: The ONA Program is designed for those with serious needs who have no  other source of assistance.  The program covers necessary expenses such  as uninsured personal property, medical and dental expenses and funeral  expenses.
section_title: Lodging Expenses
paragraphs: Expenses for reasonable short-term accommodations that individuals or  households incur in the immediate aftermath of a disaster.  Lodging  expenses may include but are not limited to the cost of brief hotel stays.
section_title: Medical Expenses
paragraphs: Financial assistance to address the cost of medical treatment or the repair  or replacement of medical equipment required as a result of the disaster.
section_title: Moving & Storage Expenses
paragraphs: Financial assistance to address necessary expenses and serious needs  related to moving and storing personal property to avoid additional  disaster damage.
section_title: Necessary Expense
paragraphs: The cost associated with acquiring an item or items, obtaining a service, or  paying for any other activity that meets a serious need.
section_title: Other Needs Expenses
paragraphs: Financial assistance to address the cost of other specific disaster-related  necessary expenses and serious needs of individuals and households.
section_title: Personal Property Expenses
paragraphs: Financial assistance to address the cost of repairing and/or replacing  disaster damaged items, such as furniture, bedding, appliances, and  clothing.
section_title: Preliminary Disaster Assessment
paragraphs: A mechanism used to determine the impact and magnitude of damage and  the resulting unmet needs of individuals, businesses, the public sector, and  the community as a whole.
section_title: Rental Assistance
paragraphs: As part of IHP housing assistance, rental assistance funds address the cost  renting another place to live. For homeowners, this money may be  provided in addition to home repair, if needed.
section_title: Serious Need
paragraphs: The requirement for an item, or service, that is essential to an applicant’s  ability to prevent, mitigate, or overcome a disaster-related hardship, injury  or adverse condition.
section_title: Transitional Housing Assistance
paragraphs: Transitional Housing Assistance is a cash grant of up to $2,358 per  household intended to cover an initial 3 months of rental payments for  eligible applicants. Transitional Housing Assistance is a form of rental  assistance and was implemented for the first time in selected disaster  areas in Louisiana and Mississippi during Hurricane Katrina.
section_title: Transportation Expenses
paragraphs: Financial assistance for public transportation and any other transportation  related costs or expense and the cost of repairing and/or replacing a  disaster damaged vehicle that is no longer usable because of disaster- related damage.
section_title: Related GAO Products
paragraphs: Small Business Administration: Actions Needed to Provide More Timely  Disaster Assistance. GAO-06-860. Washington, D.C.: July 28, 2006.
Individual Disaster Assistance Programs: Framework for Fraud  Prevention, Detection, and Prosecution. GAO-06-954T. Washington, D.C.:  July 12, 2006.
Expedited Assistance for Victims of Hurricanes Katrina and Rita:  FEMA’s Control Weaknesses Exposed the Government to Significant  Fraud and Abuse. GAO-06-655. Washington, D.C.: June 16, 2006.
Hurricanes Katrina and Rita Disaster Relief: Improper and Potentially  Fraudulent Individual Assistance Payments Estimated to Be Between  $600 Million and $1.4 Billion. GAO-06-844T. Washington, D.C.: June 14,  2006.
Hurricanes Katrina and Rita: Coordination between FEMA and the Red  Cross Should Be Improved for the 2006 Hurricane Season. GAO-06-712.  Washington, D.C.: June 8, 2006.
Hurricane Katrina: Improving Federal Contracting Practices in  Disaster Recovery Operations. GAO-06-714T. Washington, D.C.: May 4,  2006.
Hurricane Katrina: Planning for and Management of Federal Disaster  Recovery Contracts. GAO-06-622T. Washington, D.C.: April 10, 2006.
Hurricane Katrina: Comprehensive Policies and Procedures Are Needed  to Ensure Appropriate Use of and Accountability for International  Assistance. GAO-06-460. Washington, D.C.: April 6, 2006.
Hurricane Katrina: Policies and Procedures Are Needed to Ensure  Appropriate Use of and Accountability for International Assistance.  GAO-06-600T. Washington, D.C.: April 6, 2006.
Agency Management of Contractors Responding to Hurricanes Katrina  and Rita. GAO-06-461R. Washington, D.C.: March 15, 2006.
Hurricane Katrina: GAO’s Preliminary Observations Regarding  Preparedness, Response, and Recovery. GAO-06-442T. Washington, D.C.:  March 8, 2006.
Expedited Assistance for Victims of Hurricanes Katrina and Rita:  FEMA’s Control Weaknesses Exposed the Government to Significant  Fraud and Abuse. GAO-06-403T. Washington, D.C.: February 13, 2006.
Statement by Comptroller General David M. Walker on GAO’s  Preliminary Observations Regarding Preparedness and Response to  Hurricanes Katrina and Rita. GAO-06-365R. Washington, D.C.:   February 1, 2006.
Hurricanes Katrina and Rita: Provision of Charitable Assistance.   GAO-06-297T. Washington, D.C.: December 13, 2005.
Hurricanes Katrina and Rita: Preliminary Observations on Contracting  for Response and Recovery Efforts. GAO-06-246T. Washington, D.C.:  November 8, 2005.