The growing number of major disaster declarations has contributed to an increase in federal expenditures for disaster assistance. From fiscal years 2002 to 2011, Presidents have declared 35 percent more disasters than during the preceding 10-year period. Major disaster declarations can trigger a variety of federal response and recovery assistance for government and nongovernmental entities, households, and individuals. Officials from the Federal Emergency Management Agency (FEMA), within the Department of Homeland Security (DHS), have cited various possible reasons for increases in the number of declarations, including more active weather patterns, increased costs to repair damaged infrastructure, and population increases.
When a state is hit by a disaster, the governor may request a major disaster declaration from the President. FEMA makes an assessment of damage and other factors and makes a recommendation to the President, who has discretion to accept or reject FEMAs recommendation. FEMA uses a statewide per capita damage indicator to help determine whether sufficient damage has occurred to warrant a declaration and to determine whether a state should receive Public Assistance. Public Assistance is the federal disaster assistance program used by FEMA to reimburse states for certain response and recovery activities. Public Assistance funding represents the largest proportion of funds obligated from FEMAs Disaster Relief Fund, which is the major source of federal disaster recovery assistance for state and local governments when a disaster is declared.
Much of the growth in major disaster declarations has occurred at the same time (that is, since 9/11) that the federal government has provided more than $34 billion to state and local governments to enhance their preparedness to protect against, respond to, and recover from disasters of all types. From fiscal years 2004 through 2011, the President approved 539 major disaster declarations. As of September 30, 2011, $78.7 billion was paid for by the Disaster Relief Fund for these disasters. For 13 of these declared disasters, FEMA has obligated over $1 billion each.
In August 2011, the Disaster Relief Fund diminished to a level that caused FEMA to temporarily halt funding on long-term recovery projects and focus on immediate needs. According to the FEMA Administrator, due to the shortage of available balances in the Disaster Relief Fund, FEMA accelerated its efforts to recover previously obligated funds from states for completed projects that had unexpended balances. Further, throughout fiscal year 2011, FEMA recovered over $3.5 billion in unexpended funds from states and other federal agencies. GAO has identified determining the costs to be borne by the federal, state, and local governments or the private sector in preparing for, responding to, and recovering from disasters of all types as a 21st Century challenge. GAO is currently conducting a review of the disaster declaration process and plans to report the results in summer 2012.
42 U.S.C. § 5170. In addition to major disaster declarations, the President may issue emergency declarations. If the President declares an emergency, the federal government may provide immediate and short-term assistance that is necessary to save lives, protect property and public health and safety, or lessen or avert the threat of a catastrophe. 42 U.S.C. § 5192. Federal assistance may not exceed $5 million under an emergency declaration unless continued emergency assistance is immediately required; there is a continuing and immediate risk to lives, property, public health or safety; and necessary assistance will not otherwise be provided on a timely basis. 42 U.S.C. § 5193.
The Public Assistance Program provides for debris removal, emergency protective measures, and the repair, replacement, or restoration of disaster-damaged, publicly owned facilities and the facilities of certain private nonprofit organizations that provide services otherwise performed by a government agency.
FEMAs obligations of $78.7 billion exclude obligations for disasters declared before fiscal year 2004 that had yet to be closed out by October 1, 2004, and, therefore, remained eligible for additional obligations in fiscal year 2004 and subsequent years.
In addition to the 13 disasters that have currently exceeded a billion dollars in obligations, other disasters declared during fiscal years 2004 to 2011 that are still open could reach obligations of over $1 billion as FEMA continues to obligate funds for them.
Statements of The Honorable W. Craig Fugate, Administrator, FEMA, before the House Committee on Transportation and Infrastructure, Subcommittee on Economic Development, Public Buildings, and Emergency Management, Streamlining Emergency Management: Improving Preparedness, Response, and Cutting Costs (Washington, D.C.: Oct. 13, 2011).
Statements of The Honorable W. Craig Fugate, Administrator, FEMA, before the House Committee on Homeland Security, Subcommittee on Emergency Preparedness, Response, and Communications, Five Years Later: An Assessment of the Post Katrina Emergency Management Reform Act (Washington, D.C.: Oct. 25, 2011).
FEMA could reduce federal expenditures by updating its eligibility indicator and more accurately determining a states capacity to respond to a disaster. According to FEMA and state emergency management officials, FEMA has primarily relied on a single indicator, the statewide per capita damage indicator, to determine whether to recommend that a state receive Public Assistance funding. For example, in fiscal year 2012, the per capita indicator is $1.35; thus, for a state with 10 million people, estimated damages from a disaster would generally have to be $13.5 million or more for FEMA to recommend Public Assistance, although other factors could also influence the recommendation.
FEMAs method for determining a states capacity to respond without federal assistance relies on a governors certification and damage indicators. The Stafford Act requires that a governors request for a major disaster declaration be based on a finding that the disaster is of such severity and magnitude that an effective response is beyond the capabilities of the state and that federal assistance is necessary. FEMA officials stated that governors must certify in their letter to the President requesting a major disaster declaration that the disaster is beyond the capabilities of the state. FEMA regulations list quantitative and qualitative factors, such as whether a state is responding to multiple disasters within a short time period, that the agency considers when determining whether a disaster declaration is warranted. However, in describing the declarations process, FEMA and state officials stated that FEMA uses the statewide per capita indicator as the primary determining factor for Public Assistance funding. This damage indicator, which FEMA has used since 1986, is essentially a proxy fiscal measure of a states capacity to respond to and recover from a disaster.
The Post-Katrina Emergency Management Reform Act of 2006, enacted in response to Hurricane Katrina, required FEMA to develop a set of preparedness metrics that could be used to assess operational preparedness capacity. Presidential Policy Directive-8, issued in March 2011, also includes such a requirement. However, FEMA has not yet developed such metrics, which limits its ability to comprehensively assess a states disaster preparedness and capabilities. Moreover, at this time, FEMA does not have any plans or policies in place to use state preparedness data to inform decisions regarding Presidential disaster declarations. Without an established means of assessing state response and recovery capacity, FEMA has continued to rely primarily on the per capita damage indicator when determining whether a major disaster declaration is warranted. Metrics to assess a states disaster preparedness and capabilities would augment the Public Assistance per capita indicator to provide a more comprehensive understanding of a states capacity to respond to and recover from a disaster without federal assistance.
Further, FEMA has not adjusted the per capita indicator for Public Assistance to keep pace with changes in per capita personal income. According to federal internal control standards, activities should be established to monitor performance indicators and controls should be aimed at validating the propriety and integrity of such indicators. In 1986, FEMA proposed a $1.00 per capita indicator for Public Assistance as a means of gauging state fiscal capacity. The indicator was based on the 1983 per capita personal income nationwide, then estimated at $11,667. FEMA thought it reasonable that a state would be capable of providing $1.00 for each resident of that state to cover the cost of state efforts to alleviate the damage which results from a disaster situation given that national per capita personal income was $11,667. While the proposed rule was not codified in 1986, FEMA began to use the $1.00 per capita indicator informally as part of its preliminary damage assessment efforts and did not adjust the indicator annually for either inflation or increases in national per capita income. In 1998, FEMA had suggested that the Public Assistance indicator be adjusted to $1.51 to account for inflation since 1986, but due to input from state emergency management officials, FEMA decided not to do so. In 1999, FEMA issued a rule codifying the per capita indicator at $1.00, which was stipulated to include an annual adjustment for inflation, but the rule was silent on whether the indicator would continue to be based on nationwide per capita personal income. As a result, the indicator has risen 35 percent from $1.00 to $1.35 in the 12 years since FEMA began its annual inflationary adjustments. In proposing and finalizing the rule, FEMA stated that it recognized that a straight per capita figure may not be the best measurement of a states capability, but that it provided a simple, clear, consistent and long-standing means of measuring the severity, magnitude, and impact of a disaster, while at the same time ensuring that the President can respond quickly and effectively to a governors request for assistance.
Had the indicator been adjusted for inflation beginning when FEMA started using it in 1986, it would have risen more than 100 percent to $2.07 by 2012. Furthermore, had the indicator been adjusted for increases in per capita personal income, the indicator would have risen to $3.42 in 2010, based on 2010 national per capita personal income of $39,945. While these alternate adjustment methods would have increased the per capita indicator, they are not necessarily indicative of a states ability to pay for the damage because they do not consider the substantial differences in states financial capacities to respond when disasters occur. For example, per capita personal income is a relatively poor indicator of a states fiscal capacity because it does not comprehensively measure income potentially subject to state taxation. In addition, reliance on a single damage estimate as the primary indicator to determine whether a major disaster declaration is warranted does not provide a comprehensive assessment of a states capacity to respond to a disaster without federal assistance.
As GAO reported in August 2001, issues exist regarding the criteria that FEMA used to recommend to the President that a state disaster declaration request be approved or denied. Specifically, GAO reported that the per capita indicator was not necessarily indicative of state or local capability to respond effectively without federal assistance, and recommended that FEMA should consider alternative criteria. FEMAs response noted that GAO provided valuable input for the FEMA team that was reviewing the disaster declaration process and the criteria used to assess state damages. According to FEMA, in 2001 the Presidents budget for fiscal year 2002 included a provision for the development of improved guidelines for disaster assistance that provided states with meaningful criteria that must be met to become eligible for federal disaster assistance. FEMA undertook a review of disaster declaration guidelines; however, no changes to the established declaration guidelines were adopted and, ultimately, FEMA did not change its reliance on the per capita indicator. In January 2012, FEMA officials stated that it is a balancing act to agree on a good, reasonable measure of a states capacity to respond to and recover from a disaster.
At the time of GAOs recommendation, there was no requirement, as there is now, that FEMA develop metrics to assess state capabilities. The growing number of major disaster declarations highlights the need to re-examine the criteria used to assess state damages and also augment the damage indicator with a means of assessing state capabilities. The figure below shows the actual increases in the per capita indicator for Public Assistance from 1986 to 2010 compared to the increases that would have occurred if FEMA had adjusted the indicator for inflation or the increase in per capita personal income during this period.
FEMA Per Capita Indicator for Public Assistance and Alternate Measures
Because FEMAs current per capita indicator does not reflect the rise in either (1) per capita personal income since it was created in 1986 or (2) inflation from 1986 to 1999, the indicator could be artificially low. Further, FEMA officials stated that the rise in construction and other costs to respond to and recover from disasters have outpaced the rise in the per capita indicator. As a result, states can receive disaster funding for relatively small damage estimates. FEMA officials stated that in states with smaller populations, damage to a single building or facility, such as a water treatment facility, could result in a damage estimate sufficient to meet the state per capita damage threshold and warrant a disaster declaration. Given the recent increase in disaster declarations, re-examining the basis for the per capita indicator would better position FEMA to assess a states capacity to respond to and recover from a disaster.
42 U.S.C. § 5170. The intent of the Stafford Act is to, among other things, 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 from disasters. 42 U.S.C. §5121(b).
See 44 C.F.R. § 206.48(a)(5).
6 U.S.C. § 749.
GAO has previously reported on the importance of metrics, for example, see GAO, Measuring Disaster Preparedness: FEMA Has Made Limited Progress in Assessing National Capabilities, GAO-11-260T(Washington, D.C.: March 17, 2011).
51 Fed. Reg. 13,332 (Apr. 18, 1986).
51 Fed. Reg. at 13,333.
64 Fed. Reg. 47,697 (Sept. 1, 1999). When FEMA published the rule establishing the formal public assistance criteria in 1999, FEMA set the public assistance per capita indicator at $1.00.
64 Fed. Reg. at 47,697; 64 Fed. Reg. 3910, 3911 (Jan. 26, 1999).
For example, per capita income does not include income produced in a state unless it is received as income by a state resident. Thus, profits retained by corporations for business investment, though potentially subject to state taxation, are not included in a state per-capita income measure because they do not represent income received by state residents.
Another potential method for calculating the public assistance damage estimate indicator is through the use of Total Taxable Resources, an indicator developed by the Department of the Treasury, which measures resources that are potentially subject to state taxation. GAO previously reported in 2001 that Total Taxable Resources provide a more sensitive adjustment for growth over time in a states fiscal capacity than the consumer price index.
Based on GAOs ongoing work, and given the experiences over the past decade and the inclusion of FEMA in DHS in 2003, GAO expects to reiterate its August 2001 recommendations and further recommend that the Secretary of Homeland Security direct the FEMA Administrator to implement them. GAO recommended that the FEMA Administrator
We also expect to recommend that once FEMA has established the metrics required by both statute and Presidential Policy Directive to assess a states disaster preparedness and capabilities, FEMA should
The data FEMA provided to GAO cannot be used to calculate the financial savings that may have been realized for prior disaster declarations had FEMA and the President used alternate indicators. For example, according to FEMA officials, they frequently stopped estimating damages for Public Assistance once the estimate equaled or exceeded the per capita indicator. Consequently, GAO cannot determine whether the estimated damages would have met or exceeded a higher, alternative per capita indicator. However, updating the current indicator to more accurately reflect the basis of and changes in a states capacity has the potential to reduce costs to the federal government in the future.
The information contained in this analysis is based on findings from products listed in the related GAO products section and additional work GAO conducted to be published as a separate product in 2012. GAO analyzed Disaster Relief Fund obligations and the criteria that FEMA uses to recommend to the President whether requests for disaster declarations should be approved. GAO also reviewed FEMA documents, policies, and briefings, as well as GAOs prior findings and recommendations associated with this effort. Further, GAO collected and analyzed financial and nonfinancial data for disaster declarations requested and approved from fiscal years 2004 through 2011 to identify trends and opportunities for cost savings. GAO focused on Public Assistance funding because it represents the largest proportion of funds obligated from the Disaster Relief Fund for fiscal years 2004 through 2011.
GAO provided a draft of this report section to DHS for review and comment. DHS generally agreed with the content as presented. DHS also provided technical comments, which were incorporated as appropriate.
For additional information about this area, contact Stephen L. Caldwell at (202) 512-9610 or firstname.lastname@example.org.
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