Disaster Relief Fund:

FEMA's Estimates of Funding Requirements Can Be Improved

RCED-00-182: Published: Aug 29, 2000. Publicly Released: Aug 29, 2000.

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Pursuant to a legislative requirement, GAO reviewed how the Federal Emergency Management Agency (FEMA) determines current and future funding requirements for the Disaster Relief fund, focusing on the: (1) accuracy and timeliness of FEMA's estimates of costs for past disasters; (2) reasonableness of FEMA's approach to estimating the timing and cost of future disasters; and (3) impact of FEMA's initiatives on the rate of obligating disaster relief funds.

GAO noted that: (1) problems with both the accuracy and timeliness of the information FEMA provides monthly to Congress on estimated remaining costs for past disasters; (2) FEMA's headquarters staff relies on data provided by its regional offices to produce a monthly report to Congress on funding requirements for past disasters; (3) however, as of the end of August 1999, for a third of all past disasters, GAO found that staff from headquarters and regional offices disagreed on the amount of funds obligated to date; (4) collectively, differences, in reported obligations between headquarters and regional staff totalled nearly $250 million--with headquarters reporting obligation amounts that were $18 million higher than regions reported obligations; (5) obligation amounts reported by regional staff were both higher and lower than amounts reported by headquarters staff, and FEMA officials could not tell GAO which amounts were correct; (6) when regional offices questioned the accuracy of the data, FEMA headquarters staff responsible for reconciling discrepancies initially failed to determine the cause and make the needed corrections; (7) instead, FEMA used the inaccurate data to report on remaining costs for past disasters; (8) in addition, because of the time needed to assemble and analyze the data, the information on remaining costs in the monthly report is based on obligation data that are 4 to 6 weeks old; (9) FEMA officials acknowledge that data problems exist and have taken steps to correct them; (10) FEMA can improve its approach for estimating the timing and cost of disasters anticipated to occur during the remainder of the current fiscal year and in the forthcoming fiscal year; (11) FEMA's recent initiatives designed to expedite the closeout of its funding activities for past disasters has had a significant impact on FEMA's rate of obligating disaster relief funds; (12) in particular, the formation of three teams of staff from FEMA's Office of Financial Management, referred to as "closeout teams," to facilitate the closure of funding activity for disasters occurring from fiscal years 1989 through 1997 increased FEMA's obligations and recoveries for past disasters considerably; (13) at the end of September 1997, 419 old disasters, with a projected remaining cost to FEMA of over $3 billion, remained open; and (14) it is less clear what impact other FEMA initiatives, such as setting goals to provide disaster funding more quickly, are having on the Fund's requirements because sufficient time has not elapsed to measure their effectiveness.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: FEMA has implemented the recommendation. In its monthly reports to the Congress, FEMA is estimating the cost of future disasters using both its past methodology and the methodology GAO recommended. Both methodologies are presented to provide a range of assumptions and projected end-of-year balances in the Disaster Relief Fund.

    Recommendation: To improve the method for projecting the timing and cost of future disasters, the Director, FEMA, should base FEMA's estimate of the costs of disasters to be declared during the current and forthcoming fiscal year on the inflation-adjusted 5-year average cost of declared disasters. For each monthly report to Congress, FEMA should use the 5-year average cost of disasters, from the date of the report to the end of the fiscal year, and should present a range of end-of-year balances based on assumptions about the timing and cost of future disasters.

    Agency Affected: Department of Homeland Security: Directorate of Emergency Preparedness and Response

 

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