Disaster Recovery:

Better Monitoring of Block Grant Funds Is Needed

GAO-19-232: Published: Mar 25, 2019. Publicly Released: Mar 25, 2019.

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Use of the $35 billion in federal Community Development Block Grant Disaster Recovery funds for the 2017 hurricanes has been slow.

Over a year after the first funds were appropriated, much of the money remains unspent because grantees in Florida, Puerto Rico, Texas, and the U.S. Virgin Islands are still in planning phases. Also, the Department of Housing and Urban Development doesn't have the review guidance and monitoring plans it needs for good grantee oversight.

We recommended ways to improve the oversight of disaster funding and better meet disaster recovery needs.

St. John, U.S. Virgin Islands, after Hurricane Irma

Downed power lines, barren and broken trees, and twisted street lights

Downed power lines, barren and broken trees, and twisted street lights

Additional Materials:

Contact:

Daniel Garcia-Diaz
(202) 512-8678
garciadiazd@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

What GAO Found

As of September 2018, the four states and territories that received the most 2017 Community Development Block Grant Disaster Recovery (CDBG-DR) funds had signed grant agreements with the Department of Housing and Urban Development (HUD). Before signing the agreements, HUD certified the grantees' financial processes and procedures. It also approved the grantees' assessments of their capacity to carry out the recovery and of unmet needs (losses not met with insurance or other forms of assistance). Before funding begins to reach disaster victims, the grantees need to take additional steps, such as finalizing plans for individual activities. As of January 2019, Texas had drawn down about $18 million (of $5 billion) for administration and planning only, and Florida had drawn down about $1 million (of $616 million) for administration, planning, and housing activities. Puerto Rico and the U.S. Virgin Islands had not drawn down any of the $1.5 billion and $243 million, respectively, they had been allocated.

HUD lacks adequate guidance for staff reviewing the quality of grantees' financial processes and procedures and assessments of capacity and unmet needs, and has not completed monitoring or workforce plans. The checklists used to review grantees' financial processes and procedures and assessments ask the reviewer to determine if the grantee included certain information, such as its procurement processes, but not to evaluate the adequacy of that information. In addition, the checklists, which include a series of “yes” or “no” questions, do not include guidance that the HUD reviewer must consider. HUD also does not have a monitoring plan that identifies the risk factors for each grantee and outlines the scope of monitoring. Further, HUD has not developed a workforce plan that identifies the critical skills and competencies HUD needs and includes strategies to address any staffing gaps. Adequate review guidance, a monitoring plan, and strategic workforce planning would improve HUD's ability to oversee CDBG-DR grants.

Without permanent statutory authority and regulations such as those that govern other disaster assistance programs, CDBG-DR appropriations require HUD to customize grant requirements for each disaster in Federal Register notices—a time-consuming process that has delayed the disbursement of funds. In a July 2018 report, the HUD Office of Inspector General found that as of September 2017, HUD used 61 notices to oversee 112 active CDBG-DR grants. Officials from one of the 2017 grantees told us that it was challenging to manage the multiple CDBG-DR grants it has received over the years because of the different rules. CDBG-DR grantees have faced additional challenges such as the need to coordinate the use of CDBG-DR funds with other disaster recovery programs that are initiated at different times and administered by other agencies. HUD officials said that permanently authorizing CDBG-DR would allow HUD to issue permanent regulations for disaster recovery. Permanent statutory authority could help address the challenges grantees face in meeting customized grant requirements for each disaster, such as funding lags, varying requirements, and coordination with multiple programs. The expected increase in the frequency and intensity of extreme weather events underscores the need for a permanent program to address unmet disaster needs.

Why GAO Did This Study

The 2017 hurricanes (Harvey, Irma, and Maria) caused an estimated $265 billion in damage, primarily in Texas, Florida, Puerto Rico, and the U.S. Virgin Islands. As of February 2019, Congress had provided over $35 billion to HUD for CDBG-DR grants to help communities recover. Communities may use these funds to address unmet needs for housing, infrastructure, and economic revitalization. GAO was asked to evaluate the federal government's response to the 2017 hurricanes. In this initial review of CDBG-DR, GAO examined, among other things, (1) the status of the 2017 grants, (2) HUD's review of the initial steps grantees have taken and its plans for future monitoring, and (3) challenges HUD and grantees face in administering grants.

GAO reviewed documentation from the four largest 2017 CDBG-DR grantees and HUD. GAO also reviewed prior work on CDBG-DR and interviewed officials from HUD and the four grantees.

What GAO Recommends

Congress should consider permanently authorizing a disaster assistance program that meets unmet needs in a timely manner. GAO also makes five recommendations to HUD, which include developing guidance for HUD staff to use in assessing grantees, developing a monitoring plan, and conducting workforce planning. HUD generally agreed with three recommendations and partially agreed with two, which GAO clarified to address HUD's comments.

For more information, contact Daniel Garcia-Diaz at (202) 512-8678 or garciadiazd@gao.gov.

Matter for Congressional Consideration

  1. Status: Open

    Comments: A bill introduced and passed by the House of Representative in the 116th Congress, HR 3702, would permanently authorize the Community Development Block Grant Disaster Recovery (CDBG-DR) program.

    Matter: Congress should consider legislation establishing permanent statutory authority for a disaster assistance program administered by HUD or another agency that responds to unmet needs in a timely manner and directing the applicable agency to issue implementing regulations.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In response to this recommendation, HUD acknowledged that providing additional guidance to staff on defining the specific conditions that must exist within these documents would improve its proficiency determination. Specifically, HUD revised its checklists for review of grantees' financial controls, procurement processes, and duplication of benefits requirements to include specific guidance indicating examples of acceptable responses and documentation that would address the program requirements. Since these checklists are disaster-specific, HUD also confirmed that it plans to include similar guidance in checklists for future CDBG-DR grants and provided an example of where they had done so for a disaster after 2017. The inclusion of additional guidance for HUD staff to use should help them assess the quality of grantees' submissions and ensure that its reviews are thorough and consistent.

    Recommendation: The Assistant Secretary for Community Planning and Development should develop additional guidance for HUD staff to use when assessing the adequacy of the financial controls, procurement processes, and grant management procedures that grantees develop. (Recommendation 1)

    Agency Affected: Department of Housing and Urban Development

  2. Status: Open

    Comments: In November 2019, HUD said that CPD will provide training to HUD staff regarding the standards for assessing unmet needs and grantee capacity. HUD needs to provide written guidance or other documentation outlining the standards HUD staff must consider when assessing the adequacy of grantees' capacity and unmet needs assessments.

    Recommendation: The Assistant Secretary for Community Planning and Development should develop additional guidance for HUD staff to use when assessing the adequacy of the capacity and unmet needs assessments that grantees develop. (Recommendation 2)

    Agency Affected: Department of Housing and Urban Development

  3. Status: Open

    Comments: In November 2019, HUD stated that HUD staff are now required to indicate the basis for their conclusions in the checklist used to review financial controls and all correspondence between grantees and HUD staff regarding revisions to the financial processes will be provided as part of the certification or grant approval package. We are following up with CPD on the extent to which similar requirements have been developed for reviews of procurement processes, grant management procedures, and capacity and unmet needs assessments. In addition, CPD needs to provide documentation showing that all correspondence between grantees and HUD staff regarding revisions to financial controls, procurement processes, and grant management procedures and capacity and unmet needs assessments are to be part of the grant's approval package.

    Recommendation: The Assistant Secretary for Community Planning and Development should require staff to document the basis for their conclusions during reviews of grantees' financial controls, procurement processes, and grant management procedures and capacity and unmet needs assessments. (Recommendation 3)

    Agency Affected: Department of Housing and Urban Development

  4. Status: Open

    Priority recommendation

    Comments: In November 2019, HUD stated CPD had modified the CDBG-DR risk analysis tool to include pre-award conditions that must be factored into the provision of the grant agreement as well as future monitoring reviews. HUD stills needs to develop a comprehensive monitoring plan for the 2017 grants based on the risk assessments conducted using this revised tool.

    Recommendation: The Assistant Secretary for Community Planning and Development should develop and implement a comprehensive monitoring plan for the 2017 grants. (Recommendation 4)

    Agency Affected: Department of Housing and Urban Development

  5. Status: Closed - Implemented

    Priority recommendation

    Comments: In response to this recommendation, HUD acknowledged the need for improved workforce planning and stated that the Disaster Recovery and Special Issues (DRSI) Division had developed a staffing plan to address long-term oversight and management of CDBG-DR grants. Specifically, it conducted a workload analysis in fiscal year 2019, assessing organizational functions, work products, and resources to determine the staffing gaps within DRSI. Since then, HUD has hired 28 staff to fill gaps identified. HUD's identification of the skills and competencies needed and hiring of staff to address gaps will help it to oversee the growing number of CDBG-DR grants.

    Recommendation: The Assistant Secretary for Community Planning and Development should conduct workforce planning for the Disaster Recovery and Special Issues Division to help ensure that it has sufficient staff with appropriate skills and competencies to manage a growing portfolio of grants. (Recommendation 5)

    Agency Affected: Department of Housing and Urban Development

 

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