- The Washington Times - Tuesday, September 5, 2000

The Federal Emergency Management Administration has misinformed Congress for many years about disaster recovery costs and misallocated hundreds of millions of dollars appropriated by Congress, says a General Accounting Office (GAO) report.
FEMA's mistakes totaled $250 million in one monthly report to Congress last year because officials in its 10 regional offices and Washington disagreed on how much was obligated to states and communities recovering from past disasters, the GAO says in an Aug. 29 report to the Senate Appropriations Committee.
"Obligation amounts reported by regional staff were both higher and lower than amounts reported by headquarters staff, and FEMA officials could not tell us which amounts were correct," the report says.
The problem was traced mainly to a "systemic error" in FEMA's financial management system, which relied on budgeted amounts rather than actual payouts for disaster recovery projects. No hint of fraud or embezzlement is mentioned in the report.
"The first problem FEMA officials noted involved projects that ultimately cost less than the amount FEMA initially approved," the GAO found. "FEMA found that if a state returned the unexpended funds for a particular disaster, the method FEMA was using to extract data from [the financial management computer] did not recognize and account for the unexpended funds."
FEMA has now modified the cost-tracking system so actual payouts are credited to budgeted amounts for individual disaster projects and leftover money is deducted from outstanding projected costs, the report says.
FEMA reported that the new cost-tracking method had reduced disagreements over outstanding disaster costs between regional and headquarters officials from $250 million to $41 million, the GAO told a Senate Appropriations subcommittee led by Sen. Christopher S. Bond, Missouri Republican, who called for the probe.
Mr. Bond, whose subcommittee has approved $27.4 billion in regular and emergency supplemental funding for FEMA over the past decade, became angry early last year when the agency reported a $700 million projected surplus for the next six months but came back only weeks later to say money would run out by Sept. 30.
The committee asked the GAO to find out why FEMA had misinformed Congress and whether the agency was even able to make proper budget decisions in the wake of a $700 million mistake, the report says.
"FEMA acknowledged that data inconsistencies have occurred in reporting to Congress on the status of the Disaster Relief Fund. It stated that it is currently revamping its process for data collection and reporting and will add controls to ensure that disaster data are updated and reported in a timely, accurate and consistent manner," the report says.
FEMA has suffered from chronic financial management problems, including a faulty method for projecting future disaster costs and a long-standing backlog of unfinished disaster recovery projects, the GAO report says.
It says FEMA regional offices project disaster costs, and the agency has projected that disasters costing about $500 million would occur in August and September.
"However, these months represent the height of the hurricane season, and over the last five years the average cost for disasters to FEMA has been twice this amount," the report says.
The report says FEMA should use monthly data on the actual cost of disasters over the past five years to estimate the cost and timing of future disasters.
FEMA has set goals to provide disaster funding more quickly and has moved to eliminate its backlog of unfinished projects.
FEMA still must pay out a projected $296 million to 37 recovery projects for disasters from 1989 to 1997, the report says.
Patricia A. English, FEMA's acting chief financial officer, said in responding to the GAO report that the agency is tracking $28 billion worth of costs throughout the country for more than 500 declared disasters and emergencies since 1989.
"We acknowledge that there have been some data inconsistencies associated with the current process. As a result, we are currently engaged in revamping and streamlining the data collection and reporting process," she wrote in the response.
"We believe that the report overstates the magnitude of the data discrepancies and by inference problems with the official [financial management] database," she said.
"At the end of September 1997, 419 old disasters, with a projected remaining cost to FEMA of over $3 billion, remained open. Over the next two years, FEMA closed out its funding activities on 382 of the disasters … obligating $2.9 billion in disaster relief funds."

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