Waste Of The Day: $8.3 Billion Of Disaster Funds Stuck In Purgatory

Authored by Jeremy Portnoy via RealClearInvestigations,

Topline: The Federal Emergency Management Agency is refusing to help some local governments pay for storm recovery while its aid fund faces a $6.2 billion deficit. The White House keeps blaming Congress for not providing enough money, but the fiscal crisis is partially FEMA’s own fault.

FEMA has $8.3 billion in “unliquidated obligations” set aside to help victims of storms from before 2012, according to a Department of Homeland Security Office of Inspector General report titled “FEMA’s Inadequate Oversight Led to Delays in Closing Out Declared Disasters.” It is money that FEMA has promised to spend in the future, but it’s unclear when or if it will actually help American families.

Meanwhile, the money can’t be used to help victims of hurricanes from this summer.

Key facts: FEMA grants must be used before a “period of performance” deadline. If the deadline is extended, FEMA officials are supposed to provide a detailed written justification.

FEMA has recently extended deadlines by up to 16 years for $7 billion of grants, sometimes without explanation, according to the OIG report.

For example, FEMA set aside billions to help the Northeast recover from Hurricane Sandy in 2012. The money was supposed to be used up by October 2016, but FEMA extended the deadline to September 2026. $4.5 billion of it was still unused as of last year and is unavailable for victims of this year’s storms.

The extensions are awarded based on “subjective” criteria, the report says. Auditors wrote that “As a result, the potential risk for fraud, waste, and abuse increases the longer a program remains open.”

Even when extensions are not granted, FEMA does not always enforce its deadlines. There was $9.4 million set aside for grants with deadlines over 12 months ago as of June 2023, according to the report. FEMA recouped an additional $5.7 million while the audit was taking place.

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Background: The inspector general report is the latest controversy in what has been a challenging year for FEMA. There were a record 28 storms that each caused over $1 billion in damages last year, and there have been 19 so far this year.

In July, the Government Accountability Office reported that FEMA greatly underestimated how much money it would need to spend on the Covid-19 pandemic and had not requested enough money from Congress over the last few years.

The agency’s Disaster Relief Fund nearly ran out of money this August, and FEMA was forced to pause 650 projects that were not deemed essential for “life-saving services.” The same thing happened in October 2023 and seven other times since 2001.

Yet FEMA continues to approve new expenses related to the Covid-19 pandemic, even though the public health emergency officially ended in May 2023.

Summary: There’s no use in obligating billions of dollars to help victims of natural disasters if the money is just going to sit in a bank account.

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