Disaster Funds Worth $8.3 Billion Left Unused

FEMA's Role and Responsibility

The Federal Emergency Management Agency (FEMA) has been accused of not assisting some local governments with storm recovery costs, despite its aid fund facing a $6.2 billion deficit. The White House has consistently pointed fingers at Congress for not allocating sufficient funds. However, the financial crisis can be partially attributed to FEMA itself.

FEMA has an astounding $8.3 billion in "unliquidated obligations" earmarked to assist victims of pre-2012 storms, as revealed by a report from the Department of Homeland Security Office of Inspector General titled "FEMA’s Inadequate Oversight Led to Delays in Closing Out Declared Disasters". This is money that FEMA has pledged to spend in the future, but it remains uncertain when or if it will actually benefit American families. In the meantime, these funds are unavailable to assist victims of this summer's hurricanes.

Key Facts About FEMA Grants

FEMA grants have a "period of performance" deadline, which is the timeframe within which the funds must be utilized. If this deadline is extended, FEMA officials are required to provide a detailed written justification. However, the agency has recently extended deadlines by up to 16 years for $7 billion worth of grants, sometimes without providing any explanation, according to the OIG report.

For instance, FEMA allocated billions to aid the Northeast's recovery from Hurricane Sandy in 2012. These funds were supposed to be depleted by October 2016, but FEMA extended the deadline to September 2026. As of last year, $4.5 billion of this amount remained unused and is now inaccessible for victims of this year's storms.

The report also highlights that extensions are granted based on "subjective" criteria. Auditors noted that "the potential risk for fraud, waste, and abuse increases the longer a program remains open." Furthermore, even when extensions are not granted, FEMA does not always enforce its deadlines. As of June 2023, there was $9.4 million allocated for grants with deadlines that had passed over 12 months ago. During the audit, FEMA retrieved an additional $5.7 million.

Background of FEMA's Challenges

The inspector general report is the latest in a series of controversies surrounding FEMA. The agency has had a challenging year, with a record 28 storms each causing over $1 billion in damages last year and 19 such storms so far this year.

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

The agency's Disaster Relief Fund nearly depleted in August, forcing FEMA to halt 650 projects that were not considered essential for "life-saving services." The same situation occurred in October 2023 and seven other times since 2001. Despite this, 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 is no point in setting aside billions of dollars to help victims of natural disasters if the money is merely going to sit in a bank account.

Bottom Line

It's clear that there are systemic issues within FEMA that need to be addressed. The allocation and utilization of disaster funds are crucial to the recovery of communities affected by natural disasters. However, if these funds are not being used effectively or within a reasonable timeframe, it raises questions about the efficiency and effectiveness of the agency. What are your thoughts on this issue? Do you think there is a need for more accountability and transparency in how these funds are managed? Share this article with your friends and let's start a conversation. Don't forget to sign up for the Daily Briefing, which is available every day at 6pm.