Disaster Assistance

For years, Congress has raised concerns about the rising cost of federal disaster assistance. One of the Federal Emergency Management Agency's (FEMA) primary approaches for reducing these costs is to promote mitigation measures that will reduce future damage within communities potentially decreasing future federal disaster expenditures. However, there are concerns that FEMA's mitigation funding is not targeted to cost-effective measures, as mandated by law. This testimony provides (1) an overview of the increases in disaster assistance costs and FEMA's mitigation programs and (2) GAO's preliminary views on the approaches that FEMA uses to ensure that funding under the Hazard Mitigation Grant Program is targeted to cost-effective mitigation measures.

GAO noted that: (1) for disasters that occurred between 1989 and 1993, average annual obligations in FEMA's disaster relief fund totalled $1.6 billion, in 1998 dollars, while average annual obligations over the past five years have increased to $2.5 billion annually in 1998 dollars; (2) to reduce these costs, FEMA is using, among other things, hazard mitigation efforts; (3) FEMA's efforts include providing federal flood insurance, converting flood-prone properties to open space, mitigating damage to public facilities, reducing earthquake risks, and helping mitigate the loss of life and damage from fires; (4) FEMA uses benefit-cost analysis--an approach recommended by the Office of Management and Budget--as its primary approach for ensuring that mitigation measures within the Hazard Mitigation Grant Program are cost-effective; (5) however, FEMA also excludes certain types of Hazard Mitigation Grant Program projects from benefit-cost analysis--including projects that fund the removal of certain structures from floodways, research for new building codes, and planning efforts; (6) FEMA officials stress a need for flexibility in assessing these projects, citing the difficulties of quantifying the benefits of some projects and the time needed to gather data to conduct a benefit-cost analysis; (7) however, these exemptions limit the agency's ability to demonstrate that the funded mitigation measures are cost-effective; (8) additionally, according to GAO's review of selected benefit-cost analyses in two FEMA regions, officials conducting these analyses were generally knowledgeable and had been trained in how to conduct the analyses; and (9) however, they did not always use the best available information in analyzing projects designed to mitigate future damage from flooding events.