Major Management Challenges and Program Risks
Federal Emergency Management Agency
Gao ID: GAO-03-113 January 1, 2003
The 2003 performance and accountability series includes the first report on the Federal Emergency Management Agency (FEMA) since the series started in 1999. GAO reported on management challenges facing FEMA this year because of the increased national significance of the agency's missions and the additional responsibilities placed on the agency. The information GAO presents in this report is intended to help sustain congressional and agency attention on continuing to make progress in addressing these challenges and ultimately overcoming them. This report is part of a special series of reports on governmentwide and agency-specific issues.
FEMA has made progress in recent years in achieving its mission of supplementing state and local governments' efforts to prepare and respond to major disasters. FEMA's mission will be absorbed into a new Department of Homeland Security. As FEMA moves to integrate its mission into this new department, FEMA faces several management challenges. Ensure effective coordination of preparedness and response efforts: FEMA and its missions will be transferred in their entirety into the new Department of Homeland Security (DHS) the largest reorganization of the federal government since 1947. However, FEMA's homeland security and nonhomeland security missions will be under separate DHS directorates. The separation of disaster and emergency preparedness responsibilities will present coordination challenges for the Undersecretaries within DHS. Enhance the provision and management of disaster assistance for efficient and effective response: FEMA has demonstrated its ability to quickly get resources to stricken communities in many disasters. However, FEMA needs to develop more objective and specific criteria to assess the capabilities of states and localities to respond to a disaster. FEMA needs to assess how the extent of its response and recovery assistance to future disasters may be affected by the magnitude and scope of recovery efforts undertaken in New York City. Information system problems and a shortfall of appropriately trained FEMA staff could compromise FEMA's ability to respond to a disaster. Reduce the impact of natural hazards by improving the efficiency of mitigation and flood programs: As the number of large, costly disasters has grown, FEMA has placed more emphasis on disaster mitigation efforts to reduce the effects of natural hazards. However, concerns about the cost effectiveness of some of the mitigation programs have been raised. The National Flood Insurance Program has not operated on a sound financial footing for several years. Resolve financial management weaknesses to ensure fiscal accountability: From 1998 to 2000, FEMA's Inspector General issued unqualified opinions on FEMA's consolidated financial statements. However, problems with some of FEMA's systems resulted in a qualified opinion on their 2001 financial statement, and FEMA plans to take corrective action. Until corrective actions are completed to address reliability of information and instances of noncompliance with requirements of certain laws and regulations, FEMA will not be able to achieve effective financial accountability.
GAO-03-113, Major Management Challenges and Program Risks: Federal Emergency Management Agency
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Performance and Accountability Series:
January 2003:
Major Management Challenges and Program Risks:
Federal Emergency Management Agency:
GAO-03-113:
A Glance at the Agency Covered in This Report
The Federal Emergency Management Agency coordinates federal disaster
and
emergency assistance policies and administers programs that provide
assistance
before and after disaster strikes. Agency programs and activities
include
* supplemental assistance to enhance state and local preparedness
activities,
* disaster relief for communities and individuals,
* a national flood insurance program,
* fire prevention and suppression assistance, and
* support for hazard mitigation projects.
The Federal Emergency Management Agency‘s Budgetary and Staff
Resources
[See PDF for Image]
[A] Budgetary resources include new budget authority (BA) and
unobligated
balances of previous BA.
[B] Budget and staff resources are actuals for FY 1998-2001. FY
2002 are
estimates from the FY 2003 budget, which are the latest publicly
available
figures on a consistent basis as of January 2003. Actuals for FY
2002 will be
contained in the President‘s FY 2004 budget to be released in
February 2003.
[End of Figure]
This Series
This report is part of a special GAO series, first issued in 1999
and updated in
2001, entitled the Performance and Accountability Series: Major
Management
Challenges and Program Risks. The 2003 Performance and
Accountability Series
contains separate reports covering each cabinet department, most
major
independent agencies, and the U.S. Postal Service. The series
also includes a
governmentwide perspective on transforming the way the government
does
business in order to meet 21st century challenges and address
long-term fiscal
needs. The companion 2003 High-Risk Series: An Update identifies
areas at high risk
due to either their greater vulnerabilities to waste, fraud,
abuse, and
mismanagement or major challenges associated with their economy,
efficiency, or
effectiveness. A list of all of the reports in this series is
included at the end of
this report.
GAO Highlights:
Highlights of GAO-03-113, a report to
Congress included as part of GAO‘s
Performance and Accountability Series
PERFORMANCE AND ACCOUNTABILITY SERIES
Federal Emergency Management Agency
Why GAO Did This Report:
The 2003 performance and accountability series includes the
first report on the Federal
Emergency Management Agency (FEMA) since the series started
in 1999. GAO reported on
management challenges facing FEMA this year because of the
increased national significance
of the agency‘s missions and the additional responsibilities
placed on the agency. The
information GAO presents in this report is intended to help
sustain congressional and
agency attention on continuing to make progress in addressing
these challenges and ultimately
overcoming them. This report is part of a special series of
reports on governmentwide and
agency-specific issues.
What GAO FOund:
FEMA has made progress in recent years in achieving its
mission of
supplementing state and local governments‘ efforts to prepare
and respond
to major disasters. FEMA‘s mission will be absorbed into a
new Department
of Homeland Security. As FEMA moves to integrate its mission
into this new
department, FEMA faces several management challenges to:
* Ensure effective coordination of preparedness and response
efforts. FEMA and its missions will be transferred in their
entirety into
the new Department of Homeland Security (DHS)”the largest
reorganization of the federal government since 1947. However,
FEMA‘s
homeland security and nonhomeland security missions will be
under
separate DHS directorates. The separation of disaster and
emergency
preparedness responsibilities will present coordination
challenges for
the Undersecretaries within DHS.
* Enhance the provision and management of disaster assistance
for
efficient and effective response. FEMA has demonstrated its
ability
to quickly get resources to stricken communities in many
disasters.
However, FEMA needs to develop more objective and specific
criteria to
assess the capabilities of states and localities to respond
to a disaster.
FEMA needs to assess how the extent of its response and
recovery
assistance to future disasters may be affected by the magnitude
and
scope of recovery efforts undertaken in New York City.
Information
system problems and a shortfall of appropriately trained FEMA
staff
could compromise FEMA‘s ability to respond to a disaster.
* Reduce the impact of natural hazards by improving the
efficiency
of mitigation and flood programs. As the number of large,
costly
disasters has grown, FEMA has placed more emphasis on
disaster
mitigation efforts to reduce the effects of natural hazards.
However,
concerns about the cost effectiveness of some of the
mitigation
programs have been raised. The National Flood Insurance
Program has
not operated on a sound financial footing for several
years.
* Resolve financial management weaknesses to ensure
fiscal
accountability. From 1998 to 2000, FEMA‘s Inspector
General issued
unqualified opinions on FEMA‘s consolidated financial
statements.
However, problems with some of FEMA‘s systems resulted
in a qualified
opinion on their 2001 financial statement, and FEMA
plans to take
corrective action. Until corrective actions are completed
to address
reliability of information and instances of noncompliance
with
requirements of certain laws and regulations, FEMA will
not be able to
achieve effective financial accountability.
What Remains to Be Done:
GAO believes that FEMA should
* ensure effective coordination of preparedness and
response efforts,
* enhance the provision and management of disaster assistance
for
efficient and effective response,
* reduce the impact of natural hazards by improving the
efficiency
of mitigation and flood programs, and
* resolve financial management weaknesses to ensure fiscal
accountability.
To view the full report, click on the link above.
For more information, contact John H.
Anderson Jr. at (202) 512-2834 or
andersonj@gao.gov
Transmittal Letter:
Major Performance and Accountability Challenges:
GAO Contacts:
Related GAO Products:
Performance and Accountability and High-Risk Series:
This is a work of the U.S. Government and is not
subject to copyright
protection in the United States. It may be reproduced
and distributed
in its entirety without further permission from GAO.
It may contain
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Permission from the
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Transmittal Letter January 2003:
The President of the Senate
The Speaker of the House of Representatives:
This report addresses the major management challenges and program risks
facing the Federal Emergency Management Agency (FEMA) as it works to
carry out its missions, which range from hazard mitigation to disaster
response coordination. It is part of a special series GAO has issued
biennially since January 1999.
This report discusses the actions that FEMA has taken and that are
under way to address its management challenges. The report also
discusses major events that have occurred that significantly influence
the environment in which the agency carries out its mission. Also, GAO
summarizes the challenges that remain, new ones that have emerged, and
further actions that GAO believes are needed.
This analysis should help the new Congress and the administration carry
out their responsibilities and improve government for the benefit of
the American people. For additional information about this report,
please contact John H. Anderson Jr., Managing Director, Physical
Infrastructure, at (202) 512-2834 or at andersonj@gao.gov.
David M. Walker
Comptroller General
of the United States:
Signed by David M. Walker:
[End of section]
Major Performance and Accountability Challenges:
For more than 20 years, the Federal Emergency Management Agency (FEMA)
has been the nation‘s lead federal agency for preparing for, responding
to, and recovering from emergencies and disasters, natural and manmade.
The agency provides disaster management assistance and funding for
disaster response and recovery activities to communities and
individuals in situations where catastrophic events are beyond the
capabilities of the state and local governments affected. During this
past year, the agency has faced the daunting challenge of leading the
federal response to aid victims of the September 11, 2001 terrorist
attacks--the most costly disaster and most devastating terrorist
incident since FEMA was created. Moreover, FEMA‘s role in working with
first responder agencies--police, fire departments, and emergency
medical personnel--has taken on new urgency in preparing for similar,
or possibly worse, terrorist incidents. Yet, FEMA‘s traditional
responsibility of preparing for and responding to natural disasters has
not lessened, and the agency responded to 49 major disaster events in
2002.
Consistent with the increasing responsibilities placed upon FEMA, its
budget is growing substantially. The fiscal year 2003 FEMA budget
request is $6.7 billion, roughly three times the request for fiscal
year 2002.[Footnote 1] The largest portion of the fiscal year 2003
request is meant to support state and local preparedness through the
proposed $3.5 billion First Responder Initiative.
On November 25, 2002, President Bush signed into law a bill creating
the Department of Homeland Security (DHS)--the largest reorganization
of the federal government since the formation of the Department of
Defense in 1947. DHS will be dedicated to protecting the United States
from terrorist attacks and will combine about 170,000 federal workers
from 22 agencies. FEMA and its missions will be placed entirely into
DHS.
The placement of FEMA within DHS represents a significantly changed
environment in which FEMA will conduct its missions in the future. FEMA
has traditionally operated in an ’all hazards“ approach--preparing
simultaneously for all types of disasters--and it will be important for
FEMA and DHS management to ensure that sufficient management capacity
and accountability is provided to both homeland security and natural
hazards missions. Some of these missions--such as hazard mitigation and
flood insurance--have not traditionally been security related. In
testimony to the Congress, the Comptroller General stated that care
needs to be taken so that nonsecurity functions in agencies such as
FEMA receive adequate funding, attention, visibility, and support when
subsumed into a department that will be under tremendous pressure to
succeed in its primary mission.[Footnote 2]
This year, for the first time, we are issuing a report that addresses
challenges facing FEMA because of the increased national significance
of the agency‘s missions and the additional responsibilities placed on
the agency. These responsibilities include responding to the effects of
terrorist attacks and providing a central focal point for disaster
preparedness and response. As a result, the agency faces a number of
challenges, some of which result from the creation of the DHS, and some
which the agency will bring into the new department. The performance
and accountability challenges facing FEMA are described below.
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[End of figure] - graphic text:
Ensure Effective Coordination of Preparedness and Response Efforts:
As a result of the legislation forming DHS, FEMA and its missions will
be transferred in their entirety into DHS. However, its homeland
security and nonhomeland security missions will be under separate DHS
directorates. This divisional separation could complicate FEMA‘s
historical all-hazards approach--a comprehensive approach focused on
preparing for and responding to all types of disasters, either natural
or man-made. The separation of disaster and emergency responsibilities
across two directorates of the new department will present coordination
challenges for the appropriate Undersecretaries within DHS.
Separation of responsibilities for preparedness and response activities
has created problems in the past. Prior to 1979, more than 100 federal
agencies were involved in some aspect of disasters and emergencies,
causing problems at all levels of government and highlighting the need
for consolidation of functions. Thus, one of the objectives in the
establishment of FEMA in that year was to bring together disaster and
emergency response for all hazards in a single federal entity. More
recently, fragmentation of responsibilities for combating and
responding to terrorism has been recognized as a problem. As we
reported in March 2002, over 40 federal entities have had a role in
combating and responding to terrorism.[Footnote 3] The absence of a
central focal point resulted in two major problems. First, there was a
lack of cohesive effort from within the federal government. Second, the
lack of leadership resulted in the federal government‘s development of
multiple, similar programs to assist state and local governments. For
example, numerous federal entities offered state and local governments
training, planning, and assistance in dealing with the consequences of
chemical, biological, radiological, or nuclear attacks. Not only did
these efforts overlap, they potentially duplicated other efforts to
prepare for possible disasters such as from biological outbreaks,
nuclear power plants, or chemical factories.
In May 2001, as one approach to achieving a more integrated federal
terrorism preparedness response, the President created an Office of
National Preparedness within FEMA to coordinate all federal programs
that support state and local preparedness. In our September 2001
report, we recommended a move beyond coordination--program
consolidation.[Footnote 4] We believed that consolidation of assistance
programs would best eliminate overlapping assistance programs and
provide a single liaison for state and local officials. The need for
consolidation of preparedness and response assistance efforts has been
similarly expressed in the Gilmore Commission‘s reports on assessing
domestic response capabilities for terrorism involving weapons of mass
destruction.
Placing varied preparedness and response functions, which are currently
dispersed across several different departments, within DHS does achieve
a measure of consolidation. However, responsibility for terrorism
preparedness and response will reside in the department‘s Border and
Transportation Security Directorate, which will include FEMA‘s Office
of National Preparedness. Other types of FEMA disaster preparedness and
response efforts will transfer to DHS‘s Emergency Preparedness and
Response Directorate. With this division of preparedness and response
responsibilities, close coordination will be needed among these
directorates to ensure programs are developed, and activities
undertaken, that do not replicate the problems of duplication, overlap,
and confusion that occurred in the past. Additionally, a single face
for the new department will be needed so that state and local
governments can be provided with clear leadership and assistance. This
will be particularly critical as the funding requested by the President
to assist state and local preparedness is expected to be substantial.
The President has requested $3.5 billion for a First Responder
Initiative that will aid state and local preparedness and response
efforts.
As FEMA has been at the forefront of preparedness and response efforts,
and has established networks with state and local governments, it will
be incumbent upon the FEMA components within the new department to play
a lead role in helping to establish an effective, coordinated
preparedness and response program that integrates both the homeland
security and nonhomeland security elements. Additionally, the DHS
Undersecretaries responsible for the Border and Transportation Security
and the Emergency Preparedness and Response Directorates will have the
challenge of establishing strong leadership and links between the
directorates to ensure that coordinated preparedness and response is
achieved. The new department will need this leadership to be able to
quickly undertake this important mission.
Enhance Provision and Management of Disaster Assistance for Efficient
and Effective Response:
FEMA faces a number of challenges pertaining to the provision and
management of disaster assistance. The agency administers several
programs authorized under the Robert T. Stafford Disaster Relief and
Emergency Assistance Act[Footnote 5] that provide federal assistance to
supplement state and local governments‘ disaster response, recovery,
preparedness, and mitigation efforts. Since the Act‘s passage in 1988,
FEMA provided over $34 billion in assistance for more than 600
disasters. In fiscal year 2001, FEMA disaster assistance obligations
totaled $3.4 billion, reflecting FEMA‘s response and recovery efforts
for 50 declared major disasters, 15 declared emergencies, and 36 events
related to fire assistance.
FEMA has demonstrated its ability to quickly get resources to stricken
communities and disaster victims, but has problems ensuring the
effective use of such assistance, according to the Office of Management
and Budget (OMB). FEMA will be challenged to:
* improve its criteria for determining state and local eligibility to
receive federal disaster assistance,
* assess extent of assistance for future major disasters based on the
recovery efforts undertaken in New York City,
* build on lessons learned from charities‘ response to September 11,
* enhance disaster assistance staff training and resource planning,
* strengthen oversight of disaster assistance, and:
* improve an existing information system before it is used as a
building block for a multiagency disaster management Web site.
Improve Eligiblity Criteria for Federal Disaster Assistance:
FEMA is developing more objective and specific criteria to assess the
capabilities of state and local governments to respond to a disaster.
The Stafford Act requires that the President determine if conditions
are beyond state and local capability to respond before major disaster
assistance from the federal government is warranted. In 1999, FEMA
published revised regulations that established formal criteria for
recommending presidential approval of disaster declarations. These
criteria include both minimum financial thresholds and other
qualitative measures that FEMA applies in deciding whether to recommend
presidential approval. As we reported in August 2001,[Footnote 6] FEMA
can recommend a disaster declaration if preliminary estimates of the
damage exceed $1.04 per capita statewide and $1 million in total.
FEMA‘s other criteria include qualitative factors such as the impact of
a disaster on a particular area or the occurrence of recent multiple
disasters in the same area.
FEMA‘s criteria, however, may not be an appropriate measure of state
financial resources. The current threshold was established in 1999 at
$1.00-per-capita and is adjusted for inflation. However, FEMA initially
proposed this $1.00-per-capita threshold in 1986, as it then
represented about 0.1 percent of estimated General Fund expenditures by
states. Adjusting for annual inflation since 1986, the threshold level
would have been $1.58 in 2001. Additionally, better measures of a
state‘s financial capacity exist. Total Taxable Resources, a measure
developed by the Department of the Treasury, provides a more
comprehensive measure of the resources that are potentially subject to
state taxation and are used to target aid in other federal programs.
Use of Total Taxable Resources criteria would result in varying
financial capability thresholds for states instead of a uniform
threshold and might better reflect states‘ capacity to bear the burden
of responding to a disaster.[Footnote 7]
We recommended in our August 2001 report that FEMA develop more
objective and specific criteria to assess the capabilities of state and
local governments to respond to a disaster. FEMA commented that our
observations would be valuable for its review of disaster declaration
criteria, but FEMA has yet to implement this recommendation. As the
President noted in his fiscal year 2002 budget proposal, the lack of
clear and meaningful criteria for recommending disaster declarations
puts FEMA at risk of providing federal funds to some states that do not
need assistance, while ignoring the legitimate needs of others. This
situation will remain until FEMA develops more objective assessment
criteria.
Assess the Extent of Assistance for Future Major Disasters Based on the
Recovery Efforts Undertaken in New York City:
FEMA needs to assess how the extent of its response and recovery
assistance to future disasters may be affected by recovery efforts
undertaken in New York City after the September 11, 2001, terrorist
attacks. The assistance FEMA is providing New York is of historic
proportions. Following the attacks, President Bush pledged at least $20
billion in federal funds to New York City to be delivered through
various federal agencies. Of these funds, FEMA is responsible for the
largest share, a total of $9 billion, an amount that is also the
greatest level of financial assistance FEMA has ever provided for any
single disaster. To provide this funding and respond to the degree of
damage resulting from the attacks, FEMA has needed to expand its
assistance guidelines. The amount and extent of assistance FEMA is
providing may, however, have consequences on spending for future major
disasters if other affected communities expect comparable federal
disaster assistance.
FEMA‘s response to the horrific damage resulting from the terrorist
attacks on New York City has led to a generally higher level of federal
assistance. According to the Stafford Act, once a disaster is declared,
FEMA may reimburse state and local governments for between 75 to 100
percent of the eligible cost for response and recovery activities. FEMA
states that assistance has generally been limited to 75 percent of
eligible costs; however, assistance levels were increased to 100
percent of eligible costs for the terrorist attacks on New York and
other affected areas due to the magnitude of the disaster. Although
FEMA funding of 100 percent of eligible costs is not unprecedented,
funding of all eligible costs not only places a greater financial
burden on the federal government and potentially reduces the cost
control incentives inherent in cost-sharing arrangements, but may also
be viewed as a precedent for FEMA assistance by other affected
communities that may experience major disasters.
Additionally, in light of the magnitude and scope of damage to New York
City, FEMA determined--in some cases, at the direction of Congress--
that it was necessary to expand its guidelines to allow for maximum
flexibility in defining eligible response and recovery activities. FEMA
Public Assistance has traditionally been limited to coverage of
disaster-related losses and damages to existing infrastructure, and
such assistance has not been provided to enhance or modernize the
infrastructure beyond its predisaster condition. However, in
recognizing the interdependence of Lower Manhattan‘s transportation
system, FEMA officials reported that they were able to broadly
interpret their guidelines in order to ensure the transportation needs
of New York City were met. As a result, FEMA will work with the
Department of Transportation to rebuild the various transportation
systems that were damaged from attacks and to improve Lower Manhattan‘s
overall transit system. Similarly, FEMA officials, as mandated by the
Congress, reported expanding eligibility guidelines of the Mortgage and
Rental Assistance program (MRA). Prior to September 11, MRA was a
rarely used FEMA program designed to aid individuals in disaster areas
whose employment was directly damaged by the event. However, with the
2002 Supplemental Appropriations Act for Further Recovery From and
Response To Terrorist Attacks on the United States (P.L. 107-206), FEMA
expanded the eligibility guidelines of MRA to include individuals who
lived and worked in Lower Manhattan and lost significant income
regardless of whether their place of employment was damaged. According
to FEMA, the expansion represented the broadest interpretation of the
program in FEMA‘s history.
FEMA faces several challenges as it continues to lead the largest
recovery effort in its history. Currently, FEMA faces the challenge of
providing an unprecedented amount of federal assistance to efficiently
meet the needs of New York City. For the future, it will be important
for FEMA to consider how the landmark federal response to the terrorist
attacks could pose a challenge in determining the level and breadth of
future federal assistance.
Build On Lessons Learned from Charities‘ Response to September 11:
FEMA needs to work with charities to build on lessons learned from
charities‘ response to September 11 in order to improve the collective
response to future disasters. FEMA is the lead federal agency for
responding to disasters and may link with charitable organizations to
provide assistance. In fact, FEMA is required to coordinate government
relief and assistance activities with those of the American Red Cross
and the Salvation Army, as well as other voluntary organizations that
agree to operate under FEMA‘s direction. Charitable aid made a major
contribution in the nation‘s response to the September 11 attacks.
However, the scope and complexity of the September 11 disasters
presented a number of challenges to charities in their attempts to
provide seamless social services for survivors of the disaster. At the
same time, FEMA and the various charities involved in the response
learned valuable lessons that could improve future disaster response.
Thirty-five of the larger charities reported raising an estimated $2.6
billion since September 11, 2001. Charities reported distributing their
September 11 funds for a broad range of assistance. For example, in
addition to cash grants to more than 3,000 families of the victims,
charities aided at least 50,000 families who lost jobs or income or
whose homes were damaged and served millions of meals to thousands of
rescue workers. To distribute aid, charities had to make extensive
efforts to identify victims and survivors, as there was no uniform
contact lists for families of victims; charity officials also said
privacy issues affected the sharing of information among charities.
Initially, little coordination of charitable aid occurred, but a more
integrated approach emerged some months later. Despite these efforts,
however, September 11 survivors reported they generally had to navigate
a maze of service providers in the early months, and both charities and
those individuals who were more indirectly affected by the disaster
were confused about what aid might be available to them. Although steps
were taken to address some of these issues in previous disasters, the
scope and complexity of the September 11 attacks presented a number of
challenges to charities in their attempts to provide seamless social
services for surviving family members. Some months after the disaster,
however, oversight agencies and large charities established a more
coordinated approach. This included the formation of coordinating
entities, the implementation of case management systems, and attempts
to implement key coordination tools, such as client databases. To help
facilitate future collaborative efforts, we recommended in a December
2002 report that FEMA convene a working group of involved parties to
take steps to implement strategies for future disasters, building upon
lessons learned in the aftermath of September 11.[Footnote 8] FEMA
generally agreed that a broad based working group is likely to foster
enhanced communication and coordination among charitable organizations
and others involved in disaster response.
Enhance Disaster Assistance Training and Resource Planning:
FEMA faces challenges to enhance its disaster assistance training and
resource planning. After a disaster has been declared, FEMA officials
determine which projects meet Stafford Act criteria for funding. Given
this responsibility, it is critical that a process exists to ensure
staff have the requisite disaster assistance knowledge, skills, and
abilities. In fiscal year 1999, FEMA developed a credentialing program
that provided a framework for evaluating the knowledge, skills, and
abilities of its staff--including its permanent full-time employees as
well as its temporary disaster assistance employees, who are deployed
to respond to a disaster. FEMA expected that this program would ensure
that its employees would have the basic qualifications to perform their
jobs and would make FEMA managers, applicants, and the public more
confident about their performance. According to FEMA officials,
however, the credentialing program has not been implemented because of
budget constraints.
The credentialing program may be a critical need because FEMA staff may
not be getting adequate training. As we reported in 2001,[Footnote 9]
the Public Assistance budget for training has decreased from about $1.9
million for fiscal year 1999 to $725,000 for fiscal year 2001. In
addition, several studies conducted by individual FEMA disaster field
offices during 1999 and 2000 found training either was not timely or
was not offered at all. For example, according to available data on
formal training, only 20 percent of the staff had received training on
the agency‘s core information tracking system--the National Emergency
Management Information System (NEMIS). NEMIS is the management
information system staff is expected to use to document disaster
assistance to various recipients. Only one FEMA region had trained over
half of its staff to use the system.
In our 2001 report, we recommended that FEMA reconsider budgetary
priorities to determine if a higher priority should be assigned to
implementing a credentialing and training program for federal disaster
staff that focuses on the knowledge, skills, and abilities needed for
each of the various roles involved in disaster management. FEMA
disagreed with the need to assign training a higher budgetary priority,
as FEMA stated that all disaster staff attended its basic training
class, which provides such instruction. We still believe, however, that
FEMA should consider giving higher priority to implementing a
credentialing program such as the one the agency has designed.
In addition, FEMA faces the challenge posed by attrition from
retirements. According to FEMA projections, 48 percent of FEMA‘s
workforce will be eligible to retire in the next 5 years. FEMA is
working to develop a workforce-restructuring plan to address how the
agency will attract and retain personnel with the skills to perform
core agency functions. FEMA advised us that they expect to have a draft
of the plan in early 2003.
Strengthen Oversight of Disaster Assistance:
For a presidentially declared disaster, FEMA has primary responsibility
for coordinating the federal response. Typically, this response
consists of providing grants to assist state and local governments and
certain private nonprofit organizations to alleviate the damage
resulting from such disasters. FEMA‘s monitoring of grantee and
contractor performance can be improved. In 1998, FEMA‘s Inspector
General (IG) reported that FEMA grantees were not fully complying with
FEMA and federal grant regulations, and problems went undetected
because FEMA did not have an effective grants management system. In
response, FEMA formed a grants management team to develop policies and
procedures to enable FEMA regional offices to manage grants. However,
GAO and the FEMA IG have continued to report FEMA grant and contractor
oversight problems.
An example of an area where FEMA can improve its oversight is debris
removal. According to a 2001 FEMA IG report,[Footnote 10] FEMA needs to
continue improving its controls over the debris removal program to
prevent fraud, waste, and abuse. The IG identified examples of excess
charges that did not meet eligibility criteria, unsupported costs not
substantiated by documentation, and duplicate payments. The IG also
called for FEMA to improve grantees‘ recording of debris information,
to provide better technical assistance for debris removal, and to
improve debris management training. Although confronted with
unprecedented challenges such as the site‘s immense scale and its
status as a crime scene, FEMA officials noted steps were taken to
improve oversight of debris removal at the World Trade Center site.
Specifically, FEMA officials reported that grantees used best practices
to ensure contractor accountability, such as trip tickets, load counts
and equipping trucks with global positioning satellite tracking
systems. Figure 1 shows debris at the World Trade Center.
Figure 1: Debris at the World Trade Center:
[See PDF for image] - graphic text:
[End of figure] - graphic text:
FEMA lacks adequate procedures and processes to recapture improper
payments. GAO‘s work over the past several years has demonstrated that
improper payments (payments that should not have been made or were made
for incorrect amounts) are a significant and widespread problem in
federal agencies,[Footnote 11] and FEMA‘s IG has found improper
payments to be a problem area for FEMA. For example, the IG found an
$8.5 million improper grantee payment, and FEMA management indicated in
February 2001 that they would take action to recover the money.
However, 7 months later, FEMA had not taken any action to collect these
funds. Moreover, FEMA officials explained that the agency was actively
pursing such debts, but that collecting debts was an arduous process
due to poor or no documentation, lack of final inspections on disaster
related projects, and difficulty in negotiating final debt amounts with
the states.
FEMA‘s lack of documentation was also noted as a problem in our July
2001 report on a presidentially declared major disaster--the Cerro
Grande fire in New Mexico.[Footnote 12] Although a systematic process
for the payment of fire victims‘ injury claims had been established, we
found that certain key procedures used by the claim reviewers under
contract were not formally documented. Further and more importantly,
because of the condition of the files, FEMA officials could not
effectively carry out their responsibilities for assessing the
contractor‘s work to determine the validity and reasonableness of the
amounts claimed. As a result, inconsistent claims determinations can
occur, and there is no assurance that the proper amounts are paid. To
address the lack of documentation, we recommended that FEMA direct the
Office of Cerro Grande Fire Claims to require all claims reviewers to
document all steps and procedures they perform to determine the
validity of a claim and the amount recommended for payment. Although
FEMA did not specifically comment on our recommendation, officials
reported that claim reviewers have responded to their direction to
improve the claim file documentation.
Improve Existing Information System Prior to System Expansion:
FEMA‘s disaster information system, NEMIS, has fundamental problems
that must be resolved before it can be used as a springboard for an
expanded disaster assistance tool. FEMA plans to create and manage a
one-stop information Web site that will include information to assist
in emergency preparedness. The new site, Disasterhelp.gov--one of the
top three e-government initiatives of the Bush administration--aims to
provide a single federal point of contact for all assistance in
response to major disasters. FEMA officials hope that states and
localities will use the Web site as an information source for
preparedness, mitigation, response, and recovery, and that public and
private organizations might use it to share knowledge and information.
The new system is being structured to use FEMA‘s existing system--
NEMIS--as a building block.
FEMA needs to resolve NEMIS problems before the system can effectively
be used for developing Disasterhelp.gov. As we reported in
2001,[Footnote 13] NEMIS has limited application in providing the
information needed to manage and oversee disasters and suffers from a
lack of quality controls. We found that NEMIS can provide information
on a project-by-project basis, but it is severely limited in its
ability to provide higher-level information that could help FEMA
management review the agency‘s performance. Further, there have been
many complaints from federal and state disaster personnel that the
system is difficult to use and subject to sporadic shutdowns. In
addition, the system does not automatically verify certain information
that has been entered; and it can be unreliable, time-consuming, and
difficult to use in a remote disaster environment. The quality of the
information in NEMIS is also suspect because of FEMA‘s reliance on
temporary staff that may lack experience with the system or training in
its use.
Furthermore, in the administration‘s fiscal year 2002 budget, OMB noted
that FEMA has traditionally given little oversight to its information
technology spending. OMB stated this led to ineffective and costly
information technology projects, and specifically noted the $67 million
NEMIS system. OMB said that the system has a history of crashing during
disaster response operations.
Reduce the Impact of Natural Hazards by Improving the Efficiency of
Mitigation and Flood Programs:
For many years, FEMA has focused increased emphasis on reducing the
impact of natural hazards, not only to lessen the impact to property
and individuals, but also to reduce federal disaster costs. Two of the
agency‘s major efforts in this regard have been its mitigation programs
and the National Flood Insurance Program. These programs seek to
strengthen structures against the effects of hazards or remove them
from harm‘s way and to minimize the need for future FEMA disaster
assistance. However, concerns exist in both of these efforts that may
limit their effectiveness in achieving these objectives.
Moreover, the placement of FEMA within DHS represents a substantially
changed environment in which FEMA will conduct its missions in the
future, and missions that focus on reducing the impacts of natural
hazards, such as hazard mitigation and flood insurance, may receive
decreased emphasis. Sustained attention to these programs will be
needed to ensure they maintain or improve their effectiveness in
protecting the nation against, and reducing federal costs associated
with, natural hazards.
Multihazard Mitigation Programs:
The cost of federal disaster assistance has grown significantly since
the late 1980s. During the 12-year period ending in 1989, the
expenditures from the disaster relief fund totaled about $7 billion (in
fiscal year 2001 dollars). However, during the following 12-year period
ending in 2001, as the number of large, costly disasters has grown and
the activities eligible for federal assistance have increased,
expenditures from the disaster relief fund increased fivefold to about
$39 billion (in fiscal year 2001 dollars). (See figure 2.) Disaster
assistance costs are expected to remain high in 2002, in part as a
result of the September 11, 2001, terrorist attacks. According to
FEMA‘s projections, disaster assistance expenditures from the disaster
relief fund will total more than $4 billion in fiscal year 2002.
Figure 2: Disaster Relief Fund Expenditures and Number of Declared
Disasters, Fiscal Years 1978-2001 (in Fiscal Year 2001 Dollars):
[See PDF for image] - graphic text:
[End of figure] - graphic text:
As costs for disaster assistance have increased, mitigation actions--
both ’brick and mortar“ efforts, such as elevating buildings in flood-
prone areas or creating tornado-resistant structures, and outreach
activities, such as providing mitigation education and awareness to the
public--have taken on greater importance. Figure 3 shows a house in the
process of being elevated to mitigate flood damage.
Figure 3: House in North Carolina in the Process of Being Elevated to
Mitigate Flood Damage:
[See PDF for image] - graphic text:
[End of figure] - graphic text:
FEMA has placed more emphasis on disaster mitigation efforts to reduce
or eliminate long-term risks to people and property from hazards and
their effects. Among the most significant of these efforts are its
multihazard mitigation programs that address a broad range of hazards.
These are the Hazard Mitigation Grant Program, which provides funding
to undertake mitigation actions in areas that have recently suffered a
major disaster, and the Project Impact program, which funds predisaster
mitigation actions.[Footnote 14]
Concerns have been raised regarding the demonstration of cost
effectiveness of some mitigation projects in these programs. For
example, as we reported in 1999, FEMA had exempted four categories of
projects in the Hazard Mitigation Grant Program from benefit-cost
analysis,[Footnote 15] and for projects in these categories--the number
of which FEMA could not identify--the cost effectiveness was unknown.
Similarly, FEMA‘s Office of Inspector General reported in March 1998
and again in February 2001 concerns about the cost-effectiveness of
mitigation projects and pointed out that analyses had often not been
done and techniques for conducting them were poorly understood.
Furthermore, many projects had been exempted from analysis.[Footnote
16]
The administration has also had concerns with the cost-effectiveness of
mitigation projects, and in FEMA‘s fiscal year 2003 budget request, a
consolidation of the mitigation programs has been proposed. This
proposed consolidation would (1) eliminate the Hazard Mitigation Grant
Program, (2) establish a new predisaster mitigation program, and (3)
require all grants to be awarded on a national, cost-competitive basis.
The funding for mitigation activities would be around $300 million
annually--relatively consistent with historical averages--but all
mitigation funding would be subject to the annual appropriation process
and spending caps. Currently, funding for the Hazard Mitigation Grant
Program can total up to 15 percent of the total grant funds for
disasters, an amount that has no dollar limit.
We reported in September 2002 that the administration‘s proposals to
change the mitigation programs could raise additional challenges to
mitigation program participation and implementation.[Footnote 17]
These challenges include: (1) a reduced window of opportunity for
taking advantage of the heightened interest in mitigation that exists
after a disaster has struck, (2) potential exclusion of some states
from disaster mitigation funding, and (3) possible curtailment of
outreach and planning activities that increase mitigation awareness and
participation. Additionally, FEMA does not have a process for
determining or comparing the relative benefits and costs of projects
needed for a competitive grant program. As a result, these changes to
the mitigation programs could lessen their effectiveness.
Flood Insurance Program:
Floods have inflicted more economic losses upon the United States than
any other natural disaster. From fiscal year 1992 through fiscal year
1999 alone, 20 major flooding disasters caused over $97 billion in
damages. Since its inception 34 years ago, the National Flood Insurance
Program has become a major component of the federal government‘s
efforts to provide disaster assistance. The program offers insurance to
property owners in communities that have joined the program and
encourages floodplain management efforts to mitigate flood hazards.
Additionally, the program has reduced federal expenditures on disaster
assistance. It is estimated that community compliance with the
program‘s standards for new construction are now saving about $1
billion annually in flood damage avoided, and that its payment of
nearly $12 billion in insurance claims replaced costs that would, to
some extent, have increased taxpayer-funded disaster relief.
Figure 4: Net Financial Status of the National Flood Insurance Program
(Annual Income Minus Costs):
[See PDF for image] - graphic text:
[End of figure] - graphic text:
Nevertheless, the National Flood Insurance Program has not operated on
solid financial footing. Annual operating losses or net revenues from
the insurance program‘s operations have varied significantly from year
to year, and while revenues exceeded program costs in some years,
cumulative program costs exceeded income by more than $1.3 billion
during fiscal years 1993 through 2001. (See Figure 4.):
This long-term loss has occurred because the flood insurance program is
not actuarially sound. As we reported in July 2001,[Footnote 18] about
30 percent of the policies in force are subsidized. By law, FEMA is
prohibited from charging full premiums for structures that were in
existence before a community joined the program, and on average the
premium on subsidized policies represents only about 38 percent of the
true risk premium for these properties. FEMA estimates subsidized
properties to be as much as four times more likely to suffer a flood
loss, and to receive 40 percent more damage, than properties with
unsubsidized policies. FEMA officials estimated that premium income
from subsidized policyholders is about $500 million per year less than
it would be if these rates had been actuarially based.
Further, the program is not designed to collect sufficient premium
income to build reserves to meet the long-term future expected flood
losses. The program‘s annual target for premium income is at least the
amount of losses and expenses in an average year. However, the program
has only been in existence since 1978 and has not experienced any
catastrophic loss years; consequently, in determining losses and
expenses in an average year, it does not include possible catastrophic
losses.[Footnote 19] This, in turn, does not enable the program to
build sufficient reserves to cover such a loss. Because the program
does not collect sufficient premium income to build reserves to meet
the long-term future expected losses, it is inevitable that losses from
the claims and program expenses will exceed the funds available to the
program in some years and, cumulatively, over time. Figure 5
illustrates severe flooding that occurred in East Grand Forks,
Minnesota.
Figure 5: Destructive Flooding in East Grand Forks, Minnesota:
[See PDF for image] - graphic text:
[End of figure] - graphic text:
In addition to these concerns, the level of compliance with
requirements for the mandatory purchase of flood insurance is unknown.
The purchase of flood insurance is required for properties located in
flood-prone areas of participating communities for the life of mortgage
loans made or held by federally regulated lending institutions,
guaranteed by federal agencies, or purchased by government-sponsored
enterprises.[Footnote 20] However, no system exists upon which to
determine the level of compliance. In June 2002,[Footnote 21] we
reported that, based on an analysis of data on new mortgages and new
flood insurance policies, compliance with mandatory insurance purchase
requirements does not appear to be a problem at the time mortgage loans
are originated. However, no readily available data exists upon which to
determine if flood insurance policies are being maintained over the
life of the mortgage loan as required. Consequently, the federal
government remains at risk of having to provide disaster assistance to
properties that should be covered by flood insurance and of not
receiving all the flood insurance premiums that it should.
The administration has recognized that the National Flood Insurance
Program faces major financial challenges, and has proposed several
reforms to improve financial performance and transfer greater financial
liability to individuals building in flood-prone areas. These reforms
include phasing out premium subsidies on second homes and vacation
properties and requiring that mortgage borrowers insure the full
replacement value of their properties. Nevertheless, while these steps
may result in some improvement to the program‘s financial soundness,
the underlying problems have yet to be fully addressed. Additionally,
beginning in fiscal year 2003, FEMA expects to begin a program to
update existing flood rate maps, an effort that may increase the number
of properties within the identified flood zone and exacerbate the
current problems in the flood insurance program.
Resolve Financial Management Weaknesses to Ensure Fiscal
Accountability:
Sound financial management is critical to ensuring that FEMA‘s--and by
extension, the federal taxpayer‘s--funds are appropriately controlled,
managed, and reported. In fiscal year 2001, FEMA received a qualified
opinion on its financial statement from its independent auditors--a
reversal from the previous 3 years in which it received unqualified
audit opinions. Further, the auditors reported six material internal
control weaknesses in FEMA‘s financial systems as well as substantial
noncompliance with certain laws and financial regulations such as the
Federal Financial Management Improvement Act. Until these weaknesses
and instances of noncompliance are addressed, FEMA will not be able to
achieve effective financial accountability and will continue to be at
risk for errors, fraud, or noncompliance that may not be promptly
detected.
Inadequate Accounting for Property and Unliquidated Obligations:
FEMA received a qualified audit opinion on its financial statements for
fiscal year 2001.[Footnote 22] This was a departure from the last 3
years when FEMA received unqualified opinions on its financial
statements. FEMA‘s auditor was unable to issue an unqualified opinion
because, with regard to personal property amounts, it found that FEMA‘s
systems were not integrated and required two different manual
accounting processes, which together were inadequate for financial
reporting purposes. Due to these inadequate processes, FEMA could not
reconcile the property information from the manually created
spreadsheets to its personal property management system and to its core
financial system. As a result, the auditors were unable to determine
the accuracy of the $10.8 million amount reported for FEMA‘s equipment.
Further, FEMA did not have adequate support for its unliquidated
obligations accounts. The auditors found that FEMA did not reconcile
many of these accounts fully or on time. Once FEMA reconciled
unliquidated obligations from its subsidiary records to the general
ledger, it reduced the general ledger by $77 million, as of September
30, 2001, in order to bring its financial statement into balance.
However, FEMA did not have supporting documentation for the reduction.
As a result, the auditors were unable to determine the accuracy of the
adjustment made to FEMA‘s financial statements.
Internal Control Weaknesses Impede Financial Accountability:
FEMA‘s auditor has also identified six serious weaknesses with the
agency‘s internal financial controls. These are as follows:
* Weak information security controls and insufficient financial system
controls increase vulnerability, such that users with viewing access
could modify data, including creating new records. This results in a
substantial risk that financial resources and data may be exposed to
unauthorized modification, disclosure, loss, or impairment.
* Ineffective interfaces between FEMA financial systems result in
inefficient and potentially inaccurate manual processes to integrate
data for financial reporting or financial statement preparation. Such
interface problems and manual processes significantly affect FEMA‘s
ability to process, maintain, and report financial information.
* The financial statement reporting process is unreliable and does not
generate reliable reports, as financial statements are not accurate
until a significant number of adjustments are made and substantial
resources are committed to review and validate the statements. These
conditions increase the risk that FEMA‘s financial statements could be
inaccurately presented.
* FEMA does not have adequate accounting systems and processes that
ensure that all property, plant, and equipment is properly recorded,
accurately depreciated, and tracked in accordance with FEMA policies
and applicable federal accounting standards. As a result, the system
cannot track items to supporting documentation or to a current
location.
* Many of FEMA‘s accounts had not been reconciled during the year and,
once reconciliations were performed, significant adjustments to FEMA
financial accounts and records were required. For example, a $177
million reduction was required in records supporting accounts payable,
and at the time the report was issued, there still existed a $22.6
million unreconciled difference in a fund account between FEMA and the
Department of the Treasury‘s records.
* Due to noncompliance with applicable regulations and policies, FEMA‘s
accounts receivable required detailed analysis and stronger collection
efforts. For example, as of September 30, 2001, FEMA has made no
attempt to recoup about $30 million of overpayments recorded as
accounts receivable in 1998.
The FEMA IG reported in January 2002 that problems with the agency‘s
internal controls significantly affect its financial accountability. In
the fiscal year 2001 Annual Performance and Accountability Report,
FEMA‘s IG reported that FEMA does not have a functioning integrated
management system and that its system of internal controls has
weaknesses that have adversely affected its ability to record, process,
summarize, and report accurate, reliable, and timely financial
information.
FEMA Did Not Comply with Certain Laws and Regulations:
The auditors reported that FEMA‘s financial management systems did not
substantially comply with requirements of certain laws and regulations
intended to improve financial accountability. The auditors reported the
following:
* FEMA‘s financial management systems did not substantially comply with
federal financial management systems‘ requirements or applicable
federal accounting standards under the Federal Financial Management
Improvement Act.
* Improvements were needed to FEMA‘s information security program in
order to fully comply with the Government Information Security Reform
Act.
* FEMA‘s selection, control, and evaluation processes for information
resource investments did not comply with the Clinger-Cohen Act.
* FEMA did not have a financial management system plan with action
plans and time frames for enhancing the agency‘s financial systems
environment and, other than its IG coordinated reviews, did not perform
reviews of financial management systems to ensure sufficient controls
were in place as required by the Federal Managers‘ Financial Integrity
Act and OMB Circular A-127, Financial Management Systems.
In a February 2002 letter responding to the audit report, FEMA
officials agreed with each issue and identified corrective actions to
all recommendations. FEMA stated that processes would be in place
during fiscal year 2002 to address the report qualifications and the
material internal control weaknesses. In addition, FEMA officials
expect the Chief Information Officer‘s final report to provide
responses to concerns about information technology and information
system security controls.
Until these qualifications, weaknesses, and instances of non-compliance
are addressed, FEMA will not have accurate financial statements or
adequate internal controls over financial information. FEMA will
continue to require intensive time-consuming manual efforts to develop
reliable information and be at risk for errors, fraud, or noncompliance
that may not be promptly detected. The results of the fiscal year 2002
financial statement audit will be the determining factor in the success
of FEMA‘s efforts to address these issues.
[End of section]
GAO Contacts:
Subject(s) covered in this report: Coordination of preparedness and
response efforts; ; Provision and management of disaster assistance; ;
Reducing impact of natural hazards; Contact person: JayEtta Hecker,
Director; Physical Infrastructure; (202) 512-2834; heckerj@gao.gov.
Subject(s) covered in this report: Building on lessons learned from
charities‘ response to September 11; Contact person: Sigurd Nilsen,
Director; Education, Workforce and Income Security; (202) 512-7215;
nilsens@gao.gov.
Subject(s) covered in this report: Financial management; Contact
person: Linda Calbom, Director; Financial Management and Assurance;
(202) 512-6906; calboml@gao.gov.
[End of section]
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Observations on the Federal Emergency Management Agency‘s Fiscal Year
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[End of section]
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FOOTNOTES
[1] FEMA‘s annual budget request provides for normal agency operations
and for conducting its various programs. Supplemental funding is
requested if funds appropriated in annual legislation are not
sufficient to respond to disasters. In fiscal year 2002, most of the
funds appropriated to FEMA were provided through supplemental
appropriations.
[2] U.S. General Accounting Office, Homeland Security: Critical Design
and Implementation Issues, GAO-02-957T (Washington, D.C.: July 17,
2002).
[3] U.S. General Accounting Office, Combating Terrorism: Key Aspects of
a National Strategy to Enhance State and Local Preparedness, GAO-02-
473T (Washington, D.C.: Mar. 28, 2002).
[4] U.S. General Accounting Office, Homeland Security: A Framework for
Addressing the Nation‘s Issues, GAO-01-1158T (Washington, D.C.: Sept.
21, 2001).
[5] Robert T. Stafford Disaster Relief and Emergency Assistance Act (42
U.S.C. 5121 et seq.)
[6] U.S. General Accounting Office, Disaster Assistance: Improvement
Needed in Disaster Declaration Criteria and Eligibility Assurance
Procedures, GAO-01-837 (Washington, D.C.: Aug. 31, 2001).
[7] U.S. General Accounting Office, Federal Grants: Design Improvements
Could Help Federal Resources Go Further, GAO/AIMD-97-7 (Washington,
D.C.: Dec. 18, 1996).
[8] U.S. General Accounting Office, September 11: More Effective
Collaboration Could Enhance Charitable Organizations‘ Contributions in
Disasters, GAO-03-259 (Washington, D.C.: Dec. 19, 2002).
[9] GAO-01-837.
[10] FEMA, Office of Inspector General Audit Division, Audit of FEMA‘s
Debris Removal Program (Washington, D.C., March 2001).
[11] U.S. General Accounting Office, Financial Management: Coordinated
Approach Needed to Address the Government‘s Improper Payments Problems,
GAO-02-749 (Washington, D.C.: Aug. 9, 2002).
[12] U.S. General Accounting Office, Federal Emergency Management
Agency: Weaknesses Exist in the Cerro Grande Fire Assistance Claim
Validation Process, GAO-01-848 (Washington, D.C.: July 13, 2001).
[13] GAO-01-837.
[14] The Project Impact program was discontinued in 2002, but a similar
program was funded by the Congress to continue predisaster mitigation
activities. However, this new program has not yet been implemented.
Consequently, we refer to the predisaster mitigation program as Project
Impact.
[15] U.S. General Accounting Office, Disaster Assistance: Opportunities
to Improve Cost-Effectiveness Determinations for Mitigation Grants,
GAO/RCED-99-236 (Washington, D.C.: Aug. 4, 1999).
[16] FEMA, Office of Inspector General Audit Division, Auditors Report
on FEMA Fiscal Year 2001 Financial Statement (Washington, D.C.,
February 2002) and Improvements are Needed in the Hazard Mitigation
Buyout Program 1-01-98 (Washington, D.C. March 1998).
[17] U.S. General Accounting Office, Hazard Mitigation: Proposed
Changes to FEMA‘s Multihazard and Mitigation Programs Present
Challenges, GAO-02-1035 (Washington, D.C.: Sept. 30, 2002).
[18] U.S. General Accounting Office, Flood Insurance: Information on
the Financial Condition of the National Flood Insurance Program, GAO-
01-992T (Washington, D.C.: July 19, 2001).
[19] A catastrophic loss year is defined as a year resulting in $5.5 to
$6 billion in claims losses, which has a 1 in 1,000 chance of
occurring.
[20] A federally regulated lending institution is any bank, savings and
loan association, credit union, farm credit bank, federal land bank,
production credit association, or similar institution supervised by a
federal entity for lending regulation. A government-sponsored
enterprise is a privately owned, federally chartered corporation that
serves a public purpose.
[21] U.S. General Accounting Office, Flood Insurance: Extent of
Noncompliance with Purchase Requirements Is Unknown, GAO-02-396
(Washington, D.C.: June 21, 2002).
[22] The qualified opinion was due to inadequate documentation to
support personal property amounts and an unsupported adjustment to its
unliquidated obligations account.
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