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Report Charges FEMA Wasted Funds After Hurricane Katrina

A report released in December by the Government Accountability Office said tens of millions of dollars’ worth of government disaster relief funds are being spent on the wrong people.

The investigation found that FEMA incorrectly awarded about $20 million in double payments to people claiming the same damage from hurricanes Katrina and Rita, as well as $17 million in rent payments to people already living in free government-provided housing.

At a hearing on the GAO report, Sen. Susan Collins, R-Maine, chairwoman of the Homeland Security and Governmental Affairs Committee, called the response to Katrina a “debacle.”

“FEMA has yet to strike the proper balance between expedited assistance and good stewardship of taxpayers’ funds,” Collins said.

The report also found millions of dollars were sent to foreign students not eligible for aid, and that breakdowns in communication hindered attempts to recoup incorrect payments.

GAO previously estimated in February that $1 billion worth of incorrect or fraudulent payments were made. FEMA had identified $290 million of overpayments and recovered $7 million as of November.

“FEMA’s low success rate in recovering improper payments makes abundantly clear the need to implement proper controls up front,” said Sen. Joseph Lieberman, D-Conn., ranking member on the Homeland Security Committee.

FEMA spokesman James McIntyre said many of the overpayments were the result of decisions made to deactivate controls, streamlining the application process, to get aid out as quickly as possible.

While a housing claim would normally be verified with a visit to the property, some homes were unreachable and entire areas were completely destroyed by the hurricane.

Confusion also arose because some families were scattered around the country and didn’t know their relatives already applied for aid.

“We had nearly 3 million people apply for assistance,” McIntyre said. “We feel we are now going through the process of identifying false claims, and once we have found them we will start the recouping process.”

McIntyre predicted that process will be lengthy, as fraudulent claims need to be investigated and people who were incorrectly overpaid are offered repayment plans.

“We will not put people in more jeopardy by demanding full payments when we know they are struggling to get their lives together,” McIntyre said.

More than 1.7 million Katrina victims are currently receiving assistance from FEMA.

Some efforts have been made to prevent incorrect claims the next time a disaster strikes. The Web site used to make claims was altered to stop duplicate registrations from being submitted. The FEMA call center also started requiring a phone identity verification process, including a Social Security number check.

While FEMA has been facing criticism over the lack of controls from the GAO, complaints about cancelling valid aid, and failures to provide aid at all, are persisting.

A federal judge ordered FEMA twice over the past month to restore aid to thousands of families whose housing assistance was cut off early without notification.

The payments will be retroactive to when aid was stopped and will continue until February, or until FEMA gives adequate notice and justification for termination. FEMA appealed the ruling, drawing harsh criticism from the judge, who demanded FEMA reinstate the assistance while the appeal process concludes.

“FEMA has been very unresponsive and hostile to the people trying to get their lives back on track,” said Charles Jackson, a representative from the New Orleans office of the Association of Community Organizations for Reform Now, which brought the suit on behalf of the families.

“They are trying to survive, they aren’t asking for a handout. They are looking for legitimate assistance until they can get up on their feet,” Jackson said.

The City of New Orleans also is taking issue with FEMA. Mayor Ray Nagin told reporters after the GAO report’s release that the city has seen only a tiny percentage of the billions of dollars promised for rebuilding.

“The dollars are not getting to the citizens and local governments trying to recover,” Nagin said. “We are ready to go, let the dollars flow.”

The continuing complaints about the speed of assistance prompted Homeland Security Secretary Michael Chertoff to scold FEMA, one of his own departments, for allowing red tape to interfere in the process too much. He accused FEMA of losing sight of “common sense and humanity.”

Being caught in the middle of the fallout from a disaster is nothing new for FEMA, said Patrick Roberts, a professor of public administration and policy at Virginia Tech.

“It’s a case of damned if you do and damned if you don’t. FEMA always faces this tradeoff in a disaster between speed of response and accuracy of work,” Roberts said.

While FEMA was not able to escape public criticism on either front, Roberts said because of the scale of the disaster, the situation could have been much worse.

Some of FEMA’s organizational problems can be attributed to the fact that the agency was never intended to be a first responder, said Mel Dubnick, professor of public administration at the University of New Hampshire.

FEMA was formed to organize and manage disaster relief. It was moved into the Department of Homeland Security in 2003, and many of its resources were diverted to deal with terrorism and outside threats.

Inexperienced appointees plagued the department and high turnover continues to be a problem.

“A huge issue is attracting talent to the agency,” Roberts said. “This is the department that is blamed every time there is a disaster.”

For FEMA, it will be a process of learning from what went wrong and trying to make improvements for the future.

“They have the culture of ‘What lessons do we learn from the last one?'” Dubnick said. “Agencies are always dealing with the last error, the last disaster.”


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