Local communities hit hard by Hurricane Sandy are starting to receive millions in federal aid for recovery and clean up. But past experiences show that much of the money could be lost to waste and abuse.
Seven years after El Dorado County, California, suffered severe flooding and mudslides during freak Christmas holiday season storms, the federal government finally got around this year to checking on how taxpayers' disaster funds were spent. What it found was, well, another disaster.
"The County did not comply with federal grant regulations and FEMA guidelines to award a contract totaling $2.2 million, nor did it ensure the reasonableness of the contract price," the Homeland Security Department's inspector general concluded in a recent report that reminds American taxpayers in the aftermath of superstorm Sandy that they often get fleeced during the cleanup and restoration efforts after natural disasters.
In audit after audit of federal emergency funds from disasters over the last decade, the Homeland Security Department's inspector general has found significant amounts of waste, fraud and misspending that totals in the hundreds of millions of dollars, a Washington Guardian review has found.
In Florida, for instance, a local water and sewage district recently got caught spending millions on a project that wasn't permitted under the disaster declaration for 2004's Hurricane Charley, forcing the IG to order more than $3 million to be repaid to the government.
Likewise, the city of Milwaukee, Wis., got $15.4 million after it was hit by heavy rains and flooding. But the vast majority of the money - $10.9 million - was used unnecessarily to repair a pumping station that had been slated for decommissioning before the bad weather hit.
And when Long Beach, Miss., was hit by Hurricane Katrina in 2005, it received $4.3 million from the government to help rebuild its port. But it didn't take long for concerns to rise. Investigators found that some contracts weren't competed, and those that were did not properly consider women- and minority-owned businesses. The failure to use competitive bidding to get taxpayers the best prices for reconstruction work is a common theme in the scores of audits reviewed by the Washington Guardian.
Local officials in many of the disaster areas, like El Dorado County, often dispute the criticisms found in audits, offering their own explanations for why money wasn't spent the way it was supposed to. But the government stands by its audit findings and is seeking to recover many of the funds. In El Dorado's case, the federal officials are seeking repayment of $2.2 million.
Richard Skinner, a veteran inspector general who served as Homeland Security Department's chief watchdog for several years before retiring, said any time a disaster occurs there is demand to get the money distributed quickly.
"That puts federal, state and local dollars at risk because there is so much money being passed through in such a short period of time it makes it very vulnerable to fraud, waste and abuse," he said in an interview. "They do want to get the job done and do it in a very expedient way, but you also have to do it in a very efficient economical way. You can not be wasteful."
A recent Homeland Security inspector general's report estimated at least $371 million in recovery spending from disasters since Katrina was misspent or defrauded, about five percent of the $8 billion the oversight office studied. That money came from the Federal Emergency Management Agency, just one of several agencies that provide aid in the aftermath of storms, earthquakes and other disasters.
"Following Hurricanes Katrina and Rita in 2005, and other disasters up to December 31, 2010, FEMA disbursed more than $8 billion in assistance payments, some of which were later determined to have been improperly paid to individuals who were ineligible or who received duplicate payments," the recent audit said.
FEMA did not return calls seeking comment. In a press release, however, the organization said it is working hard to ensure the current Hurricane Sandy recovery efforts are effective and all resources are made available to those in need.
"More than 3,200 FEMA personnel are working to support response operations, including search and rescue, situational awareness, communications and logistical support in states affected by the storm," FEMA's statement said. "Community relations teams are on the ground in the hardest hit areas of the Mid-Atlantic going door-to-door to inform disaster survivors about available services and resources and to gather situational awareness. More than 1,000 housing inspectors are on the ground, meeting with disaster survivors to identify damages to homes, to further expedite assistance to individuals."
Examples of past problems abound. Some are small dollar totals, but they add up over hundreds of counties across the nation during multiple disasters.
Pompano Beach, Fla., received criticism for overbilling the government for cleaning up more debris then there actually was, investigators found. Federal and local officials blamed a billing mistake. The inspector general said the city should refund $230,000 to the government.
And when Miramar, Fla., received funds to clean up after Hurricane Wilma, investigators wound up questioning about $6 million for contracts they said the local government hadn't properly competed or tried to find the best prices.
"It is FEMA’s responsibility to hold states accountable for proper grant administration," the inspector general report said bluntly in shifting some of the blamed to federal officials.
Skinner said its important that local agencies maintain good records while spending federal funds.
"You want to make sure the taxpayer’s dollars are being used wisely and not frivolously," he said. "We can do it in a very timely manner, but at the same time we can do it in a very wise manner."
FEMA has learned a lot since Hurricane Katrina in 2005, Skinner said. When the storm destroyed large parts of New Orleans and the Gulf Coast, the government was widely criticized for a slow and ineffective response. But the organization learned from its mistakes, Skinner said. Not only has it gotten more money from Congress for disaster relief, but the emergency management agency has become much better at getting out in front of storms.
“It’s all a matter of getting prepared before the disaster ever occurs,” Skinner explained, adding that before Sandy hit, “FEMA was housed with the state governments and was prepared to provide relief immediately.”
Before Sandy hit, President Barack Obama said the government would "respond big and respond fast" to help with disaster relief and clean up.
"My message to the governors, as well as to the mayors, is anything they need, we will be there," the president said in October. "And we’re going to cut through red tape. We’re not going to get bogged down with a lot of rules. We want to make sure that we are anticipating and leaning forward into making sure that we’ve got the best possible response to what is going to be a big and messy system."
Local governments should request help when it is needed, Skinner said, but make sure to try to understand the requirements and regulations first.
"I think the most important thing that the locals should walk away with from any past experiences is to seek the support, to get assistance, to understand what the rules are, so that they don’t get themselves in trouble down the line," he said. "To navigate that whole relief effort can be very daunting."
Sandy's devastating damage will create an unprecedented wave of federal spending; New York alone is seeking $30 billion in U.S. funds. It will take years for taxpayers to know how wisely their recovery funds will be used after the East Coast disaster, but history suggests some problems are likely to be repeated.
The Federal Emergency Management Agency, or FEMA, is the government's disaster response arm that provides relief and reconstruction. The agency gained notoriety after the received failure of its efforts in New Orleans following Hurricane Katrina.