NEWS YOU WON'T FIND ON CNN

Where Did The Money Go?

By Geoff Pender

08/31/07 "Sun Herald" -- - BILOXI -- It's hard for the average working stiff to contemplate a number as vast as the $23.5 billion the federal government has allocated to Mississippi for Katrina recovery.

Think of it this way:

It's enough money to buy two average-sized houses for each of the 65,000 families in Mississippi who lost their homes.

And, there would be enough left over to buy each family a brand-new Honda Accord to drive between their two $166,000 houses. That's the EX-L, V-6 four-door sedan Accord, with all the extras and navigation, not a base model.

It's enough to give each man, woman and child in the three southernmost counties $68,500 apiece. Or, to look at it another way, federal Katrina spending in Mississippi will cost each person in the United States about $94.

Just the $1 billion the U.S. Government Accountability Office estimates FEMA lost to "fraud, waste and abuse" within a short time after the storm would be enough to cover the city of Waveland's budget for 143 years, or buy more than 6,000 new houses.

Today, the Sun Herald looks at Katrina spending in Mississippi.
GEOFF PENDER After "normal" U.S. disasters, the federal government, mainly through FEMA, has always brought resources to bear, but the spending was closely regulated and greatly limited by the federal Stafford Act.

Katrina wasn't a normal disaster.

It soon became clear that the Stafford Act, which governs federal assistance to states and local areas, didn't contemplate such massive, regional destruction.

If government had played by the pre-Katrina rules, Mississippi would have received about $6 billion to $7 billion in federal relief, instead of the $23.5 billion and counting that has been allocated.

No homeowners would have received recovery grants. Private property would still be covered with mountains of debris. Most federal aid, including temporary housing, would have ended within months of the storm. Other payments or programs would still be years away.

There would have been no reprieve from quadrupling wind pool insurance rates. While premiums remain exorbitant, they would have been far, far worse.

And state and local governments would be looking at bankruptcy, burdened with hundreds of millions of dollars in debt from "matching money" requirements for the federal aid.

As it has with so many things, Katrina has forever changed how federal tax dollars can be spent after disasters. And as with most things in the aftermath of the storm, the rules are in large part being made up as we go along.

"(The Stafford Act) really was way inadequate," said U.S. Sen. Trent Lott, part of the Mississippi delegation that convinced Congress to push aside the rules and allocate billions in unprecedented spending to Katrina relief. "That law was written in different times under different circumstances... We've been changing the Stafford Act in pieces, as we see what works and what doesn't, adding changes to other moving leg- islation."

Economists and other experts have predicted federal spending will jump-start the Coast, state and regional econ- omies.

For the state as a whole, that's already happening.

But on the Coast, housing, insurance and labor problems, while not crippling the economy, have thus far prevented a boom.

That, some say, could change as billions of dollars of public projects - schools, city halls, roads - are clearing red tape and about to begin. If the labor can be found - and that's a significant 'if' - the federally-funded projects should make the local economy take off over the next few years.

'Specific, reasonable request'

Mississippi has, to date, received much of the $34 billion it formally asked for in federal spending, thanks in large part to U.S. Sen. Thad Cochran, the rest of the state congressional delegation and Gov. Haley Barbour.

"Not only has the administration and Congress given the Katrina states unprecedented amounts of money, they have also given unprecedented latitude to spend that money on Mississippi priorities rather than Washington priorities," said Barbour, who used his Washington connections as a former lobbyist to help secure the federal spending and waive rules.

For instance, Barbour managed to convince federal authorities to let the state use more than $600 million to expand water and sewerage into northward, rural areas where growth is expected as homeowners and businesses move inland. This is on top of the more than $400 million received to replace systems destroyed by the storm.

The Stafford Act would have allowed federal dollars to cover only rebuilding the water and sewerage that was destroyed. As an official once put it, "If you had a 1981 Chevette with a leaky radiator, FEMA will buy you a 1981 Chevette and poke a hole in the radiator."

Of Mississippi's federal spending requests, the largest remaining unfunded is for environmental restoration of marshland and the Barrier Islands, expected to cost from $7 billion to $10 billion over eight to 10 years.

If this is approved, Barbour said, Mississippi would have received about $30 billion of the $34 billion it requested. This does not include federal money spent repairing federal facilities on the Coast.

"We presented a very specific, reasonable request, half of which we were entitled to under existing law," Barbour said. "We didn't ask for everything we ever dreamed of, multiplied by two."

On the sharp end

Complaints about federal Katrina spending, and state management thereof, appear to come in two broad categories: Either the money is too closely guarded and shrouded in red tape, like the homeowner grant program; or the money is spent willy-nilly and eaten up by waste and abuse.

Out on the sharp end of the stick for federal spending, Eddie Favre, mayor of Katrina-ravaged Bay St. Louis, says that overall he'd give the federal funding efforts decent marks.

"But we've just got to do it quicker," he said, "especially homeowner grants and other housing programs. We have some people who have gotten a check, or even three or four checks, under phase I of the homeowner grants. But we still have a lot of people who haven't gotten anything yet. There is still frustration from their standpoint and ours. Until we get these people back home, we are not going to have a Bay St. Louis or a Waveland like there used to be."

Lott admits he "got disgusted" about the homeowner grant program. He believes HUD dragged its feet in approving the state-administered program, and that Barbour and the state used "an overabundance of caution" in handling the federal money, which resulted in needless delays.

"I think the state did a very good job, and Haley has been magnificent in the way he's handled things," Lott said. "But on the homeowner grants, I did start saying, 'Haley, what's happening here?' They had to have a system to make sure the people who got it deserved to get it, but I never understood, for instance, why they needed lawyers for the grant closings."

Until only recently, Favre said, the cities hit the worst were totally stalled, despite the billions of federal dollars earmarked for their recovery.

"Until they passed the bill a few months ago that eliminated the matching requirements for the federal money, we weren't able to do anything, other than some small, minor piecemeal projects. Now we are about to move on multi-million dollar projects."

All the federal disaster spending programs have overlooked one thing, Favre said, operating money for cities to stay afloat until their tax bases are rebuilt.

"There's still no provisions anywhere for that, for operating funds," Favre said. "We've borrowed money from the federal community disaster loan program. They are now at least talking about forgiving that debt when it comes due in two years. We were also able to borrow money under the (state MDA) bond bank. But we just had to find $3 million to pay part of that back. We ended up having to beg and borrow and cut just to keep operating."

Excruciatingly slow, record-breaking speed

If you look at federal Katrina spending as a disaster victim or taxpayer, you'd likely determine it has gone excruciatingly slow, been fraught with waste and fraud and awash in waves of red tape.

If you view federal Katrina spending compared to previous disasters and programs, it has gone with record-breaking speed, has been relatively well monitored and and much of the red-tape has been pushed aside for expediency.

"Nothing we've done has been fast enough to suit me," said Barbour. "If it's not fast enough to suit me, then think about somebody living in a FEMA trailer two years after the fact. On the other side of the coin, it's been done so much faster and on a larger scale than any other program, period. That's especially positive when you consider none of these programs existed. We created the programs from scratch, then had to spend long periods of time negotiating with HUD and other agencies, doing things that had never been done before."

Katrina spending has at times been criticized by storm victims, local officials, Congress, the media and watchdog groups.

Just as Katrina overwhelmed emergency infrastructure and programs, post-Katrina spending overwhelmed many accounting and checks-and-balances systems.

Lack of data

Closely monitoring Katrina spending would be akin to closely monitoring the number of grains of sand on the Coast's beach.

Congress has so far appropriated about $116 billion to the Gulf Coast states - primarily Mississippi and Louisiana - in the aftermath of the 2005 hurricanes.

But how much of that has actually been spent? No one really knows.

"There's not really one particular place to go and find the spend-down," said Stan Czerwinski, director for strategic issues for the U.S. Government Accountability Office. "Keep in mind, we've just finished paying out the money on Hurricane Andrew (1992). There's a very good likelihood that, 20 years from now, if money is being put into the disaster relief pot, we will still be paying for the Katrina disaster."

Contrary to popular belief, the federal money allocated for Katrina spending is not sitting in a bank account drawing interest. The Cash Management Improvement Act doesn't allow that. It's "drawn down" from the treasury as the spending is approved or, in many cases, as reimbursement to governments down the food chain.

Amy Liu of the Brookings Institution notes: "FEMA is the only agency required by law to report their spending. This, despite the fact that the Army Corps, HUD and SBA also have large engagements in a post-disaster situation. Further, this makes the task of federal and public oversight of the effectiveness and efficiency of major taxpayer investments difficult. Without data, we cannot learn and improve upon current and past practices."

Federal money allocated to Mississippi for Katrina recovery

Congress has thus far allocated $23.5 billion for Mississippi Katrina Recovery. A breakdown of the money:

Federal funds allocated for state activities:

Community Development Block Grant: $5,481,221,059

• Phase I homeowner grants: $1.1 billion

• Phase II homeowner grants: $700 million

• Elevation grants: $250 million

• Public housing: $120 million

• Utility/wind pool subsidies: $380 million

• Water and sewerage: $641 million

• Economic development: $340 million

• Community revitalization: $305 million

• Small rental property assistance: $125 million

Federal Highway Administration Emergency Relief Program: $1,013,000,000

Uncompensated Care Program, hospital reimbursements: $643,668,933

Hurricane Katrina Education Recovery Act: $323,966,913

Social Services Block Grant: $128,398,427

Higher Education Recovery: $121,917332

National Emergency Grant: $95,000,000

Law Enforcement Grant: $58,250,000

National Park Service Historic Preservation Fund: $27,500,000

Mental Health Crisis Counseling Programs: $25,128,566

Job Corps Facilities: $14,000,000

Subtotal: $7,932,051,230

Federal funds to individuals, local and state governments:

FEMA Public Assistance to local governments: $2,357,482,556

FEMA Mission Assignments: $1,667,853,393

FEMA Individual Assistance: $1,245,389,062

FEMA Hazard Mitigation Grant Program: $433,895,495

FEMA Alternative Housing Pilot Program, "Katrina cottages": $281,318,612

FEMA Community Disaster Loans: $270,621,714

SBA Homeowners and renter loans: $2,063,563,700

SBA business loans: $540,000,000

SBA business working capital loans: $19,000,000

National Flood Insurance Program: $2,418,484,220

Subtotal: $11,297,608,752

Federal funds for federal activities:

Navy shipbuilding and construction: $1,987,000,000

VA Hospital: $292,500,000

Seabee base and Stennis Space Center: $291,219,000

Keesler Air Force Base, housing: $278,000,000

Keesler Medical Center: $45,000,000

Keesler Air Force Base: $43,400,000

U.S. Army Corps of Engineers: $267,700,000

Armed Forces Retirement Home: $176,000,000

Military Construction and Support: $169,720,000

Navy housing: $131,639,000

Armed Forces Retirement Home: $45,000,000

Gulfport Veterans Home: $35,919,000

NOAA Marine Resources: $37,000,000

Public Housing Authorities: $27,320,120

USDA Rural Development, single family housing: $426,400,000

USDA Rural Development, multifamily housing: $10,889,365

USDA Rural Development, community facilities grants: $7,500,000

USDA Rural Development, community facilities loans: $2,627,500

Subtotal: $4,274,833,985

- FEDERAL GOVERNMENT

Stafford Act

The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988 is an amended version of the Disaster Relief Act of 1974. It authorizes the president to issue a major disaster declaration to speed a wide range of federal aid to states determined to be overwhelmed by catastrophe. Financing for the aid is appropriated to the Disaster Relief Fund, administered by the Department of Homeland Security through FEMA. The act authorizes three major categories of aid to:

• Individuals and households: immediate temporary shelter, cash grants maximum of approximately $25,000 for uninsured emergency personal needs, temporary housing assistance generally no longer than 18 months, emergency food supplies.

• State tribal and local governments and certain private nonprofit organizations: repair, reconstruction or replacement of infrastructure and recreational facilities; emergency protective measures, communications and transportation systems; loans to replace lost revenue or meet federal cost sharing requirements and hazard mitigation to reduce future losses

• Disaster relief: Congress appropriates money to the Disaster Relief Fund to ensure that the above federal assistance is available.

Under Stafford Act authority, five types of actions may be taken, they are:

• Major disaster: The president issues a major disaster declaration after receiving a request from the governor of the affected state.

• Emergency: The president may issue an emergency declaration without the request of a governor, if primary responsibility rests with the federal government, on "any occasion or instance" in which the president determines federal assistance is required.

• Fire suppression: The secretary of DHS is authorized to provide fire suppression assistance to supplement the resources of communities.

• Defense emergency: Upon the request of a governor, the president may authorize the Department of Defense to carry out emergency work for a period not to exceed 10 days, and limited to work essential for the preservation of life and property.

• Pre-declaration activities: When a situation threatens health and safety, and a disaster is imminent but not yet declared, DHS may place employees on alert, and deploy teams and resources to maximize the speed and effectiveness of the anticipated federal response.

The series

Where did all the money go is a Sun Herald series taking a look at the accounting of federal and charitable dollars spent toward South Mississippi's recovery from Hurricane Katrina.

Today

Where did all the money go - Closely monitoring Katrina spending would be akin to closely monitoring the number of grains of sand on the Coast's beach.

Katrina fraud - The U.S. Government Accountability Office estimates FEMA lost $1 of every $6 to "fraud, waste and abuse" for the first $6 billion it spent after Katrina.

Katrina grants - At the two-year mark, some say the program is missing the mark in helping people of low-to-moderate incomes enough.

Pender column - The title of this package of stories, "Where did all the money go?" requires this mea culpa: We don't know. Nobody does.

Monday

Charity relief - Thousands of people still struggle to recover from Katrina. And many will tell you the kindness of strangers has kept them afloat.

Affordable housing - South Mississippi residents who had limited resources and lived in rentals before Katrina, are in many cases sinking, mentally at least, from the pressure of just trying to survive.

Lee column - Keeping it simple in trying to compile numbers on charitable spending after Hurricane Katrina is not an easy process.

© 2007 Sun Herald. All Rights Reserved.

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