Inspector General: FEMA overpaid Floridians $177M, has $1B in future liabilities

Hurricane damage FL 2005 file photo

While Floridians celebrated New Year’s Eve, the U.S. Department of Homeland Security slipped a last-minute firecracker of a press release in which it acknowledged massive government waste by one of its most stigmatized federal agencies.

The Federal Emergency Management Agency appears to have “overfunded” its Florida public assistance grant program to the tune of $177 million, according to the DHS inspector general’s office.

The taxpayer loss stems from the two-year period of 2004 and 2005, when the state was hit with seven hurricanes and two tropical storms. FEMA provides aid to states after the president declares an official disaster. The Public Assistance Program is FEMA’s primary way to deliver financial aid.

The bottom line: FEMA paid for property damages that should have been covered by private insurance in addition to sometimes paying on top of private insurance reimbursements, effectively duplicating recovery benefits.

“Clearly, FEMA’s insurance review process failed to achieve the intended objectives for the 2004 and 2005 Florida hurricanes,” the audit concluded.

But that’s not all.

As more sunlight begins to shine on the disaster agency’s mismanagement — nearly a decade later — the audit reveals taxpayers are now on the hook for an estimated $1 billion in future liabilities due to grant award processing failures.

In order to receive the government aid, recipients are supposed to show they’ve acquired proper insurance going forward to both protect taxpayers and hedge against future storm damage. That didn’t happen.

“FEMA’s insurance specialists routinely waived the requirement to obtain and maintain insurance for future disasters, even though they did not have the authority to take such action,” the audit states. “As a result, FEMA potentially stands to lose up to a billion dollars in future Florida disasters because many Florida communities may not have adequate insurance coverage for future disasters such as those that occurred in 2004 and 2005.”

Christian Camara, director and co-founder of the R-Street Institute, a market-oriented think tank specializing in Florida hurricane insurance reform, sounded a note of caution.

“In the aftermath of a disaster, people genuinely need assistance, and quickly,” he told Watchdog. Without defending FEMA’s reported mismanagement, Camara explained that, initially, confusion is part of the disaster recovery process and “haste to get people relief can open the door” to mismanagement and fraud.

The question is how much waste and inefficiency is reasonable.


By William Patrick | Florida Watchdog


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