Segment 2 Of 2 Previous Hearing Segment(1)
SPEAKERS CONTENTS INSERTS
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EFFECTIVENESS OF MITIGATION SPENDING
Wednesday, August 4, 1999
House of Representatives, Subcommittee on Oversight, Investigations and Emergency Management, Committee on Transportation and Infrastructure, Washington, D.C.
The subcommittee met, pursuant to call, at 2:00 p.m., in Room 2167, Rayburn House Office Building, Hon. Tillie K. Fowler [chairwoman of the subcommittee] Presiding.
Mrs. FOWLER. The subcommittee will come to order. A little over a year ago I witnessed the devastation of the Florida wildfires of 1998, and it is truly difficult to explain the pain and suffering of people who have completely and utterly lost all of their belongings and in some cases their loved ones. Though no one needs to sell me on the need for Federal mitigation assistance. Providing assistance before a disaster occurs to avoid suffering later on not only makes sense but really has become a necessity.
More people than ever before are vulnerable to disasters in this country and the only way to reverse this trend is by placing greater emphasis on prevention. I am happy to say that this subcommittee has demonstrated its commitment to mitigation. Last February we passed the Disaster Mitigation and Cost Reduction Act of 1999. That act, which subsequently passed the House on March the 4th by a huge margin, authorizes an increase of over $600 million in mitigation spending over the next 5 years.
Now, coupled with increasing the authorization for mitigation funding, is the subcommittee's obligation to make sure that mitigation funding goes to the most effective projects available. We need to make sure that we are getting the most bang for each mitigation buck.
The law requires that mitigation spending be cost effective. This requirement has historically and rightfully been interpreted to mean that grant proposals must undergo a cost-benefit analysis. This analysis not only helps the government screen out potentially bad projects, but it also allows decision makers to compare possible projects so that even among a group of good projects authorities can pick the very best ones to fund.
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A few years ago the Federal Emergency Management Agency began administratively exempting certain projects from benefit-cost analysis. Now, earlier this year I along with my Senate counterpart requested that the General Accounting Office examine the extent to which these exemptions were being used. I also wanted to know what analysis, if any, was replacing benefit-cost analysis as a method of determining whether a project was cost effective. Today we are releasing GAO's report and we will hear from the GAO about results of their study and we will hear FEMA's response.
Now, based on the results of this report, which I have read, I am concerned about what I see. FEMA seems unable to determine how much mitigation money has been awarded under its exemptions. Further, the benefit-cost justification for exempted projects seems to be extremely thin and in some cases nonexistent.
I want to make it clear that I do not think that a traditional benefit-cost analysis can adequately capture the costs and benefits of every proposed project, but in the limited cases where a modified approach may make more sense there must be some analytical basis for selecting some mitigation projects over others. At the very least, there must be some solid evidence that funded projects are expected to be cost effective.
If our plans to increase mitigation spending are to be successful, then we need to be able to convince the public that every project that we support is a good, sound project, and we all know that there are so many excellent mitigation projects out there that we cannot possibly fund them all. My State alone could probably take up most of the money if they were allowed to get that much. So it is likely, therefore, that every questionable project that we fund takes money away from another project that is a likely winner.
I am afraid FEMA's exemptions may be letting too many questionable projects slip through. So we owe it to future victims of disasters to make sure that this is not happening and to stop it if it is.
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I look forward today to hearing GAO's findings and FEMA's response, and I would now like to recognize our ranking member, the Honorable Mr. Traficant, for an opening statement.
Mr. TRAFICANT. I want to thank you Madam Chairwoman for putting this hearing together. I concur with it. I believe the most important thing that Members of Congress can and should do is to provide oversight for agencies that basically take a tremendous amount of the taxpayers dollars and then in fact grant those dollars under some form or machinations to the respective States and localities for specific purposes, and many times, too often times there is not the follow up in oversight of them and the cost effectiveness of some of those as the impact upon the targets for which they were designed are not quite there frankly.
Now, I have been known to be one that has been highly skeptical of many of the respective government agencies, but there is one government entity that I have faith in and I have developed great faith in the General Accounting Office. I believe they do an objective job. I believe that they have brought and have made some recommendations that speak towards the effectiveness, the cost effectiveness of certain FEMA activities relative to certain grants under discussion. I don't think we have to indict FEMA, but I think the recommendation should be taken very seriously. I am anxious to hear what they are and I am anxious to then hear what the response is from FEMA.
So hopefully when it is all over the money that is appropriated by the Congress to mitigate some of the problems under the scope of this or the scope of this oversight hearing that they will be cost effective and they will perform the task for which the funds were intended.
So I would ask unanimous consent that my specific written statement that so clearly defines many of these issues be included in the record.
Mrs. FOWLER. Thank you, Mr. Traficant. It will be included. I want to welcome the ranking member of the full committee, Mr. Oberstar, to our subcommittee hearing and ask Mr. Oberstar if he has an opening statement that he would like to make. We are in the process of opening statements.
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Mr. OBERSTAR. Thank you very much, Madam Chair. I would like to include a more extensive statement in the record and make very brief remarks at this point, and begin by thanking you for holding this oversight hearing and Ranking Member Traficant. It is important for our committee to conduct periodic regular oversight over the programs that we authorize and the agencies that carry those programs and those laws out.
I had the privilege for several years of chairing this subcommittee and many of the staff are still here that served during those years, and one of the very important hearings we held was on FEMA at a time when a previous administration was proposing to radically change the cost sharing formula and shift the burden of proof, and shift responsibilities for area-wide, multi-State disasters onto local and State governments not able to bear those burdens. And one of those who objected at the time to the change in formula is now the Governor of Pennsylvania, not on our committee but brought his concerns to our committee, and we addressed those issues on a completely bipartisan basis and in the process streamlined the FEMA law, streamlined the way in which FEMA responds to disasters, and I think greatly improved the program.
One of the initiatives that that Mr. Clinger and I, who was the ranking member on the subcommittee at the time, considered was hazard mitigation initiative. We did not craft that idea at that time in the early 1980's but we launched it as a way of helping to prevent the seriousness—prevent in some cases disaster or mitigate the spread of tragedy when natural disasters occur.
And I think it is now very appropriate that this provision is written into law to oversee how effective it has been. Often times good ideas start out, don't wind up so well in the carrying out.
But before concluding, I must compliment FEMA for their extraordinary response to the disaster that struck northeastern Minnesota, the northernmost part of my district when the storm, not of the decade or the century, but of the millennium, struck. By all archeological records there is nothing has hit the wilderness country, the Superior National Forest, the boundary between the United States and Canada, with such fury and force as the storm of this past July 4th just one month ago today. It blew over 25 million trees, some of which were saplings at the time of the Civil War. The flooding in homes and the devastation to rural electrification systems was of a magnitude we have never seen before.
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The local REA normally replaces 6 poles in a year. They're now replacing 250 power poles and having to import them from as far away from Indiana because we don't have enough poles available. But FEMA didn't wait to count the tragedies and the losses, and they sent people up there immediately.
In working with the State, local governments as appropriate, formulated preliminary damage assessment as required, submitted it to the Governor, the Governor reviewed it, sent it on to James Lee Witt with a request to the President for a disaster declaration, and the whole process from the time the State cleared it was 4 days. In fact it didn't rest at the White House more than 10 hours. And I think that is—the storm leveled northern Minnesota in half an hour. To count the disaster took a lot more than that. To recover from it will take years, decades, and probably a millennium.
Thank you, Madam Chair.
Mrs. FOWLER. Thank you, Mr. Oberstar. Mr. John Doolittle from California, do we have an opening statement from Mr. Doolittle?
Mr. DOOLITTLE. I do not, Madam Chairman.
Mrs. FOWLER. Thank you. Glad to have you with us. Mr. Terry.
Mr. TERRY. On with the show.
Mrs. FOWLER. If there are no further statements, then I would like to call our first panel, representing the General Accounting Office, Mr. Stanley Czerwinski. He is the Associate Director of Housing and Community Development Issues at GAO. And Mr. Czerwinski, I understand you also have two colleagues accompanying you. Could you introduce them to the subcommittee.
Mr. CZERWINSKI. Yes. To my left is Tim Baden. Tim was the project director on the report that was released today. To my right is Pat Moore. She was responsible for all of GAO's disaster assistance work.
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Mrs. FOWLER. You know, as is customary in this committee and the subcommittee, we will swear in the witnesses, including Mr. Baden and Ms. Moore. So if you would stand and raise your right hand.
[Witnesses sworn.]
Mrs. FOWLER. Mr. Czerwinski, we ask that you summarize your testimony in 5 minutes, and without objection then the full written statements of both panels today will be included in the record. I have read your testimony and it is very interesting and I know our other members have, too. I know we would like to get on to questions. So if could you summarize it we would appreciate it.
TESTIMONY OF STANLEY CZERWINSKI, ASSOCIATE DIRECTOR, HOUSING AND
COMMUNITY DEVELOPMENT ISSUES, RESOURCES, COMMUNITY, AND ECONOMIC DEVELOPMENT DIVISION, U.S. GENERAL ACCOUNTING OFFICE, ACCOMPANIED BY R. TIM BADEN, SENIOR PROGRAM EVALUATOR, AND PATRICIA D. MOORE, ASSISTANT DIRECTOR
Mr. CZERWINSKI. I promise to be brief, Madam Chair. We are here today to discuss how FEMA works with the States to determine the cost effectiveness of projects funded under the Hazard Mitigation Grant Program. Our statement is based on the work we did at your request and our report, which was released at the hearing today.
In short, we found that FEMA has established a reasonable process for assessing the cost effectiveness of the mitigation projects. Although benefit-cost analysis is FEMA's primary tool for doing this, we found that FEMA has exempted a number of projects from this process. This is of particular concern for us because FEMA lacks both a solid estimate of the number of projects it exempts and a sufficient justification for doing so. So it is not a matter of a process that is at fault, but rather a sound process that is not being fully followed.
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Before I summarize what we found I would like to take a minute to give you some background on the Hazard Mitigation Grant Program. The concept behind the program makes sense: Learn from past disasters to help identify mitigation techniques that reduce the impact of future ones. Over the past 10 years FEMA has funded about $2 billion worth of projects that States have proposed. But not all State proposals can be funded. So, the goal of the benefit cost portion of the program is to ensure that only cost effective projects are funded.
However, we found that since September 1996, FEMA has exempted four categories of projects from benefit-cost analysis: First, a general exemption for up to 5 percent of the projects. This covers a wide variety of projects, including disaster warning systems, new unproven mitigation techniques, et cetera. Second, an additional 5 percent for tornado related projects. Third, hazard mitigation planning projects. And, finally, projects involving the purchase of substantially damaged properties in 100-year flood plains.
FEMA officials told us that they believe benefit-cost analysis should not always apply to each and every project. They give reasons such as difficulties in quantifying benefits and the time needed to gather data. We agree. FEMA should not always require a benefit-cost analysis for every project. However, we also believe that FEMA should know the number and dollar value of the projects it is exempting. It should also have a better quantitative basis when deciding to exempt whole bodies of projects.
When we asked them, FEMA was unable to quantify the actual number and dollar amount of the projects it exempted. However, FEMA did estimate that a maximum of $258 million could have been exempted from three categories of projects. That is, 114 million for the general exemption, 56 million for tornado related projects, 88 million for planning projects.
FEMA did not know the funding for the fourth category, the acquisitions of substantially damaged properties. FEMA also had no way of assuring us it did not exempt more than the maximum 5 percent allowed. So we went out and did some field work to examine the numbers on 55 projects worth about $20 million in Arkansas, Florida, Louisiana, and Texas. We found that 14 of them were exempt from benefit-cost analysis. The 14 projects accounted for over 8 million or 42 percent of the total project funding in our sample.
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We also found that three factors limited FEMA's ability to demonstrate that mitigation projects are cost effective. First, to qualify for either a general or tornado related exemption, FEMA permits States to substitute a narrative in place of a benefit-cost analysis. According to FEMA, the narrative is supposed to establish a reasonable expectation that the project will reduce future property damage, injury, or loss of life. Just about any project will fit under these broad criteria. Second, FEMA has only conducted limited reviews of projects after they have been implemented. This concern particularly affects planning projects. And third, FEMA lacks an established analytical basis to support exempting substantially damaged property acquisitions. These acquisitions comprised about 69 percent of the exempt funding that we reviewed. Based on our recommendations, though, FEMA has begun to analyze projects exempted under this policy. And we are pleased to note that FEMA has agreed to implement all the other recommendations in our report.
Before I conclude my statement, Madam Chair, I would like to thank you for requesting this study, and I would like to commend FEMA and the staff of your committee for how effectively they worked with us. It is really oversight at its best. This is a program that we all agree has a lot of merits and should be supported, and we all agree that it should work better.
The assessment of my team is that FEMA is doing its sincere best to try to make this program work. However, we have a perspective FEMA lack because we have some distance. FEMA was very open and receptive to our comments and to our recommendations. Your staff has been very helpful in making sure that our discussions with FEMA have been productive and constructive and haven't been polarized as sometimes can happen with the agency and the overseer. We would like to thank you for asking us to do this work.
With that I would like to conclude my statement and we will be happy to respond to any questions you may have.
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Mrs. FOWLER. Thank you. I want to commend you. I think you are one of the first witnesses that we have had that takes a long statement and truly summarized it in 5 minutes in such a good way.
I have several questions, but first I want to comment when you were talking about our working relationship with FEMA, as I said being from Florida I know, as Mr. Oberstar does, firsthand the great work FEMA does. So as I said in my opening statement, this is all about making a great agency better because it does a great job. And 13 months ago when we had the wildfires in Florida and one of many counties had to be totally evacuated, FEMA was right there doing a great job and working hand in hand with us. So we just want to help them keep doing that good job.
So that is why I think this is oversight the way it should work, not polarizing but working together to make government work better and more cost effectively and efficiently for everyone.
I have got just a couple of questions I would like to ask before I go on to my colleagues on the panel. Over here on my right we have got a chart here and I know you have some of these examples we are giving you, but this is the actual results of a benefit-cost analysis that was performed for a proposed $670,000 mitigation project. Are you familiar with this.
[Information follows:]
[insert here]
Mr. CZERWINSKI. If that is Fort Walton Beach, then I am familiar with it, yes.
Mrs. FOWLER. Is this type of statement that is in there the type of statement that is pretty typical for the nonexempt projects that you looked at?
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Mr. CZERWINSKI. It is similar to a number of the cases that we looked at, yes.
Mrs. FOWLER. Then the next chart that we have here, get where you can read it, this is a statement that was used in an application for an exempted project to justify a grant of $920,000 for planting trees. Now, can you confirm for me that this statement was used in lieu of a cost-benefit analysis to demonstrate this project was cost effective?
[Information follows:]
[insert here]
Mr. CZERWINSKI. Yes. That is an example of the narrative that can be substituted for benefit cost analysis under the exemptions.
Mrs. FOWLER. Is such a statement similar to other justifications that you examined for exempted projects that were given Federal funding?
Mr. CZERWINSKI. Yes, it is.
Mrs. FOWLER. How would you compare the rigor of the second statement to a benefit-cost analysis?
Mr. CZERWINSKI. My children like a test like this. Obviously the second statement is much less rigorous.
Mrs. FOWLER. How does FEMA compare such a project with this type of justification with other projects to determine which may be a better project to fund?
Mr. CZERWINSKI. Well, that was at the crux of our review. It is very difficult to come up with that type of comparison with only a description like this. So it is more of a judgment call.
Mrs. FOWLER. Okay. Now I would like to, in going through your report, I saw that you identified four categories of projects that are exempted. In the category of 'project acquisition,' is the amount of the potential funds exempted unknown?
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Mr. CZERWINSKI. That is correct.
Mrs. FOWLER. It is millions of dollars but it is unknown. So you were not able to determine.
Mr. CZERWINSKI. We were not able to determine the amount from FEMA's records; however, in the sample of projects that we did examine, that category comprised 69 percent of the exempt project funding.
Mrs. FOWLER. So for 69 percent of the exemptions, we don't have a figure from FEMA as to what is set aside for that category.
Mr. CZERWINSKI. That is correct.
Mrs. FOWLER. And in today's computer world we should have been able to figure that out.
I noted also in your report that the inspector general for FEMA had raised some concerns in a March 1998 report noting the lack of analytical data in this area and that FEMA is doing a report on this that they expect to have completed by the end of this month. So I gather you're looking forward to that and working with them on it.
Mr. CZERWINSKI. Absolutely.
Mrs. FOWLER. I was concerned to how can we tell if we don't have the dollar figures to know what we are dealing with? I would have some other questions, but right now I would like to recognize Mr. Traficant for any he has.
Mr. TRAFICANT. Madam Chairwoman, before we cause FEMA to get tennis elbow from patting themselves on the back here, the inspector general of the GAO did find the need to make specific recommendations, but I take it from your testimony that FEMA is attempting to answer and respond to those recommendations and that in good faith they're proceeding forward trying to do a good job. Yes or no, is that about it?
Mr. CZERWINSKI. Yes.
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Mr. TRAFICANT. That is good to hear that. Because I think when we talk about disasters around the country, we need an agency that has a little bit of a heart too. And it was some time ago when they were rather more restricted to numbers and codes than they were to people. And I think there's been a noticeable change where they've tried to accommodate people. Have you found that to be a fact?
Mr. CZERWINSKI. Absolutely.
Mr. TRAFICANT. In that regard your report acknowledges that there are some difficulties inherent in using benefit-cost analysis to determine the cost effectiveness of certain hazard mitigation projects. Nevertheless, when FEMA conducts benefit-cost analysis, is the agency using the best available data? Does your report or have you found any evidence of how they are doing that and are they using the best available data?
Mr. CZERWINSKI. I am really glad you asked that question. First of all, we found that their system for doing benefit cost analysis is correct. It is right on target. However, there are some data limitations. There are two places where we found limitations. The first one is that in some cases the agency is relying on anecdotal data when there are more concrete examples available to them. In other words, somebody may have damage to their house and the owner may say, 'oh, it cost about $5,000 to replace my carpet in the basement' when in fact there was an insurance claim that would give FEMA the precise amount. FEMA is sometimes accepting the anecdote versus the verifiable.
That was one. The second one has to do with flooding. FEMA relies upon flood maps in its work with projects that involve substantially damaged properties in the 100-year flood plain. Their floodplain maps are fairly old and they really could use updating. We have talked to FEMA about both points. They have agreed with us on both.
Mr. TRAFICANT. One last question and then any other questions I have I would like to submit for the record and ask unanimous consent they be given to the GAO for writing and response. My last question is basically this, something I touched on earlier. When FEMA comes in, our citizens are at their lowest level. They have faced a great tragedy, some of them lost loved ones. In your opinion in reviewing the human side of it, coupled with the cost-benefit analysis and these structured oversight responsibilities that everybody has, and you've been asked to objectively comment on, a very simple question looking at all these dynamics after your review, is FEMA doing a good job?
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Mr. CZERWINSKI. I think overall the agency has made substantial improvement.
Mr. TRAFICANT. No further questions.
Mrs. FOWLER. Thank you, Mr. Traficant.
Mr. Doolittle.
Mr. DOOLITTLE. I am just wondering, some of these examples where they were exempt involved removing structures from flood plains and those—I mean, that is quantifiable, isn't it?
Mr. CZERWINSKI. Yes, it is.
Mr. DOOLITTLE. And the amount of the exemptions equaled one-third of the money allocated for this program, is that what I recall reading?
Mr. CZERWINSKI. Yes, in the acquisition projects where FEMA is removing properties with substantial damage. That is the piece that FEMA does not have the information on. In our sample, it comprised 69 percent of the funding for exempt projects.
Mr. DOOLITTLE. Okay. 69 percent of the exemptions, but those things are all subject to review and appraisal, aren't they? That doesn't seem difficult to determine, does it?
Mr. CZERWINSKI. You're working on the same lines as us, Mr. Doolittle. I don't want to speak for FEMA, but what they told us—and Mr. Armstrong can correct me if I am wrong--is that these acquisition projects, in FEMA's opinion, are a worthwhile set of projects consistent with what is covered under the flood insurance program. So FEMA has exempted this class of projects from benefit cost analysis, not necessarily because of the difficulty in quantifying, but because of the intuitive value inherent in them. To a squinty eyed auditor, like GAO, that is not quite what we would like to see. We would like to see FEMA do an analysis that would support exempting this whole class of projects along the lines you just spoke about.
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Mr. DOOLITTLE. So they're making the case that they've already determined that the benefit outweighs the cost without going through the analysis.
Mr. CZERWINSKI. FEMA has promised to go back and do a study in line of what we have talked about.
Mr. DOOLITTLE. Okay. You note in your report that projects receiving over one-third of the funding—I guess this is of the amount that you looked at, projects receiving over one-third of the funding were exempt from the benefit-cost analysis. So this is hardly, you know, a relatively unusual exception. It is a huge loophole it sounds like.
Mr. CZERWINSKI. The numbers were large.
Mr. DOOLITTLE. Well, I appreciate the work that you've done, look forward to seeing this issue develop.
Mr. CZERWINSKI. Thank you, sir.
Mrs. FOWLER. Thank you, Mr. Doolittle. Mr. Oberstar.
Mr. OBERSTAR. Thank you, Madam Chair. I always appreciate the work that the GAO does for this committee and for the Congress and for the American public. The GAO on average year in and year out saves the Treasury some $500 million quantifiable actual and maybe tens of millions more in saved practices that are otherwise wasteful in various government agencies. And I appreciate your assessments of the FEMA program and, as is the case with GAO, you don't just go in to trash an agency, you go in to evaluate it fairly. And you have found good and you have found some questionable practices.
On the cost-benefit or benefit to cost analysis, this is something our committee is familiar with. We have to deal with it on Corps of Engineers programs particularly. But there's some aspects that are not easily quantified, like planning projects. Do you—have you evaluated the planning funds that have been provided under the hazard mitigation grant program and do you have any comments on how those funds are used and whether benefit-cost analysis should apply to those as well?
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Mr. CZERWINSKI. First of all, thank you very much for the compliments about our agency. We would like to think we return many dollars for those spent on us, but it is nice to be told that. As far as the planning projects go, you've identified one of the key areas where we have a recommendation because just as you said, sir, the benefits are very difficult to quantify. We would never suggest that the agency do this on a case-by-case basis, especially when they're under the pressure to get the money out there for worthwhile projects. So we understand the tension that FEMA is under.
However, what we would suggest having FEMA periodically do after-the-fact analyses of a number of these projects. The agency could then say: well, we funded these projects, did they result in savings as we'd hoped they would? If they do, then we have some basis for allowing these projects to go forward without a benefit cost analysis. That is the approach we would suggest, rather than have them do the analysis one-by-one up front, which would slow things down.
Mr. OBERSTAR. Have you reviewed the entire range of hazard mitigation grants offered by FEMA? You said you've done a relatively narrow slice of it, but have you—in the process have you just given an overview to the whole Hazard Mitigation Grant Program?
Mr. CZERWINSKI. Yes, we reviewed the range of projects within the Hazard Mitigation Grant Program. But of course as you know there are so many other programs that have mitigation components to them and we haven't looked at all those.
Mr. OBERSTAR. The idea of funds to mitigate or to prevent, mitigate meaning to allay the spread of a disaster or to prevent a future disaster is always based on the last war you had with nature. And I am just curious to know what your assessment is of some success stories that FEMA has funded and those that are somewhat more questionable types of projects than grants that have been requested and implemented by State and local governments.
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Mr. CZERWINSKI. Overall we would say that mitigation is a very sound program; one that should be supported. And we have seen projects that have been nominated for funding, both with and without cost-benefit analyses that have worked. Yet, there have been some that probably are questionable. But because FEMA does not have the overall numbers (and neither do we) it is uncertain as to which are fully working and which are not.
Mr. OBERSTAR. Well, you know and I have in mind from our previous experience in oversight of the Federal Emergency Management Program, is there are areas of the country like northeastern Minnesota where every year the glacier makes a comeback. We know winter is coming, we know there are going to be storms. We prepare for it. And the snow plows and the icing and we have wide shoulders on the road to store the snow and people just have to cope with it. We are not prepared for the 1,000-year storm or 100-mile an hour winds in an area 5 to 12 miles wide 40 miles long blowing down trees over 370,000 acres, 6 million cords of wood blown down. I would, you know, question the sanity of anyone saying we ought to have some hazard mitigation funds against the jet stream dropping down to ground zero.
On the other hand, where people are living on the Outer Banks, and they have deliberately put themselves in harm's way, I also question whether we ought to have hazard mitigation grants, folks who know year after year they're coming eye to eye with a hurricane. And you know, that is an area that I—and I don't know whether any grants have been approved for such areas, but I it is an area where I think people ought to—we ought to think carefully about it.
Mr. CZERWINSKI. It all depends on how you define the benefits and the cost.
Mr. OBERSTAR. I'll leave it at that. Thank you.
Mrs. FOWLER. Thank you, Mr. Oberstar. Mr. Terry.
Mr. TERRY. I am just curious, comparing the two, highlighting the chairman's questions to you, the two projects shown here, the good and the bad, we'll start with the bad, we'll keep it ''anonymous yet creative community'', you understand. Show me or highlight specifically what your recommendations and then instead of using it as a bad example what should this community have done to comply so it would look as good as the drainage improvement award.
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Mr. CZERWINSKI. Sure. Mr. Terry, you notice that I identified the name of the good community but I didn't use the other one.
Mr. TERRY. I appreciate that.
Mr. CZERWINSKI. I think the communities do too. The project you cite is a little more questionable by nature because it is a softer project. And I would ask either Pat or Tim to please jump in, because these folks actually did the work on the ground. The bottom line is that the project's benefits were not clear.
Is that correct, Tim?
Mr. BADEN. That is correct. Basically what we are looking for is a little more quantification, if possible, of some of the benefits of the project up front. So, we are really talking about quantifying where at all possible. In the cases where that is not possible, we are making the recommendation for periodic reviews of the projects after they are implemented. So, even if you have projects where you cannot go in and quantify all the benefits involved, after the fact our suggestion would be to go in and look at some of those projects based on their actual benefits and look at the cost effectiveness of those projects and then make a determination on those type of projects for the future. If they do turn out to be cost effective, then in the future you'll know those are the type of projects you want to fund. The main point we want to make is the need to demonstrate cost effectiveness.
Mr. CZERWINSKI. Following up on Tim's point, rather than saying that cost-benefit analyses should be done for every project, there are certain groups of projects where there could be overall studies of cost-effectiveness. An example we reviewed included trying to educate residents about the risks of potential flooding. For example are you better off educating residents with a pamphlet, are you better off with a radio spot, television, whatever? You can weigh the costs of doing those versus the benefit of the number of people that you reached. And this could be done on an overall basis for a group of educational projects.
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Mr. TERRY. All right. Just a follow-up question, I don't want to put myself in a position where I am defending this applicant, even though I participated in this, evidently, but one question that does pop up with this is at least in this community where the trees were destroyed by a storm that heavily relied upon tree lined right-of-ways. How do you enter into a cost-benefit analysis of that because most of the benefits are intangible and not monetarily related. So how do you force a community to go through a cost-benefit analysis when in essence you can't enter into a dollar cost?
Mr. BADEN. I would think for this particular type of project what you would want to try to do is to go in and set up very specific criteria for how that funding is going to be spent. Because you're right, in this particular case it is going to be very difficult to go in and put a valuation on every aspect of the project so you choose the aspects with the most obvious benefits. For this particular project, I would want to know in what cases are the trees that are being planted actually trying to prevent erosion. I would want to try to go in and be much more specific about the uses of that funding, because at this point really that is what's raising the questions on this particular project.
Mr. TERRY. Good point. And I think if they did follow up what they'll find is the majority was to mitigate existing hazards as opposed to actual planting. I was surprised to find that some of this money was to go to, quote-unquote, planting trees along tree lined right-of-ways in a city. Even though I am—cat out of the bag—this is my city.
Mr. BADEN. This is actually a very good example for us to use because the point we want to show really is it can be very unclear. Some of the projects may well be good projects or have good aspects of the projects. That some aspects are indeed very good and very cost effective. But it is very difficult to tell. That is the point that we want to make.
Mr. TERRY. At least in this particular situation, using dollars for replanting, brings us now full circle, where the ranking member left off, and is that a proper use of mitigation dollars. Part of that grant that was used for pruning, which is taking off hanging limbs over a right-of-way, was a dangerous situation that we needed the help. Replanting, I am having a hard time justifying as I sit here. But that begs the question of how is that a hazard mitigation, taking it a step further, as I said, from the ranking member, when people have put themselves or developments are in a traditionally hazardous area.
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Mr. CZERWINSKI. You make a very good point.
Mrs. FOWLER. Thank you, Mr. Terry. Now, this is not a bad application. This community complied fully with the regulations that were in place at FEMA at the time. So I think the community did all that it was required to do.
Mr. TERRY. And that is what we have, a creative mayor, a former member of this body.
Mrs. FOWLER. Mr. Isakson.
Mr. ISAKSON. Thank you, Madam Chairwoman. I apologize, I missed the testimony. I have some prepared questions but I learned a long time ago never read a prepared question when you didn't hear the testimony because you're going to look stupid. So I wanted to ask a question to make sure something Mr. Baden said that I heard was correct. From what I have heard in the questions and answers, the GAO is questioning the level of which those projects that have been exempt from cost-benefit analysis have been funded; is that correct?
Mr. BADEN. That is correct.
Mr. ISAKSON. In the Baden—in the remark that you
made—I don't want to put words in your mouth, so please tell me if this is not—what I heard you saying was because of the nature of some of these projects, it might be best to periodically review them to make sure FEMA is not getting off course rather than try—and this is my words, but I think it is the afterthought—rather than try and construct some type of cost-benefit analysis that had to fit every single allocation. Is that correct?
Mr. BADEN. That is correct. We are making the point that we don't feel like every project should be scrutinized with benefit-cost analysis. That would be extremely laborious for the agency. So we are not suggesting that. There are cases where benefit cost analysis is applicable. But in some of these other projects where it is very difficult to try to quantify the benefits involved, what we are suggesting is after the fact, after the projects have been implemented, do go in and take a look at the cost effectiveness of those projects. You may indeed find out that they were very cost effective. That is good information to know for the future funding of projects. On the other hand, you may find out that indeed this project was not cost effective. So, you wouldn't, of course, fund those in the future or you might try to revise them to where they would be cost effective.
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Mr. ISAKSON. That brings me up to my point, which is I happen to agree with what you said. My experience in some of these exempted areas such as older disasters, which you have to stop a minute and think what is an old disaster, you know, but we had an old disaster in our district with 13 houses wiped out, partially damaged, almost wiped out, couldn't be habitated, it took four and a half years, this was back some number years ago, to finally get the funds to buy those houses because they wouldn't let anything ever be rebuilt on the property. And it was kind—as I understand it that would have qualified as an older disaster. And in our community it helped tremendously. FEMA was a tremendous help when they finally broke that loose.
Secondly, on the exemptions on tornados, that makes a lot of sense to me, given the tremendous amount of experience we have had in the metropolitan Atlanta area and in Georgia with tornados and the good experience that I personally have had with FEMA most recently in the terrible storm that hit almost in the heart of Atlanta last year. So I just wanted to echo that I think a cost-benefits analysis is always important but these are not—no disaster is repetitively alike. They're all different. And the consequences are not necessarily tangible in the sense of a mathematical equation.
And so I want to say that I, Madam Chairwoman, I think the comment about the periodic review, I always found if I knew periodically people are going to look at what I did then I did a better job, than to just say it is all okay.
But I also want to commend our State's experiences with FEMA. We had the terrible floods of '97 that decimated most of central and southeastern, southwestern Georgia, many small towns. We have had major damage in the metropolitan areas for 3 successive years with tornados. And in each and every case, my experience with FEMA has been extremely good. And any time you can say something nice up here you try and do it because a lot of times you can't.
I would like to say that. But I concur with Mr. Baden's comment.
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Mrs. FOWLER. Thank you, Mr. Isakson. I have just got a couple of last questions, I know Mr. Traficant has one also. I just want to ask you that based on your study, does it appear that FEMA is in the process of changing how they define cost effective?
Mr. CZERWINSKI. Yes, they are.
Mrs. FOWLER. And is this new definition, does it appear to be more or less rigorous?
Mr. CZERWINSKI. More rigorous.
Mrs. FOWLER. Okay. Good, because that was a concern. I know we are going to talk to them about it, but I wanted to make sure you were comfortable with the direction this new definition was going. I knew Mr. Traficant had another question.
Mr. TRAFICANT. I don't know if you looked into this but after listening to all this testimony I have one question. Is there any evidence that FEMA has played any politics with any of these exemptions or played preferential treatment one community versus another because of political elements?
Mr. CZERWINSKI. We found no evidence of that. The only thing that I would say is that FEMA is following guidance from the Congress to help communities so they're looking for ways to do it.
Mr. TRAFICANT. Thank you.
Mrs. FOWLER. If there are no further questions, then I really want to thank the GAO for their testimony. I want to add to the comments of Mr. Oberstar, I mean, and every committee I serve on we really appreciate the work of the GAO because it is always well done and objective and it helps us do our job here so much better. So we appreciate it. I know you had a lot of hard work that went into this report, appreciate the manner in which you've conducted it. And we will have some further written questions that will be submitted for the record from the members and we look forward to your answers. But again I want to thank you very much for your testimony today.
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Mr. CZERWINSKI. Thank you very much.
Mrs. FOWLER. The Chair now calls the witnesses for the second panel, Mr. Mike Armstrong from the Federal Emergency Management Agency. Mr. Armstrong is the Associate Director for Mitigation at FEMA and has testified many times before this committee. So we want to welcome you back. And Mr. Armstrong, as you know, it is standard procedure to swear in all witnesses. So you can just remain standing if you would like to. And do you have some other witnesses that are going to be with you also to speak? If so, you want to introduce them. We'll swear them in also.
Mr. ARMSTRONG. Yes, Madam Chair. If I could I'd like to introduce Robert Shea, Donna Dannels and Gerilee Bennett, all of my staff.
Mrs. FOWLER. If you could all raise your right hands.
[Witnesses sworn.]
Mrs. FOWLER. Please be seated.
We would ask if you could summarize your testimony in under 5 minutes and without objection your full written statement will be included in the record. We have that. I think we have each read it. And we look forward to asking questions. So if you could summarize your testimony I would appreciate it.
TESTIMONY OF MICHAEL ARMSTRONG, ASSOCIATE DIRECTOR, MITIGATION DIRECTORATE, FEDERAL EMERGENCY MANAGEMENT AGENCY
Mr. ARMSTRONG. Thank you, Madam Chair and members of the committee. I am Michael Armstrong, the Associate Director for Mitigation at the Federal Emergency Management Agency. It is an honor to be here today to represent Director James Lee Witt and really an honor not to be in the mode of defending a program but rather celebrating a program; as was stated earlier, making a good program even better.
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We do want to acknowledge the collegial relationship we have had with the GAO staff. We think that going on 6 years now after this committee chose to amend the 404 program to allow for the cost share to increase on the Federal side and decrease on the State side, that it is time to look at this program more closely. And any program as it matures needs a closer look. Certainly we have learned a lot through this process and we wholeheartedly embrace and endorse the recommendations of the GAO.
We do believe that we have a great success story to tell. And this committee does deserve much of the credit for the success. As I said a moment ago, in 1993 with the Volkmer amendment this program really took off. Once the cost share was reduced to only 25 percent for State and local government we saw a huge acceleration in the use of the 404 program and understanding the 404 program and really moving the mitigation mindset forward in this country.
Also, this year this committee voted to increase the share out of the total disaster funds from 15 percent to 20 percent for the 404 program, which I think is a continuing endorsement from this committee, and we hope this Congress, on the fact that we are moving in the right direction with mitigation as a priority in emergency management. So I especially, Madam Chair, want to thank this committee for its foresight and its endorsement of mitigation.
I have on each side of me easels which have photographs on one side and I think we had a chart also that we were posting as well. If we could put that up. These photographs are close to my heart because up until the middle of 1997, I was the regional FEMA director in Region 8, Denver, which included North Dakota. And in the waning months of my tenure as regional director the horrible floods hit North Dakota and Grand Forks in particular and these photographs demonstrate just one example of what an effective use of 404 funds can do. You see on the left the flooded area. 250 homes were bought out, and then that same area after the flood waters had receded and after the acquisitions had been completed. We now have open space for which we will never again have to spend disaster response dollars, we will never again see the interruption of businesses, we will never again see State and local treasuries being depleted, and we will never again see the indirect costs of disasters which are far beyond the realm of cost-benefit analysis but certainly have a lasting impact in changing and scarring the community not only physically but psychologically.
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On my left, your right, we have a chart and I know it is hard to read from a distance, but we have a handbook that we now give to all local communities, that Mrs. Bennett is showing to you, that is part of our training program to show local governments how to effectively utilize the 404 program. And that chart, which I believe your staff has up there on the dais, really is an easy way to understand how the 404 program works. I know that some of the members have had firsthand experience with our 404 program. Some of you have not. But I will, before I conclude, try to address some of the questions that were raised by some of the members regarding the details of this program.
We believe that more than any other FEMA program, the Hazard Mitigation Grant Program has been the engine that has driven the national movement toward understanding and embracing mitigation as an effective post and predisaster tool. And much of the work has been done by the persons sitting next to me at this table, along with their staff, our regional staffs, our regional disaster reservists, and our partners in State and local government.
The vision for this program has been provided by James Lee Witt and this Congress, and this vision has an effective mix of local, State, and Federal responsibilities. We think that what is exciting about this program and what works in this program are the different levels of government working together. We have seen an increased comfort with this program at all levels with the program's potential to save lives, protect property and reduce disaster costs.
In my written testimony, I have highlighted several communities that I think show our example of success stories. I won't go through all of those with you at this time but I would like to highlight two. The State of Iowa study, entitled the Benefit of Hazard Mitigation Projects, studied 55 projects that required an investment of $47,372,325. The results of the State's study indicate that the long term benefit of this investment in avoided future damages is anticipated to be more than $100 million.
Aside from the intangible benefits of these projects, the financial success of these projects is confirmed by the projected cost savings in excess of the desired goal of $2 in savings for every dollar spent. And I just spoke on the telephone yesterday with Ellen Gordon, the State Director in Iowa, who also is the current President of the National Emergency Management Association. She wanted me to convey to this committee that if Iowa was to issue a new study today that the cost-benefit ratio would be even higher and the savings would be even greater.
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The other example is Arnold, Missouri. In 1993 approximately 250 structures were affected by high waters despite over 60 sandbag sites, and 528 households applied for Federal disaster assistance amounting to over $2 million. After this disaster, the city implemented an acquisition program based on their flood plain management program. In 1995, 2 years later, the city was again flooded. The damage was much less severe because, as the Arnold city manager indicated, most of the areas affected had been bought out so the people weren't there.
Only three or four sandbag sites were needed in 1995, and only 26 households applied for Federal disaster assistance for a total of $40,000.
We believe that this activity with the 404 program has now laid the foundation for a more aggressive approach to predisaster mitigation, which we refer to as our Project Impact Initiative. The ideas that we have gleaned from the 404 program that we are applying in Project Impact include identifying all stakeholders in the process at all levels of government, making sure there's a partnership with the private sector and that they are investing back into their community, that there is a consensus toward how future growth should be addressed and how communities should rebuild to create disaster-resistant communities, that the initiatives must be locally driven (As you, Madam Chair, and I both know from our experience in local government, land use management in this country is enacted and implemented at the local level), and finally that we should leverage other Federal agencies and nonprofits and other organizations for all potential mitigation opportunities.
We have also learned something in the past 5 years since the Volkmer amendment. We have bought out nearly 23,000 properties from the flood plain with the 404 program in this country. We have also learned that we need to devolve more of these authorities to State government. And this committee again has stepped up to the plate and endorsed the idea of codifying the 'Managing State' concept. We have discovered that we need to create environmental officer positions, which we have now done in every FEMA regional office, and we are now funding State hazard mitigation officer positions in every State office to help administer this program.
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We also have learned that we need to revisit the measurements that we use to apply to this program, that we need to streamline our cost-benefit and our cost effectiveness processes and train state and local officials, that we have created categorical exclusions to the National Environmental Protection Act, that we need to take a sampling of our exempted categories that was referenced earlier and that we concur with in the GAO report.
Finally, I would close by saying that for the record I am attaching two volumes of the FEMA publication 'Report on Costs and Benefits of Natural Hazard Mitigation' and also a recently published compilation from the Association of State Floodplain Managers entitled 'Mitigation Success Stories.' With these and other successes behind us I am extremely optimistic as I look forward to future successes, but these successes will only come from sound public policy and strong public support. I believe FEMA has demonstrated an ongoing commitment to both. I would like to thank this committee and the GAO for both your interest and support in this area and I am ready to take your questions.
Mrs. FOWLER. Thank you, Mr. Armstrong. I appreciate your statement. I have a few questions.
Mr. Czerwinski indicated that the statement on the exhibit to my right is typical of cost effectiveness justifications for exempted projects. Do you agree with that?
Mr. ARMSTRONG. I have not personally read all of the justifications for all of the exempt categories, but this reference to trees falls into the category of what we call 5 percent set-asides for the States. Out of the entire pot of money that is available for the 404 program, we have initiated an exemption for 5 percent of that total for States to pursue projects that may not traditionally fit within classic 404 projects or apply to classic cost-benefit, and there are several reasons for that.
First of all, there are many times when there are other projects that, if they are implemented, can strengthen and underlie the main thrust of the 404 program and in such cases, such as the tree example, we think that it is important to let the States experiment and determine what new methods can be used to promote mitigation.
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In this case, one of the main persuasive factors for the replanting, as well as pruning, of trees was the whole issue of providing snow and wind breaks in this area. This is a small amount of funds and allows for testing this type of creative approach, and we would revisit this on a later date, see if it worked or not. But we think that part of our partnership obligation to the State and the spirit behind the 404 legislation is in letting the States think of this as their program and that it should allow for some experimentation with a small amount of money.
Mrs. FOWLER. Do you think this type of statement is adequate when you are trying to determine whether this project or these types of projects will be cost effective?
Mr. ARMSTRONG. In the specific example there is usually a caveat that says it is cost effective because. It doesn't say that. It implies it, and so I can't defend this particular statement.
Mrs. FOWLER. So what you are looking at as you go through redefining this type of broad categorization of cost effective would be narrowed down. If you use this, you can approve every project.
Mr. ARMSTRONG. Yes. Obviously we need to tighten some of our criteria and redouble our efforts to train State and local officials on how the exemptions should work.
Mrs. FOWLER. I know in looking at the chart in the 5 percent initiative in 1998 to 1999, there was $113 million available, which isn't a lot nationwide, so when you have got a lot of projects trying to compete for that again to make sure if there is some criteria set up to go by.
Can you tell me how much grant money has been exempted from benefit-cost analysis and how much of this has actually been obligated?
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Mr. ARMSTRONG. I can't tell you today but I will be able to tell you soon, and there are several reasons for that. Our entire agency is engaged in starting up a new computer methodology called the National Emergency Management Information System, NEMIS. Like a lot of new computer programs we have had a lot of trouble getting this started up. Collecting the data is key not only for this committee but in reporting back to other committees on how quickly we are obligating money and making sure that we are good stewards of the taxpayer dollar. So it is our intention to get you that information.
Mrs. FOWLER. I read about the start-up of that and I commend you because that is the type of information that we need because when you look at since 1988, FEMA has obligated about $2.5 billion to hazard grant mitigation projects, but it is tough—we can't get the total amount of mitigation funding that has been exempted. This system that you are setting up will help us get a better handle on this.
Is the same true on the 5 percent category that right now it is difficult to know when you have reached the limit on the 5 percent set-aside funds or is there a way that you can tell when you have reached this $113 million?
Mr. ARMSTRONG. It is not an exact science. We try throughout the disaster activity to set a marker down as to how much money is totally being spent on the disaster and then apply the 15 percent to that total. Our chief financial officer and his designees and our disaster field offices regularly monitor that number and adjust that number. And as that number adjusts up or down, so do the dollars. So there is a bit of flex in that. Then the subset of that 15 percent set-aside for 404 would be 5 percent of the 15, and that would go to the States. To the degree that we can keep tracking how much money is allocated to the disaster overall, we can track each of those subsets.
Mrs. FOWLER. When I was asking the GAO in looking at their chart, it appears that there was no breakdown of the dollars that are available under the category of property acquisition. The GAO said in their study 69 percent of the exempted dollars come under this category but yet we don't seem to be able to get a handle on what those dollars are. So this causes me some concern since it is by far the largest category. Will this system you are setting up be able to give us the information on that category and the dollars available for that?
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Mr. ARMSTRONG. Yes, it will. If I can elaborate on the GAO response, that number, that 69 percent or 67 percent number is based on the sample that GAO used for this particular report.
We believe in reality that for the entire Hazard Mitigation Grant Program nationwide, the percent applied to exempted programs is much smaller, perhaps as low as 10 percent of the entire program. Nevertheless, we do agree with the GAO that we need to tighten our approaches to these programs and I am sorry that Congressman Doolittle was unable to stay, but I want to respond for the record about his concern regarding the loophole for substantially damaged properties.
This determination of a substantially damaged property, which is the bulk of where our exempted activities occur, is based upon a certification by the local building inspector. We do not go out and grant the money based on a random statement that it looks like it is substantially damaged. These building inspectors are trained by the State and FEMA to do inspections to adhere to our criteria. They give a report back to us, and again the acquisition program itself is voluntary. The property owner must elect to be bought out. And also there are other further criteria that are currently applied. Is it in a floodway versus a floodplain? Is it a repetitive loss property, again tying back to the National Flood Insurance Program? By buying out this property and removing it from the rolls of repetitive loss properties, we are stopping the leakage out of the National Flood Insurance Fund, and we are also tying back to the requirement of the National Flood Insurance Program that if a property is substantially damaged it must adhere to higher code requirements, triggering the most current codes. Sometimes it is more cost effective to buy that property out than to spend the money to cause that property to come up to current code standards. This category is not devoid of criteria. Should it be sampled? Absolutely. Will we do it? Absolutely.
Mrs. FOWLER. Thank you. I know from our meeting earlier that towards the end of August you will have the report coming forward on your IG's request on doing an analysis of some of the projects that were exempted under that category.
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Mr. ARMSTRONG. Madam Chair, that is correct. However, I would offer to the committee at this time our own assessment that we have done based on hazards. We recently sampled 591 hazard mitigation grant projects representing over $532 million in costs, and we categorized these into four types of hazards and we determined that, overall, the four categories averaged over a 2 to 1 ratio. But, specifically, for wind retrofits, the cost-benefit was almost a 5.5 ratio. Riverine elevation was almost a 3.0. Seismic retrofits were over 2, and acquisitions were at about 1.7. So we think we are on track in terms of some of the data that we have already collected, and so we really are optimistic that we can come back to you and show you that our exempted categories do make sense.
Mrs. FOWLER. Thank you. Mr. Traficant.
Mr. TRAFICANT. Thank you. On page 5 of your written testimony you are talking about the benefit of hazard mitigation projects in Iowa and about halfway down you talk about 55 projects for an investment of 47 plus million. But you said that this investment avoided future damages to be anticipated to be more than $1 million. I assume that is a typo?
Mr. ARMSTRONG. That is a typo, and that is the Iowa reference, Congressman, and I did read that into the record again during my oral. But to clarify, on page 5 the first full paragraph, the second to the last sentence, it says $1 million, that should be $100 million.
Mr. TRAFICANT. These are anticipated gains?
Mr. ARMSTRONG. Yes. This is based on the State of Iowa's own assessment.
Mr. TRAFICANT. Thank you. In its report, the GAO notes that the best available data, and you heard my interaction with Mr. Czerwinski, that the best available data is not always used or they found that to be the case in analyzing the cost effectiveness of some of the acquisition projects.
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Have you in fact undertaken any implementation activities relative to those recommendations and have you concurred with those recommendations and find them reliable?
Mr. ARMSTRONG. Well, we concur with all of the recommendations contained in the GAO report. We are constantly going back to our State and local partners to make sure that they are providing us with the best available data. Again, these projects and the way that the 404 program works is that the States submit the applications that are given to them by local governments. The local government acts as the agent for the individual property owner. The State in turn does its own scrutiny of these projects. They apply their own criteria and then they give us them in priority ranking. We, in turn, do a cost-benefit analysis or if the project falls into an exempt category, we do an environmental assessment. And if the application clears all of these hurdles, then the dollars are obligated for the project to commence. In that process is there room for better data? Absolutely, and we intend to continue to pursue that.
Mr. TRAFICANT. I have some other questions, and I would ask unanimous consent that they be submitted in writing and responded to in writing. I have one last point.
FEMA does have a tough charge and task. And I think over the last 15 years that I have seen and observed FEMA that you have put some human touch into the program where it was more numbers crunching before, and I think for that even though there may be problems, some of these problems that are so cited, they don't seem to be major and they have put a human face inside this thing, and I think there are some commendations in store for that.
Mr. ARMSTRONG. Thank you, Congressman. Madam Chair, if I may add, we do appreciate your interest in this data issue and we would also—I would be remiss if I didn't echo the comments of the GAO that one of the key issues regarding the data is better flood maps. You may be aware that we have initiated a program to modernize our mapping program. We are partnering with local governments to let them share the dollars that are available to remap and study their communities, and we believe that this will also help us implement compliance with the National Flood Insurance Program and get back to the repetitive loss issues and help communities look at future growth and future development issues.
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Mrs. FOWLER. Thank you. Mr. Terry.
Mr. TERRY. Thank you, Madam Chair. My preliminary statement is very positive. I appreciate FEMA's help in the Omaha project, the snowstorm, an early October snowstorm that felled so many trees, including all three in my yard. It was really devastating to the city, and I appreciated FEMA's involvement. It certainly provided us a cushion where we can make the community safe and get the trees out of the streets, trim the trees where branches were left hanging over right-of-ways and in parks.
I want to say that I do appreciate FEMA's involvement and these funds that were requested fell basically into three categories. One was for the initial cleanup. Then the other was for the trim and the plant. They were requested by the governor and the mayor. Nonetheless, however, the application was made, and being somewhat as a member of the city government I was part of the fringe of what was going on. Like all City Councils, as Tillie knows, we were reported to more than we were active within the process, but certainly we knew that the city, with the governor, was making application for these funds.
I do have to say that I am surprised with the generalities that were set forth in this application, some of which I almost find humorous when you find out what the money was used for in the right-of-ways. So bringing it full circle to why we are here today and our little bit of oversight to make a good program that much better, what have you learned from the GAO report, what are you adopting, and put it in the practical and realistic sense of applying it to the Omaha grant for $920,000. What differences would there be by way of what you would have accepted from the City of Omaha? Is this still acceptable for the category for which we received the grant? Would you look back on it and say, was it really used for what they told us it was going to be used for? What would change I guess is the bottom line question.
Mr. ARMSTRONG. Well, Congressman, I share your—first of all your bias in terms of your background in local government. I served as an assistant city attorney for 10 years in the area of code enforcement and building and zoning and planning. And if I had been advising the applicants as an assistant city attorney, I would have read the FEMA guidelines and made sure that it reflected the FEMA language.
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That having been said, I don't know if this is a paragraph taken out of a longer application. My staff seems to indicate to me that our narratives always include estimations and potential savings in detail, and that this application specifically was over 30 pages long and very detailed. So there may be other language in the application that did get into these issues.
But it comes back, as I said earlier, to better training. Making sure that local officials and State officials understand our programs and that our programs are working for them. We do this in our applicant's briefing immediately after disaster is declared, and we have ongoing training throughout the year at our various facilities.
The best thing we can do is two things. We can go back and see when the next storm hits, did these trees make a difference.
And the second thing we can do is make sure that everybody is prepared to respond to you and help me respond to you when we have hearings like this in the future.
Mr. TERRY. So the one alteration after going through this study that would make a difference in retrospect, applying to this grant, would be that you simply go back and see if what they said in the paragraph is in fact what happened? There is nothing up front that this applicant should do differently now pursuant to new guidelines that you would adopt?
Mr. ARMSTRONG. In terms of any new applications that would come along, we would absolutely want to tighten and enforce criteria that require specific statements as to estimated cost-benefit. But I think, as I said earlier, because the 5 percent set-aside is a bit of—what I call the experimental category, to give the States some flexibility within this program. I think we need to let the States try certain projects and see what happens.
Mr. TERRY. When the governor of the State and the mayor of the city that is receiving these funds sign off on it, you are going to give them some leeway?
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Mr. ARMSTRONG. A little bit, yes. Not a lot.
Mr. TERRY. Coming from local government I don't have a problem with that. Now that I am here, I want to see that some of the things that are said in that aren't going to happen. I don't want to tell on my city, although I will tell you that the money was put to absolutely good use for a public hazard.
Mr. ARMSTRONG. Sure. That is why it is only a 5 percent set-aside.
Mr. TERRY. But there is not an erosion on Dodge Street.
Mr. ARMSTRONG. That is why it is only a 5 percent set-aside and not a 10 or 15 or 20. If these projects tell us something new about other mitigation approaches or legitimize some ideas that we have had, then we think that it is worth the experiment.
Mr. TERRY. Very good.
Mrs. FOWLER. Thank you. Mr. Isakson.
Mr. ISAKSON. Thank you, Madam Chair. I have already made a statement, and I know that you were in the audience, but I want to thank you for what you have done in the greater metropolitan area and south Georgia in the last couple of years. We have had our share of disasters, and my experience with FEMA has always been favorable. I do concur with understanding that there should be flexibility in the mitigation grants.
With that said, so Mr. Terry doesn't think that I am picking on him as he walks out the door—just hear me out—I would not in a million years pass judgment on that grant which I guess was Omaha.
My question is, and Congresswoman Fowler made a good statement, about the relatively small amount of money that this is for the United States. When you add to the fact that it is a small amount of money and it is basically grant based in that the local government or the State government applies for it, then that decision to make that grant was made in competition with, I assume, an awful lot of other requests, and so for that reason in the best interest of FEMA, and I think in the spirit of what GAO asked, if it were to be found in the scheme of things that that grant, albeit beneficial and appropriate, could have been better spent in a worse disaster area with a more predictable result, rather than beating up on Mr. Terry or Omaha to make some political statement you could begin to build because this would have to be under that unproven category, I would assume.
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Mr. ARMSTRONG. Yes.
Mr. ISAKSON. You build a basis so future decisions might not make that kind of a grant because it was not proven to be as effective as another unproven at the time technique which in fact turned around and proved to be very effective.
If you are going to have that flexibility and you are in a competitive grant situation and you in an environment dealing with politicians who are ultimately going to be asked why did we not get this and so and so get it, the better background on the unproven grants that fall in that exemption will serve Mr. Terry well and will serve me well, and it will particularly serve FEMA well to continue to have that type of flexibility to make good decisions in the future.
That is not a question, that is a statement, but I just thought that I would throw that in.
Mrs. FOWLER. Thank you. I would thank Mr. Terry for allowing us to use his example. This was a good application following all of the requirements of FEMA at the time. So we appreciate his letting us use it. He was a good sport about it.
Thank you very much.
Mr. TRAFICANT. It looks like a sweetheart deal to me.
Mrs. FOWLER. He can say he wasn't here then.
Mr. ARMSTRONG. Madam Chair, I should inform the committee that not all States use this 5 percent set-aside. While Nebraska did, I can't say that every other State does.
Mrs. FOWLER. Are there any further questions?
I really want to thank FEMA for your testimony and hard work. As I said in my opening statement, I know firsthand what a great job you do. Florida has had more than its share of natural disasters. We work hand in hand, and that is the way that I want to run this oversight subcommittee, and that is the way that we have worked with GAO and OMB and you. We look forward to working with you as we move down the road and make this even better.
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Whether we are praising your work or providing constructive criticism, we have had a very good relationship with FEMA and we look forward to continuing to work with you to tackle some of the issues raised today, and we will continue to work together to make this program work even better for you and the American people.
If there are no other statements, I just have a brief closing statement.
I see this as a first step in trying to get some hard information about our mitigation spending, and as Mr. Traficant said, we may have some follow-up questions on attempting to pin down how much is being spent and how cost effective some of these projects are, and we will submit those to FEMA and to GAO.
Also as FEMA begins to disburse the $230 million in special needs funds that you have received from the Department of Housing and Urban Development, we are going to be watching closely to see what sort of analysis is done on the mitigation projects that will be funded with part of that money.
This is a great opportunity for FEMA to show that some of these potential problems we have talked about can be addressed in a very constructive way as you put these new things in place.
With no other comments or questions, I want to thank you again and thank GAO and we look forward to continuing to work with you. The meeting is adjourned.
[Whereupon, at 3:30 p.m., the subcommittee was adjourned.]
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