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GAO study of Puerto Rico hurricane recovery finds concerns over FEMA guidance, disbursements

By on March 14, 2019

Documents concerns that towns haven’t been fully reimbursed for work completed, challenges regarding procedures applied

Damaged Segment of Road Near Maricao, Puerto Rico, September 2018

Damaged Segment of Road Near Maricao, Puerto Rico, September 2018

SAN JUAN – The Government Accountability Office (GAO), the independent agency that examines the use of public funds, federal programs and policies to provide recommendations to Congress, prepared an initial report, titled “Puerto Rico Hurricanes: Status of FEMA Funding, Oversight, and Recovery Challenges,” which was requested by lawmakers, but will not issue any recommendations until “later this year.”

The report, the GAO explained, is a part of an ongoing review of disaster recovery efforts on the island, which in the future will examine the implementation of the Public Assistance “alternative procedures process” and efforts by the Federal Emergency Management Agency (FEMA) and Puerto Rico to oversee disaster recovery funds allocated following hurricanes Irma and Maria in 2017, including a “temporary manual reimbursement” process.

For Puerto Rico, FEMA did not use the standard Public Assistance program, which funds the actual cost of a project; instead, it used “Public Assistance alternative procedures,” which allow awards for permanent work projects to be made on the basis of fixed cost estimates, “to provide financial incentives for the timely and cost-effective completion of work,” the report reads.

The “challenges identified included concerns about lack of experience and knowledge of the alternative procedures being applied in Puerto Rico; concerns about missing, incomplete, or conflicting guidance on the alternative procedures; and concerns that municipalities have not been fully reimbursed for work already completed in the immediate aftermath of the hurricanes, causing financial hardships in some municipalities,” the GAO said.

Crumbling pavement by the water.

Damages to a Dock at the Port of Ponce, Puerto Rico, September 2018

The report describes FEMA’s Public Assistance spending in Puerto Rico and oversight efforts of federal recovery funds, and initial challenges with the recovery process. GAO reviewed Public Assistance program documents; analyzed grant funding data; and interviewed officials from Puerto Rico and DHS about the Public Assistance program and recovery efforts, as well as officials from 10 municipalities, selected on the basis of population and Public Assistance spending.

Municipal officials cited concerns about a lack of guidance for the alternative procedures process. Specifically, officials in eight municipalities the GAO interviewed cited problems with missing, incomplete or conflicting guidance from FEMA.

“In addition, officials in four municipalities stated that they were waiting on additional written instructions to establish more clear and consistent guidance. Officials from one municipality said the lack of written guidance has meant that the municipality has had to re-submit documents to FEMA multiple times to respond to changing guidance that they have received verbally.

“Additionally, four municipalities cited missing, incomplete, or conflicting guidance from COR3 [Acronym for the Central Office for Recovery, Reconstruction & Resiliency] as a challenge. However, one municipality noted that the quality of communication with COR3 has improved over time as COR3 has become more established,” GAO said.

Officials in nine municipalities GAO spoke to said they had not been fully reimbursed for emergency work they completed.

“Further, officials in five municipalities we interviewed stated that the lack of full reimbursement has caused financial hardships. For example, officials in three municipalities said that the lack of full reimbursement has meant that the municipalities have had to pause or delay recovery work due to lack of financial resources. A mayor in one municipality stated that they have scaled back some essential services, such as the frequency of garbage pick-up, while waiting for full reimbursement,” the GAO reported.

The Puerto Rican government estimates that $132 billion will be needed to repair and reconstruct infrastructure and services.

A draft of the report was provided to the Department of Homeland Security (DHS) and the government of Puerto Rico for review and comment. DHS summarized the amount of Public Assistance funding provided to the island through fiscal year 2018, and described FEMA’s manual reimbursement process, which was implemented “to mitigate risk and ensure fiscal accountability of taxpayer dollars,” and stated that FEMA is “committed to supporting Puerto Rico as it finalizes internal controls, management policies and procedures to oversee disaster recovery funds,” according to the report.

FEMA officials stated they will eliminate the manual process “once the agency approves Puerto Rico’s internal controls plan,” the report added.

For its part, the Puerto Rico government commented that its COR3 achieved progress but faced additional challenges. The GAO reviewed government documents related to recovery planning and internal controls, in what it called a performance audit, conducted from March 2018 to March 2019.

GAO’s report says FEMA obligated nearly $4 billion in Public Assistance grant funding to Puerto Rico as of Sept. 30, 2018; about $3.63 billion for emergency measures such as debris removal and generators; and about $151 million for permanent work to repair and replace public infrastructure such as roads.

FEMA officials, according to the study, stated that the agency is taking actions to address recovery challenges, “such as leveraging existing expertise to train personnel and developing supplemental guidance on alternative procedures and reducing delays in reimbursements.”

See the full report here.

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