Summary

The fiscal year 1991 shortfall in the Federal Emergency Management Agency's (FEMA) Disaster Relief Fund occurred essentially because (1) large expenses were paid from the fund during fiscal year 1991 as a result of disasters from previous years, such as the Loma Prieta earthquake and Hurricane Hugo, (2) no appropriation was made for fiscal year 1991, and (3) the enactment of the supplemental appropriation was delayed. Recent steps taken by Congress and FEMA should lessen the chances of another shortfall. For example, legislation enacted in 1991 stating that supplemental appropriations for the Disaster Relief Fund will be considered as emergency funds should help to reduce the delay in making funds available. Also, FEMA is trying to develop more accurate and timely estimates of disaster costs. Although major disasters like Hurricane Andrew involve huge costs paid over many fiscal years, FEMA's budget submission to Congress gives no idea how much of the balance of the Disaster Relief Fund at the start of the year will be needed to pay for disaster costs arising from previous years. Congress could use such information in considering the need for and the amount of appropriations.

GAO found that: (1) FEMA expected a decrease in the Disaster Relief Fund's appropriations, since Congress did not appropriate any money for the fund for fiscal year (FY) 1991; (2) in February 1991, FEMA advised the Office of Management and Budget (OMB) that a supplemental appropriation was needed to cover its 1991 obligations; (3) OMB informed FEMA that the uncertainty, variation, and lack of timeliness of the FEMA estimate prevented responsible budgeting; (4) by June 1991, FEMA determined the estimated additional funds it needed and submitted a FY 1991 supplemental request and an amendment to its FY 1992 budget request; (5) FEMA notified appropriation committees that without a supplemental appropriation for FY 1991, the fund would need an $800 million appropriation for FY 1992; (6) uncertainties involved in estimating the frequency and severity of future disasters did not allow for accurate budget estimates; (7) although FEMA issued guidance to its field offices on how to provide more timely data, it did not issue any guidance on steps that should be taken to collect more accurate data; and (8) FEMA did not receive the 1991 supplemental appropriation until December 1991, and as a result, it suspended federal disaster assistance to many states and communities.