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Report to Congressional Committees: 

United States Government Accountability Office: 

GAO: 

January 2007: 

Budget Issues: 

FEMA Needs Adequate Data, Plans, and Systems to Effectively Manage 
Resources for Day-to-Day Operations: 

Budget Issues: 

GAO-07-139: 

GAO Highlights: 

Highlights of GAO-07-139, a report to congressional committees 

Why GAO Did This Study: 

Much of FEMA’s funding is provided in supplemental appropriations when 
a disaster is declared, but funds to staff, manage, and operate other 
FEMA programs and underlying support functions—what GAO refers to as 
its day-to-day operations—compete with other Department of Homeland 
Security (DHS) and federal priorities for limited resources. In this 
environment, FEMA must strategically plan for and manage its day-to-day 
operations to ensure they efficiently and effectively support the 
agency’s disaster relief mission. To analyze this issue, GAO examined 
resource trends and management related to FEMA’s day-to-day operations 
from fiscal year 2001 through fiscal year 2005. 

What GAO Found: 

The Federal Emergency Management Agency (FEMA) experienced near-
constant organizational change from fiscal years 2001 through 2005 that 
caused considerable flux in FEMA’s resources. During this period, the 
most significant change occurred in March 2003 when FEMA transitioned 
from an independent agency to a component of the newly created DHS. 
From the beginning of fiscal year 2003 through fiscal year 2005, a 
significant number of programs and their associated funding moved into 
and out of FEMA. Although the amounts nearly balanced, the movement was 
disruptive to operations and created uncertainty about the availability 
of resources. 

Figure: Programs and Associated Funding That Moved into and out of FEMA 
from March 1, 2003 through Fiscal Year 2005 (in Millions of Dollars): 

[See PDF for Image] 

Source: GAO analysis of FEMA data. 

[End of Figure] 

FEMA also contributed to DHS start-up costs and ongoing expenses, which 
reduced funds available for FEMA’s operating expenses. Though FEMA 
would have incurred some of these costs as an independent agency, 
evidence suggests that FEMA may have been assessed a disproportionate 
amount relative to several larger DHS entities. While all of this 
affected resources for FEMA’s day-to-day operations, the extent cannot 
be fully understood because FEMA does not have adequate information on 
how resources are aligned with those operations. Such information could 
be used to improve planning and management and provide greater 
accountability to Congress and the public. 

Although these shifting resources created challenges, the way FEMA 
managed its existing resources compounded problems. Notably, FEMA lacks 
a strategic workforce plan and related human capital strategies—such as 
succession planning or a coordinated training effort—which are integral 
to managing resources. They enable an agency to define staffing levels, 
identify the critical skills needed to achieve its mission, and 
eliminate or mitigate gaps between current and future skills and 
competencies. FEMA also lacks business continuity plans for its day-to-
day operations, which puts support for the disaster-relief mission at 
increased risk. Even FEMA staff’s strong sense of mission is no 
substitute for a plan and strategies for action. 

What GAO Recommends: 

GAO recommends that FEMA take steps to better manage resources for its 
day-to-day operations, including collecting data that enables managers 
to monitor progress and support resource priorities, using leading 
practices to develop a strategic workforce plan, and developing 
business continuity plans. In carrying out these recommendations, FEMA 
should work with Congress to ensure that the information it provides is 
sufficient for use in oversight activities. 

DHS and OMB staff provided technical comments on a draft of this 
report, which we incorporated where appropriate. 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-139]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Susan J. Irving, (202) 
512-9142, irvings@gao.gov. 

[End of Section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

Organizational Changes Created Uncertainty about the Availability of 
Resources, but FEMA Lacked Adequate Data to Understand the Effect on 
Day-to-Day Operations: 

FEMA's Lack of Strategic Management Tools Compounded Problems It Faced 
in Coping with Shifting Resources: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments: 

Appendix I: Analysis of Resources for Day-to-Day Operations: 

Appendix II: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Summary of FEMA's Regular and Supplemental Appropriations for 
Fiscal Years 2001 to 2005: 

Table 2: FEMA Organizational Changes, Fiscal Years 2001-2003: 

Table 3: Illustration of Three Entities' Share of DHS FTEs, Funding, 
and Assessments for the DHS WCF for Fiscal Year 2005: 

Figures: 

Figure 1: Programs and Associated Funding That Moved into and out of 
FEMA from March 1, 2003 through Fiscal Year 2005 (in Millions of 
Dollars): 

Figure 2: Trends in Annual Funding for FEMA's Non-DRF Operations, 
Fiscal Years 2001-2005: 

Figure 3: Trends in FTEs for FEMA's Non-DRF Operations, Fiscal Years 
2001-2005: 

Figure 4: Estimate of Funding for FEMA's Day-to-Day Operations, Fiscal 
Years 2001-2005: 

Figure 5: Estimate of Actual FTEs for FEMA's Day-to-Day Operations, 
Fiscal Years 2001-2005: 

Abbreviations: 

CORE: Cadre of On-call Response/Recovery Employees: 

DHS: Department of Homeland Security: 

DRF: Disaster Relief Fund: 

DSA: Disaster Support Activity: 

EP&R: Emergency Preparedness and Response: 

FEMA: Federal Emergency Management Agency: 

FTE: full-time equivalent: 

MMRS: Metropolitan Medical Response System: 

ODP: Office of Domestic Preparedness: 

OMB: Office of Management and Budget: 

ONP: Office of National Preparedness: 

PFT: permanent full-time: 

SES: Senior Executive Service: 

WCF: Working Capital Fund: 

United States Government Accountability Office: 
Washington, DC 20548: 

January 19, 2007: 

The Honorable Robert C. Byrd: 
Chairman: 
Committee on Appropriations: 
United States Senate: 

The Honorable Judd Gregg: 
Ranking Minority Member: 
Subcommittee on Homeland Security: 
Committee on Appropriations: 
United States Senate: 

The Honorable Joseph I. Lieberman: 
Chairman: 
The Honorable Susan M. Collins: 
Ranking Minority Member: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The Honorable David R. Obey: 
Chairman: 
Committee on Appropriations: 
House of Representatives: 

The mission of the Federal Emergency Management Agency (FEMA) is to 
lead the nation in mitigating, responding to, and recovering from major 
domestic disasters, both natural and man-made, including terrorist 
incidents. Budgeting for FEMA's mission is inherently difficult because 
the number, severity, and timing of disasters are unknown. In 
recognition of this fact, a large portion of FEMA's funding is provided 
in emergency supplemental appropriations when a disaster is declared, 
and Congress has provided FEMA with the authority to hire additional 
nonpermanent staff and to leverage support from other agencies quickly. 
In contrast, funds to staff, manage, and operate other FEMA programs 
and underlying support functions--which we refer to in this report as 
its day-to-day operations--are requested in the President's annual 
budget and, therefore, compete with other Department of Homeland 
Security (DHS) and federal priorities for resources.[Footnote 1] 
Although there are obvious reasons to distinguish between funding for 
disasters and for day-to-day operations, it is important to recognize 
that day-to-day operations affect FEMA's ability to deal effectively 
and as efficiently as possible with disasters. In this report we 
examined resources related to FEMA's day-to-day operations from fiscal 
year 2001 through fiscal year 2005 and asked the following: 

1. What were resource trends for FEMA's day-to-day operations? 

2. How did FEMA manage its resources for day-to-day operations? 

To address these objectives, we reviewed and analyzed fiscal years 2001 
to 2005 budgetary and personnel data from the President's budget, FEMA 
operating plans, FEMA and DHS budget documents, and budget and full- 
time equivalent (FTE) employee summary tables provided by FEMA. To 
assess its reliability, we compared FEMA's budget and personnel data 
with data in the President's budget. However, to make information 
comparable for the President's fiscal year 2004 budget request, the 
Office of Management and Budget (OMB) restructured fiscal years 2002 
and 2003 budget data to reflect changes that occurred with the creation 
of DHS in 2003. Because our review called for a more detailed 
presentation than what was available in the President's budget, we 
relied on FEMA's data. In addition, we analyzed personnel and training 
information and reviewed FEMA's workforce planning contract. We 
determined that FEMA's budgetary and personnel data were sufficiently 
reliable for purposes of providing background information and showing 
general trends. We interviewed staff in FEMA's Office of Budget, 
officials from the Offices of Plans and Programs, Training, and 
Procurement, as well as program managers and staff from the Mitigation, 
Response, Recovery, and Human Resources Divisions. We did not interview 
FEMA regional managers because FEMA headquarters staff had primary 
responsibility for the resource allocations and programs that we 
examined. Therefore, we determined that our scope was sufficient and 
did not materially affect our findings. At DHS we interviewed staff 
from the DHS Budget Office, the Office of Financial Management, and the 
Office of the Inspector General. At OMB, we interviewed Resource 
Management Office staff with budget and oversight responsibilities for 
DHS and FEMA about the start-up of DHS and the role of OMB's Planning 
Transition Office for the Department of Homeland Security. This 
engagement was conducted under the Comptroller General's authority from 
November 2005 until October 2006 in accordance with generally accepted 
government auditing standards. 

Results in Brief: 

Organizational changes caused considerable flux in FEMA's resources 
from fiscal years 2001 through 2005. However, resource trends for day- 
to-day operations could not be fully understood from available data. 
Changes in FEMA's structure and responsibilities occurred multiple 
times in this period. FEMA underwent several reorganizations in fiscal 
years 2001 and 2002, but the most significant change occurred in March 
2003 when FEMA transitioned from an independent agency to a component 
of the newly created DHS. From the beginning of fiscal year 2003 
through fiscal year 2005, over $1.3 billion in new or significantly 
expanded programs came into FEMA, while programs with funding of nearly 
$1.5 billion were transferred from FEMA. Although these changes nearly 
balance in dollar terms, they mask the disruption in operations and 
uncertainty about the availability of resources that accompanied the 
nearly constant change. FEMA officials described challenges in 
responding to these changing responsibilities and shifting resources 
with roughly the same number of FTE employees.[Footnote 2] At the same 
time, as a component of DHS, FEMA contributed to departmental start-up 
costs and departmental expenses, which reduced funds available for 
FEMA's operating expenses. Even though some of these costs would have 
been incurred if FEMA had been an independent agency, DHS billing 
notifications for fiscal year 2005 indicated that FEMA may have been 
assessed a disproportionate amount relative to several larger DHS 
entities. Unquestionably these factors affected resources at FEMA, but 
the extent to which they affected resources for FEMA's day-to-day 
operations cannot be fully understood because FEMA lacks adequate 
information on resources associated with its day-to-day operations. For 
example, FEMA lacks adequate data on reallocations of resources among 
programs, projects, and activities, on staffing levels, and, for some 
grant programs, on how much has been allocated. If FEMA collected such 
data, it could be used for improved planning and management, and 
greater accountability to Congress and the public. 

Although shifting resources caused by its transition to DHS created 
challenges for FEMA, the agency's management of existing resources 
compounded these problems. FEMA lacks some of the basic management 
tools that help an agency respond to changing circumstances. Most 
notably, FEMA lacks a strategic workforce plan and related human 
capital strategies--such as succession planning or a coordinated 
training effort. Such tools are integral to managing resources, as they 
enable an agency to define staffing levels, identify the critical 
skills needed to achieve its mission, and eliminate or mitigate gaps 
between current and future skills and competencies. In addition, FEMA 
lacks business continuity plans for its day-to-day operations. Since 
FEMA operates somewhat like a volunteer fire department in that all 
personnel can be called on to respond to disasters and none are 
assigned exclusively to day-to-day operations, having plans outlining 
which of these operations are critical and how they will be maintained 
when the agency is in disaster relief mode becomes much more important. 
FEMA officials told us that nondisaster programs are maintained on an 
ad hoc basis when permanent staff are deployed and that the agency does 
not have provisions for continuing programs when program managers are 
called into response duties. Without an understanding of who holds a 
mission-critical position for day-to-day operations and what minimum 
level of staffing is necessary even during disaster response, business 
continuity and support for the disaster-relief mission are put at 
increased risk. Even FEMA staff's strong sense of mission, which was 
apparent in our interviews, is no substitute for a plan and strategies 
for action. 

In this report, we make a series of recommendations to help FEMA better 
track its resources for day-to-day operations, identify current and 
future staffing needs through workforce planning, ensure leadership 
capacity through training and development, and maintain business 
continuity when a disaster is declared. We also recommend that the 
Secretary of Homeland Security direct the Director of FEMA to work with 
Congress in carrying out these recommendations to help ensure FEMA 
provides sufficient information to enable Congress to conduct its 
oversight role. 

We requested comments on a draft of this report from the Secretary of 
Homeland Security. DHS did not provide formal comments on the draft 
report but did provide technical comments, which we incorporated where 
appropriate. OMB staff also provided technical comments on an excerpt 
of the draft that referred to our discussion with OMB; we incorporated 
these where appropriate. 

Background: 

In response to concerns about the lack of a coordinated federal 
approach to disaster relief, President Carter established FEMA by 
Executive Order in 1978 to consolidate and coordinate emergency 
management functions in one location. FEMA absorbed the Federal 
Insurance Administration, the National Fire Prevention and Control 
Administration, the National Weather Service Community Preparedness 
Program, the Federal Preparedness Agency of the General Services 
Administration, the Federal Disaster Assistance Administration 
activities from the Department of Housing and Urban Development, and 
civil defense responsibilities from the Defense Department's Defense 
Civil Preparedness Agency. Between 1979 and 2003, FEMA's 
responsibilities expanded to include emergency management for human- 
made and technological disasters, such as managing the off-site 
consequence of accidents at nuclear power plants, hazardous materials 
emergency management, chemical weapons disposal, and hazardous material 
disaster mitigation initiatives. 

In 2003, FEMA became a component of the Emergency Preparedness and 
Response (EP&R) Directorate in the newly created DHS. Much like its 
FEMA predecessor, EP&R's mission was to help the nation to prepare for, 
mitigate the effects of, respond to, and recover from 
disasters.[Footnote 3] While FEMA moved intact to DHS and most of its 
operations became part of the EP&R Directorate, some of its functions 
were moved to other organizations within DHS. In addition, functions 
that were formerly part of other agencies were incorporated into the 
new EP&R organization. Once in the department, FEMA's preparedness 
functions were transferred over 2 years to other entities in 
DHS,[Footnote 4] reducing its mission responsibilities. However, recent 
legislation transferred many preparedness functions back to 
FEMA.[Footnote 5] Today, once again, FEMA's charge is to lead the 
nation's efforts to prepare for, protect against, respond to, recover 
from, and mitigate against the risk of natural disasters, acts of 
terrorism, and other man-made disasters, including catastrophic 
incidents. 

FEMA funding is provided in both regular and supplemental 
appropriations. FEMA's Disaster Relief Fund (DRF), which supports a 
wide range of programs in response to presidentially declared 
disasters, receives an annual regular appropriation that is based on 
the 5-year average for direct disaster activity, excluding 
extraordinary events. Supplemental funding is requested if funds in the 
regular appropriation are not sufficient to respond to specific 
presidentially declared disasters. The amount of this funding varies 
depending on the number and severity of disasters (see table 1 below 
for a summary of FEMA's regular and supplemental appropriations from 
fiscal years 2001 to 2005). In its regular annual appropriations FEMA 
receives not only some funding for its DRF but also funding to provide 
for day-to-day agency operations, including financial management, human 
resources, procurement, policy direction, and administration of FEMA 
programs.[Footnote 6] Some programs that provide funding, such as 
grants to state and local governments--and not to FEMA operations--are 
funded in these appropriations as well. 

Table 1: Summary of FEMA's Regular and Supplemental Appropriations for 
Fiscal Years 2001 to 2005: 

Millions of dollars. 

Regular Disaster Relief Fund appropriations; 
Fiscal year: 2001: $293.6; 
Fiscal year: 2002: $611.1; 
Fiscal year: 2003: $773.4; 
Fiscal year: 2004: $1,767.5; 
Fiscal year: 2005: $2,042.4. 

Other regular appropriations; 
Fiscal year: 2001: 839.8; 
Fiscal year: 2002: 921.9; 
Fiscal year: 2003: 2,552.9; 
Fiscal year: 2004: 1,525.9; 
Fiscal year: 2005: 1,046.8. 

Supplemental Disaster Relief Fund appropriations; 
Fiscal year: 2001: 4,383.1; 
Fiscal year: 2002: 8,007.6; 
Fiscal year: 2003: 1,925.3; 
Fiscal year: 2004: 2,245.0; 
Fiscal year: 2005: 66,385.0. 

Other supplemental appropriations; 
Fiscal year: 2001: 0.0; 
Fiscal year: 2002: 531.4[A]; 
Fiscal year: 2003: 86.3[B]; 
Fiscal year: 2004: 0.0; 
Fiscal year: 2005: 100.0[C]. 

Source: GAO presentation of FEMA data. 

[A] This supplemental funding was for the following activities: $210 
million for fire grants; $25 million for preparedness; $10 million for 
the Winter Olympics; $225.4 million for fire grants, the existing 
national urban search and rescue system, and interoperable 
communications equipment; and $61 million for Cerro Grande Fire Claims. 

[B] This supplemental funding was for the Liberty Shield. 

[C] This supplemental funding was for the National Disaster Medical 
System. 

[End of table] 

Similar to FEMA's funding arrangement, most of its employees are hired 
to perform work related to a specific, presidentially declared 
disaster. The majority of FEMA's workforce is comprised of nonpermanent 
employees with various terms (from 120 days to 4 years), who are paid 
out of the DRF. As with the funding for the DRF, the number of these 
employees can fluctuate in response to the number and severity of 
disasters.[Footnote 7] The remainder of FEMA's workforce is comprised 
of about 2,100 permanent full-time (PFT) employees, who are paid 
primarily out of FEMA's nondisaster relief fund accounts. FEMA also 
uses contractors to administer some of its programs, but FEMA does not 
track data on the level of contract support it receives. 

Certain nonpermanent staff, known as the Cadre of On-call Response/ 
Recovery Employees (CORE), perform functions similar to those performed 
by PFT employees.[Footnote 8] Although paid from the DRF account, the 
CORE work alongside PFT employees in headquarters and the regions in 
both program offices and support functions, such as human resources and 
IT, and both CORE and PFT employees can be deployed to respond to 
disasters. 

Organizational Changes Created Uncertainty about the Availability of 
Resources, but FEMA Lacked Adequate Data to Understand the Effect on 
Day-to-Day Operations: 

To better understand resource trends for FEMA's day-to-day operations, 
information about aggregate resource trends should be viewed in the 
context of organizational changes, priorities, and the movement of 
resources within FEMA and DHS. However, FEMA lacks adequate information 
on the resources associated with its day-to-day operations. Without 
such data, FEMA cannot strategically plan for and invest in these 
operations, which are necessary for fulfilling its disaster-relief 
mission. Moreover, it cannot ensure accountability to Congress and the 
public that these resources were used efficiently, effectively, or for 
the highest priorities. 

FEMA's Responsibilities Were in Flux, Which Created Uncertainty about 
the Availability of Resources: 

Even prior to its transition to DHS, FEMA was undergoing organizational 
change. In response to domestic terrorist incidents in the 1990s--such 
as the bombings of the World Trade Center in New York City in 1993 and 
the Alfred P. Murrah federal building in Oklahoma City in 1995--federal 
efforts to focus on preparedness against terrorist attacks increased. 
This led to the first of several organizational changes between fiscal 
years 2001 and 2003, as shown in table 2. 

Table 2: FEMA Organizational Changes, Fiscal Years 2001-2003: 

2001: Before 9/11: The President created an Office of National 
Preparedness within FEMA; 
FEMA underwent an agencywide reorganization to streamline service 
delivery; 

2001: After 9/11: FEMA's new Office of National Preparedness was 
assigned increased responsibility for working with first responder 
agencies; 

2002: FEMA underwent another reorganization that split preparedness 
functions from readiness and response; 

2003: FEMA became part of the newly created Department of Homeland 
Security (DHS). 

Source: GAO presentation of information from FEMA, the DHS Office of 
the Inspector General, and past GAO work. 

[End of table] 

Recognizing a need for greater coordination among federal agencies in 
responding to a terrorist attack, the President created the Office of 
National Preparedness (ONP) within FEMA in May 2001 to provide 
leadership in the coordination and facilitation of all federal efforts 
to assist state and local emergency management and emergency response 
organizations. Specifically, FEMA was to assist with planning, 
training, equipment, and exercises necessary to build and sustain 
capability to respond to any emergency or disaster. FEMA also underwent 
an agencywide reorganization in 2001 to streamline the agency and 
devote more employee effort to service delivery by bringing together 
programs that shared complementary missions. FEMA's Preparedness, 
Training, and Exercises Directorate merged with its Response and 
Recovery Directorate and became the Readiness, Response, and Recovery 
Directorate. FEMA also created the External Affairs and Administration 
and Resource Planning Directorates. 

The terrorist attacks of September 11, 2001 prompted additional changes 
at FEMA. FEMA led the federal response to aid victims of the September 
11 attacks and afterward took on a growing role in promoting emergency 
preparedness, largely focused on preparedness for future terrorist 
attacks. FEMA's ONP was assigned increased responsibility for working 
with first responders, such as police, fire, emergency medical, and 
public health personnel, to ensure that they were trained and equipped 
to deal with weapons of mass destruction. FEMA underwent another 
reorganization in fiscal year 2002, when the Readiness, Response, and 
Recovery Directorate that was created in fiscal year 2001 was split 
into the National Preparedness Division and the Response and Recovery 
Division. 

In March 2003, FEMA--which had been an independent agency since its 
inception--became part of the newly created DHS. In accordance with the 
Homeland Security Act of 2002 and subsequent determination orders 
issued by OMB, FEMA's assets and responsibilities were transferred to 
DHS's EP&R Directorate. The Undersecretary of EP&R assumed the 
responsibilities of the Director of FEMA, and EP&R retained use of the 
name FEMA. Many of the changes in FEMA's resources from 2003 to 2005 
can be attributed to FEMA's transfer to DHS and its shifting 
organizational responsibilities, as shown in figure 1 below. 

Figure 1: Programs and Associated Funding That Moved into and out of 
FEMA from March 1, 2003 through Fiscal Year 2005 (in Millions of 
Dollars): 

[See PDF for image] 

Source: GAO analysis of FEMA data. 

[End of figure] 

In total, over $1.3 billion in funding for new or significantly 
expanded programs came into FEMA between the beginning of fiscal year 
2003 and fiscal year 2004, and nearly $1.5 billion left FEMA by fiscal 
year 2005. Although the movement of programs and their associated 
funding in and out of FEMA nearly balanced in dollar terms, this masks 
the amount of change and the challenges described by FEMA officials as 
the organization, with roughly the same number of FTE employees, 
responded to its increased responsibilities, only in most cases to have 
them taken away later. In the transition to DHS in fiscal year 2003, 
for instance, FEMA gained over $513 million in new programs from HHS. 
However, by fiscal year 2005, two of these programs and most of the 
associated funding were transferred out of FEMA: the Strategic National 
Stockpile was transferred back to HHS and the MMRS was transferred to 
another component of DHS, leaving in FEMA just $34 million of the more 
than $513 million in public health programs that had been transferred 
to FEMA less than 2 years before. 

FEMA also had most of its terrorism-related programs transferred to 
DHS. In the transition, nearly $998.9 million in existing FEMA 
preparedness programs that were deemed to be terrorism-related were 
transferred from FEMA to the Office of Domestic Preparedness (ODP) in 
DHS. Most of what remained in FEMA was not considered homeland security-
related,[Footnote 9] a designation based on the National Strategy for 
Homeland Security and used by the administration and OMB to evaluate 
funding priorities.[Footnote 10] Since the September 11, 2001 terrorist 
attacks, the administration's guidance for preparation of agency budget 
submissions has encouraged agencies to hold nonhomeland security, 
nondefense funding level.[Footnote 11] For fiscal years 2003 through 
2005 the President's budget requests for most of FEMA's programs have 
been consistent with this policy. 

In addition to resource fluctuations associated with its changing 
responsibilities, some FEMA resources were transferred to establish a 
departmental structure at DHS. OMB requested that a total of $125 
million be transferred from component entities for DHS start-up costs. 
Of this $125 million, FEMA's share was $32 million. OMB officials 
involved with the DHS transition said OMB reviewed the relative size of 
agency budgets and staffing levels, their levels of unobligated 
balances, and the services they received from their parent departments 
to get a sense of the components' appropriate relative share of the 
start-up costs. Yet, according to our analysis of a letter from OMB to 
the Chairman of the Senate Committee on Appropriations dated December 
20, 2002, FEMA paid about the same amount as each of the other three 
larger contributing agencies, which transferred entities such as the 
Immigration and Naturalization Service, Transportation Security 
Administration, Coast Guard, U.S. Customs Service, and U.S. Secret 
Service.[Footnote 12] 

After DHS was established, additional payments that FEMA made to 
support ongoing departmental operations also affected its resources. In 
the period after Hurricane Katrina, the FEMA director who had served 
through the storm publicly claimed that FEMA's resources were 
compromised as a result of being "taxed" by DHS. Although that 
individual is no longer at FEMA, this claim was repeated by current 
FEMA officials with whom we spoke.[Footnote 13] These assessments were 
actually payments made to DHS's Working Capital Fund (WCF), a type of 
intragovernmental revolving fund that agencies use to support services 
that are shared across the agency. The DHS WCF supports a number of 
activities--including payroll, governmentwide mandated service 
activities (such as e-government initiatives), and software licensing, 
many of which FEMA would have had to pay for as an independent agency. 
In fact, FEMA had a WCF when it was an independent agency before it 
transferred to DHS. In the transfer, FEMA's WCF became DHS's WCF. 

WCF billing notifications for fiscal year 2005--the first year for 
which sufficient data are available--do indicate that FEMA may have 
been assessed a disproportionate amount for the WCF compared to several 
larger entities in DHS. According to the WCF billing notifications and 
DHS officials, the WCF assessments for that year were based on the 
number of FTE employees in an entity, the amount of funding that DHS 
defined as an entity's "discretionary budget,"[Footnote 14] or how 
frequently an entity used a particular service. The entity with the 
largest percentage of FTEs was the Transportation Security 
Administration. The entity with the largest percentage of DHS 
discretionary budget was the U.S. Coast Guard. Table 3 below shows for 
fiscal year 2005 the share of FEMA, Transportation Security 
Administration, and U.S. Coast Guard FTEs and discretionary funding 
relative to DHS as a whole, the percent that each organization was 
assessed for fiscal year 2005 relative to the total amount assessed by 
the WCF, and the percent of the organization's discretionary funding 
that the assessment represented. 

Table 3: Illustration of Three Entities' Share of DHS FTEs, Funding, 
and Assessments for the DHS WCF for Fiscal Year 2005: 

DHS entity: Emergency Preparedness and Response (FEMA); 
Percent of DHS FTEs used for billing purposes: 1.9; 
Percent of DHS discretionary funding used for billing purposes: 2.08; 
percent of total WCF assessment: 6.19; 
Percent of WCF assessment relative to entity's discretionary budget: 
3.88. 

DHS entity: Transportation Security Administration; 
Percent of DHS FTEs used for billing purposes: 38.2; 
Percent of DHS discretionary funding used for billing purposes: 14.14; 
percent of total WCF assessment: 6.96; 
Percent of WCF assessment relative to entity's discretionary budget: 
0.64. 

DHS entity: U.S. Coast Guard;  
Percent of DHS FTEs used for billing purposes: 4.8; 
Percent of DHS discretionary funding used for billing purposes: 27.24; 
percent of total WCF assessment: 5.45; 
Percent of WCF assessment relative to entity's discretionary budget: 
0.26. 

Source: GAO analysis of DHS data. 

[End of table] 

As the table shows, FEMA paid more than the entity with the largest 
percentage of DHS's discretionary budget--the U.S. Coast Guard--and 
nearly the same amount as the DHS entity with the largest percentage of 
DHS's FTEs--the Transportation Security Administration. According to 
our analysis of the WCF billing notifications, items that were based on 
usage or participation (i.e., are not simply correlated with number of 
FTEs or amount of discretionary funding) could have accounted for up to 
$15.8 million of FEMA's $18.7 million assessment. However, a closer 
examination of what DHS labeled algorithms shows that the way usage or 
participation was factored into the calculations in many cases was not 
straightforward; it was often based on a combination of unweighted 
variables, some of which related to the number of FTEs or the amount of 
funding. This again raises questions about how assessments actually 
were determined.[Footnote 15] Because a number of usage charges 
actually related to FTEs or funding, it is unlikely that an agency with 
a workforce and budget the size of FEMA's could have used the same 
amount of resources as its much larger counterparts. 

A DHS official acknowledged that finding the "right size" of the 
different components' assessments has been an ongoing challenge and 
that the WCF algorithms are being improved to ensure fairness and 
equity. Several FEMA officials with whom we spoke confirmed that the 
process has improved and attributed this in part to congressional 
oversight of the WCF. 

FEMA program officials said that FEMA's share of DHS start-up costs and 
its assessment for the WCF directly affected the level of service they 
were able to provide from fiscal years 2004 to 2005. Several officials 
said that the WCF assessments in particular contributed to a hiring 
freeze. FEMA reported in its Fiscal Year 2005 Mid-Year Budget Review 
report to DHS that it froze hiring for over 500 positions in September 
2004 to ensure availability of funding for all onboard staff. DHS 
clarified that the hiring freeze was temporary--lasting only until 
January 2005--and was instituted primarily to allow FEMA to complete a 
baseline staffing review and implement its Position Management program. 
Nonetheless, nearly all of the FEMA program officials that we spoke 
with said that this hiring freeze made it difficult to run existing 
programs or contributed to delays in implementing new programs. In 
addition, FEMA officials said that the hiring freeze further compounded 
the effects of the increases in attrition that began after the 
September 11, 2001 terrorist attacks. 

Resource Trends for FEMA's Day-to-Day Operations from Fiscal Year 2001 
to 2005 Cannot Be Fully Understood, Because FEMA Lacks Adequate Data: 

Organizational changes unquestionably affected resources at FEMA, but 
the extent to which they affected resources for FEMA's day-to-day 
operations cannot be fully understood because FEMA lacks adequate 
information on the resources associated with such operations. To ensure 
that FEMA's day-to-day operations are efficiently and effectively 
supporting the agency's disaster relief mission, FEMA must 
strategically plan for and manage these functions. Simply having data 
about transactions or decisions is not enough; strategic planning and 
management requires data and tools that would enable FEMA to identify 
the resources associated with its day-to-day operations. However, FEMA 
lacks adequate data in a number of areas, including reallocations of 
resources among programs, projects, and activities, staffing levels, 
and, in some cases, FEMA appropriations allocated for grant programs. 
Not only would such data help FEMA better manage its day-to-day 
resources, but, as we have previously reported,[Footnote 16] having 
sufficient information on resource investments, such as budget 
documents combined with performance data, provides a valuable tool to 
assist members of Congress in their oversight responsibilities. 

Throughout all the organizational changes one thing that remained 
consistent was that the level of management and oversight of FEMA's 
resources once appropriations had been enacted was minimal. For 
example, although reprogramming actions--shifts in resources within an 
appropriation between offices, divisions, or activities that occur 
during the fiscal year--affect resource availability, FEMA does not 
capture data in a way that makes it practical to analyze reprogramming 
trends. According to FEMA staff, a financial auditing firm had reached 
the same conclusions when it tried to perform an analysis of 
reprogramming actions several years earlier. A FEMA official said 
budget analysts receive between 500 and 1,000 reprogramming requests 
every year. However, this official said that budget analysts do not 
assess the appropriateness of a reprogramming request; they simply 
check requests against FEMA's apportionment to ensure that the funding 
is available and that the request complies with applicable rules and 
laws. Once approved, FEMA captures information about reprogramming 
actions on a transaction-by-transaction basis in its financial 
management system, which is not equipped to provide trend information 
about reprogrammings in the aggregate.[Footnote 17] Without this 
information, FEMA cannot know whether reprogramming decisions made 
during the year have gone for the highest organizational priorities or 
determine definitively what resources support day-to-day operations. 
While FEMA is not required by law to aggregate its reprogramming data, 
nothing prevents FEMA from developing additional aggregations of data 
for management purposes, particularly in light of its unique operating 
and funding environment. 

FEMA not only lacked useful information on funding changes that 
occurred during the year, but until fiscal year 2005 it was also unable 
to produce accurate information on the number of positions it had and 
where they were located in the organization. Despite improvements in 
the information that is available, FEMA still uses multiple and 
disparate systems, managed by different offices, to gather information 
about its staff levels. The Budget Office maintains FTE data; the Human 
Resources Division maintains data about the number of "onboard" 
employees and separations; and the Office of Plans and Programs 
maintains the "Manpower Database" to track the number of positions and 
their location in the organization. 

Moreover, FEMA does not have a positive definition of which activities 
constitute its day-to-day operations--FEMA has categorized much of what 
it does on a day-to-day basis simply as "nondisaster," even though many 
of those activities are necessary to support its disaster relief 
mission. As a result, FEMA could not provide information that was 
sufficient to allow us to accurately report on the resources associated 
with its day-to-day operations. When asked by the DHS Office of the 
Inspector General and later by us to identify the resources associated 
with its operations, FEMA divided its annual funding and FTE data into 
three categories--operating expenses, other FEMA programs, and 
DRF.[Footnote 18] The FEMA Budget Office presented the summary data as: 
(1) "FEMA without DRF" (the sum of operating expenses and other FEMA 
programs), (2) DRF, and (3) total. Because DRF funding is primarily 
available only in response to a specific, presidentially declared 
disaster, we attempted to use the "FEMA without DRF"--or "non-DRF"-- 
data as a proxy for day-to-day operations. However, the non-DRF 
category presents an inaccurate picture of FEMA's day-to-day operations 
for two reasons. First, it includes some funding, such as for grants, 
that is not available to FEMA for its day-to-day operations because 
FEMA distributes it to states and local governments. Neither FEMA's 
Budget Office nor the program offices responsible for grants 
administration were able to separate out the amount of funding 
allocated for grants from other operating expense funding provided in 
the same account. In these cases, rather than demonstrating that 
consideration had been given to how much of the resources available for 
day-to-day operations should be used instead to fund grants, FEMA could 
only report on how much had been obligated for grants, subsidies, and 
other contributions. Second, the non-DRF data leaves out a key 
component of FEMA's day-to-day operations--the Disaster Support 
Activity (DSA). Although part of the DRF, the DSA provides funding for 
ongoing capabilities, such as training, that are not readily 
attributable to any one specific declared disaster. FEMA has deemed 
these support expenditures essential to providing (1) timely disaster 
response, (2) responsive customer service, and (3) cost-effective 
program management and delivery. (See app. I for more details.) Without 
a clear understanding of the resources associated with its day-to-day 
operations, FEMA lacks the data that would enable it to identify areas 
that are working well, opportunities for improvement and, ultimately, 
where best to invest resources. 

FEMA's Lack of Strategic Management Tools Compounded Problems It Faced 
in Coping with Shifting Resources: 

FEMA Lacks a Strategic Workforce Plan: 

A strategic workforce plan is integral to defining the appropriate 
level of staffing, identifying the critical skills needed to achieve 
the mission, and eliminating gaps to prepare the agency for future 
needs. Strategic workforce planning, also called human capital 
planning, helps an organization align its staffing with its current and 
emerging mission and programmatic goals. This includes developing long- 
term strategies for acquiring, developing, and retaining an 
organization's total workforce, including full-and part-time federal 
staff and contractors. This is especially important in a dynamic 
environment in which the need for changing technologies and skills are 
coupled with constrained budgets. 

In the wake of Hurricane Katrina, considerable attention was given to 
the fact that FEMA had been under its authorized staffing level for 
several years,[Footnote 19] but FEMA has not developed a strategic 
workforce plan, and therefore cannot demonstrate that the authorized 
FTE level and positions are appropriate. FEMA did not have a strategic 
workforce plan at any time between fiscal years 2001 and 2005 and it 
did not know until January 2005 how many positions it had or where they 
were located in the organization. At that time, FEMA inventoried its 
existing positions and used that information to establish a "baseline" 
for the number and type of positions in the agency. Although FEMA 
officials said this baseline represented the organization's staffing 
needs, in fact it was only the number of positions in the organization 
at that point in time and did not represent an assessment of the 
agency's composition and needs. In addition, this baseline does not 
include any information about the size or composition of its contractor 
workforce--which FEMA officials said is a growing component of the 
organization's total workforce. Furthermore, FEMA's authorized FTE 
levels may not be realistic as funding has become more constrained. 
OMB's most recent budget formulation guidance directed all federal 
agencies to review their authorized FTE levels to bring them in line 
with available funding. 

We are not the first to note FEMA's lack of a strategic workforce plan. 
In 2001, FEMA received an unsatisfactory rating for Human Capital 
initiatives in the President's Management Agenda scorecard, OMB's 
assessment of the management of federal agencies. The scorecard 
results, published in the Fiscal Year 2003 Budget of the United States 
Government, noted that FEMA lacked a strategy for linking human capital 
to fiscal resources and agency goals and that FEMA needed to develop a 
workforce-restructuring plan that addressed how the agency will attract 
and retain personnel with the skills to perform core agency functions 
including program oversight and analysis. In 2004, OPM recommended that 
FEMA develop a comprehensive human capital plan, including a thorough 
workforce analysis that establishes staffing levels aligned with FEMA's 
mission, goals, and organizational objectives. Most recently, the Post- 
Katrina Emergency Reform Act of 2006 included a provision that requires 
FEMA to develop a strategic workforce plan within 6 months of enactment 
of the act. 

FEMA included workforce planning as a priority in its 2003 to 2008 
Strategic Plan and, in September 2005, FEMA awarded a 1-year contract 
to a consulting firm to help the agency with the technical aspects of 
developing its workforce plan. However, FEMA's workforce planning 
efforts have not been conducted in accordance with leading practices in 
this area. As we have previously reported, the first step in strategic 
workforce planning is to set strategic direction,[Footnote 20] but 
according to FEMA officials, the workforce planning effort is being 
conducted without such a perspective. Instead, it is being conducted 
from the bottom up, division by division. A FEMA official told us that 
the instability created by FEMA's frequent reorganizations has made 
strategic workforce planning difficult. Instead of identifying mission- 
critical needs, the agency began workforce planning in divisions of 
FEMA that were relatively stable, that is, those that were less likely 
to be reorganized. FEMA's goal is to complete two divisions per year, 
with a goal of covering the entire agency by 2009. However, one 
official speculated that ongoing changes at DHS and FEMA may delay the 
completion of plans for all divisions. Although this approach may seem 
pragmatic, it is more likely to result in plans that meet the immediate 
needs of individual divisions rather than produce an integrated, long- 
term strategy for the entire agency. 

As part of a workforce planning effort, we have noted in previous work 
that agencies should develop human capital strategies--including 
succession planning, training, and staff development--to eliminate gaps 
between the future and current skills and competencies needed for 
mission success.[Footnote 21] FEMA, however, lacks a succession plan 
and does not have a coordinated or strategic approach to employee 
training or development. 

FEMA Has Not Engaged in Succession Planning: 

Succession planning--a process by which organizations identify, 
develop, and select their people to ensure an ongoing supply of 
successors who are the right people, with the right skills, at the 
right time for leadership and other key positions--is especially 
important for organizations that are undergoing change.[Footnote 22] In 
fact, according to one participant at a GAO forum on mergers and 
transformation, private sector experience with mergers and acquisitions 
is that over 40 percent of executives in acquired companies leave 
within the first year and 75 percent within the first 3 years.[Footnote 
23] Though FEMA's experience was less dramatic, succession planning was 
described as nonexistent and several officials cited the lack of 
succession planning as the agency's weakest link. Many FEMA managers 
described the loss of institutional knowledge when senior employees 
left in the transition to DHS and how those Senior Executive Service 
(SES) and other managers that remained often covered vacant positions, 
performing more than one job at a time. From fiscal year 2002--the last 
year that FEMA was an independent agency--through fiscal year 2005, 
FEMA lost over 25 percent of its permanent SES employees. As SES 
employees generally represent the most experienced and senior segment 
of the federal workforce, they are critical to leadership continuity, 
institutional knowledge, and expertise. Nor was there an experienced 
mid-level cadre to mitigate these losses: 16 percent of FEMA's career 
GS-15 staff were new to their positions in fiscal year 2004. Although 
turnover was to be expected, FEMA must recruit key talent to limit the 
effect of these departures. 

In addition to helping FEMA replace people who have left or are leaving 
in the near term, succession planning is important as a forward-looking 
exercise to ensure that FEMA can respond to emerging human capital 
challenges (e.g., the predicted federal retirement wave). Like the rest 
of the government, FEMA faces the possibility of losing a significant 
percentage of staff--especially at the managerial and leadership 
levels--to retirement. About a third of FEMA's SES and GS-15 leaders 
were eligible to retire in fiscal year 2005, and OPM data projects that 
this percentage will increase to over half by the end of fiscal year 
2010.[Footnote 24] This increases the importance of thinking about what 
knowledge, skills, and abilities are important--simply replacing staff 
without thought would miss a chance to set direction for the future. 

FEMA Does Not Have a Coordinated or Strategic Approach to Employee 
Training or Development for Its Permanent Full-Time Employees: 

We have previously reported that agencies need to invest resources, 
including time and money, to ensure that employees have the 
information, skills, and competencies they need to work effectively in 
a rapidly changing and complex environment.[Footnote 25] However, 
FEMA's training and development programs are not designed to ensure 
this because FEMA does not have a coordinated or strategic approach to 
training and development programs for its PFT staff. For example, 
FEMA's training requirements are not aligned with reported needs. FEMA 
training officials identified training in human resources management, 
financial management, and subject matter expertise as the areas of 
greatest need for the agency, but FEMA's training requirements do not 
reflect these. In addition, FEMA does not prioritize funding to ensure 
that the most important training needs are addressed first. We were 
told that training funds are generally available on a first-come, first-
served basis. 

Moreover, FEMA does not have an integrated system to track employee 
training and, therefore, no way of reliably tracking the cost of 
training, who has received it, or how successful it has been. As a 
result, it is extremely difficult for the agency to monitor the 
development of critical skills and competencies in its employees, have 
accurate and reliable data to document the total costs of training 
efforts, or assess how training and development efforts contribute to 
improved performance and greater capacity to meet new and emerging 
challenges. 

FEMA Does Not Have Business Continuity Plans for Its Day-to-Day 
Operations: 

FEMA operates much like a volunteer fire department in that all FEMA 
employees are expected to be on call during disaster response and no 
FEMA personnel are exclusively assigned to its day-to-day operations. 
While the volunteer fire department model may work in addressing a 
short-term incident, FEMA staff can be deployed for weeks or months. 
This makes planning for business continuity management (e.g., 
identifying which day-to-day operations must continue and how they will 
be staffed) a paramount concern.[Footnote 26] However, FEMA does not 
have guidelines on what constitutes a mission-critical position and has 
not conducted an assessment of what minimum level of support is 
necessary. As a result, it has no guidelines for which personnel either 
cannot be deployed or can be deployed only if sufficiently trained 
backups are available--although DHS Office of the Inspector General 
staff said that payroll and facilities support have been left intact 
during disasters. FEMA officials told us that nondisaster programs are 
maintained on an ad hoc basis when permanent staff are deployed and the 
agency does not have provisions for continuing programs when program 
managers are called into response duties. 

Some FEMA managers told us that the lack of such planning has 
negatively affected day-to-day operations during disaster response 
efforts. An official from one program branch told us that the branch 
has had as few as one or two staff members left to run it when 80 
percent were called to work on disaster operations in either the field 
or headquarters. To provide a contingency backup for one program, FEMA 
established contractor-supported Regional Management Centers in each 
region. Officials explained they could not have a $50 million program 
shut down every time a disaster occurs. However, the existence of these 
centers does not prevent the slowing down of operations during a 
disaster since there are functions contractors cannot perform. Only 
federal employees can set policy, sign contracts, or disburse grant 
funding. Without an understanding of who holds a mission-critical 
position for day-to-day operations and an assessment of what minimum 
level of support is necessary, it is unlikely that managers or 
employees can be held accountable for day-to-day operations and the 
probability of failure in providing necessary support for the disaster- 
relief mission goes up. 

Conclusions: 

Whether FEMA is a part of DHS or an independent entity, more attention 
needs to be paid to its day-to-day operations. This is an organization 
that not only has to deal with the repercussions of the prior year's 
hurricane season and the cumulative workload of other earlier disasters 
while preparing for future disasters, but also during the period of our 
review had been reorganized four times in 3 years, assumed significant 
responsibilities for preparedness activities that were subsequently 
transferred out, and inherited an assortment of programs from other 
agencies, some of which were gone within a year. In this environment, 
anything seen as "nondisaster" was likely to get less attention. Since 
most of FEMA's day-to-day operations--even those necessary to support 
disaster relief activities--are considered "nondisaster" by FEMA, day- 
to-day operations were likely to suffer. Without a vision of what day- 
to-day operations should be and how they contribute to achieving the 
disaster-related mission, FEMA is more likely to continue to react 
rather than manage its way through future changes. Even FEMA staff's 
strong sense of mission, which was apparent in our interviews, is no 
substitute for a plan and strategies for action. 

FEMA's piecemeal efforts to address the management challenges we 
highlighted are unlikely to produce desired results. These challenges 
are not new to FEMA and are not just the result of becoming a component 
of DHS. In 2001, FEMA was scored as unsatisfactory in all five areas of 
the President's Management Agenda. To make progress, FEMA is going to 
have to change the way it does business. In this report we have 
suggested some first steps. They include developing meaningful 
management reports that allow FEMA to consider tradeoffs in resources 
for day-to-day operations, a strategic workforce plan that identifies 
skills needed now and informs hiring in the future, training guidelines 
and requirements tailored to critical mission needs, a clear business 
continuity plan for when staff are deployed, and systems that can help 
FEMA operate more efficiently and effectively. Implementing such 
changes will not only improve the information available for planning 
and management, but they will also provide greater accountability to 
Congress and the public. 

Recommendations for Executive Action: 

We recommend that the Secretary of Homeland Security direct the 
Director of FEMA to take the following actions: 

* Define what resources--staff and funding--are associated with FEMA's 
day-to-day operations, link the investment of these resources to 
achievement of its disaster relief mission, and collect sufficient data 
in a way that enables managers to monitor progress and support resource 
priorities for these operations. 

* In responding to the strategic workforce planning requirements 
included in the Post-Katrina Emergency Reform Act of 2006, Pub. L. No. 
109-295 Title VI, apply the key principles of strategic workforce 
planning discussed in our report on such planning efforts (GAO-04-39), 
including: 

* establishing strategic direction; 

* assessing the number of employees and critical skills that FEMA 
needs; 

* conducting succession planning to identify, develop, and select 
people to ensure an ongoing supply of successors; and: 

* establishing training and development requirements and tracking 
systems to ensure that staff have the necessary training to carry out 
their day-to-day and disaster response functions. 

* Develop business continuity plans for the day-to-day operations to 
ensure that critical program functions are maintained at a sufficient 
level when PFT employees are called to respond to a disaster. These 
plans should include clear guidelines on who holds a mission-critical 
position at headquarters and, therefore, either cannot be deployed for 
disaster-relief efforts or needs to have alternates designated to 
provide backup in their absence. FEMA should consider formally cross- 
training and preparing ancillary workforce members (e.g., contractors, 
employees in other job titles/descriptions, retirees) to maintain daily 
functionality in the presence of anticipated staffing shortages when a 
disaster strikes. 

* In carrying out these recommendations, FEMA should work with Congress 
to ensure that FEMA has provided Congress with the information 
necessary to conduct its oversight role. Specifically, FEMA should work 
with Congress to ensure that its financial information is sufficient 
for use in the following oversight activities: 

* facilitating an understanding of the agency's operations; 

* informing the development, analysis, and debate of alternative 
policies; 

* supporting a historical perspective from which to evaluate future 
plans, budgets, and spending proposals; 

* assessing FEMA's accountability for actual results when compared to 
budgets; and: 

* evaluating program costs. 

Agency Comments: 

We requested comments on a draft of this report from the Secretary of 
Homeland Security. DHS did not provide formal comments on the draft 
report but did provide technical comments, which we incorporated where 
appropriate. OMB staff also provided technical comments on an excerpt 
of the draft that referred to our discussion with OMB; we incorporated 
these where appropriate. 

We are sending copies of this report to the Secretary of Homeland 
Security, the Director of OMB, the Director of FEMA, and other 
interested parties. We will also make copies available to others upon 
request. In addition, the report will be available at no charge on 
GAO's Web site at [Hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report please 
contact me at (202) 512-9142 or irvings@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. GAO staff making key contributions to 
this report are listed in appendix II. 

Signed by: 

Susan J. Irving: 
Director, Federal Budget Issues: 

[End of section] 

Appendix I: Analysis of Resources for Day-to-Day Operations: 

Given its mission, much of what the Federal Emergency Management Agency 
(FEMA) does is defined by disasters, and FEMA has largely divided its 
operating world into two categories--disaster and nondisaster. In this 
division, much of what FEMA does on a day-to-day basis is categorized 
as "nondisaster." This masks the fact that many of these operations are 
essential to preparing the agency to carry out its disaster relief 
mission. When asked by the Department of Homeland Security (DHS) Office 
of the Inspector General and later by GAO to identify the resources 
associated with its operations, FEMA divided its annual funding and 
full-time equivalent (FTE) data into three categories--operating 
expenses, other FEMA programs, and Disaster Relief Fund (DRF).[Footnote 
27] The FEMA Budget Office presented the summary data as: (1) "FEMA 
without DRF" (the sum of operating expenses and other FEMA programs), 
(2) DRF, and (3) total. Because DRF funding is primarily available only 
in response to a specific, presidentially declared disaster, we 
attempted to use the "FEMA without DRF"--or "non-DRF"--data as a proxy 
for day-to-day operations. However, the non-DRF presents an inaccurate 
picture of FEMA's day-to-day operations. Using this data skews FEMA's 
resource trends, because resources not associated directly with its 
operations, such as grants, cannot be disaggregated and resources from 
the DRF that are associated with its day-to-day operations are not 
included. 

Figure 2 below illustrates this point. If the non-DRF data are used as 
a measure of day-to-day operations, it appears that FEMA's funding for 
these operations rose significantly from fiscal year 2002 to 2003 and 
declined sharply from fiscal year 2003 to 2004--with the most dramatic 
decline occurring in operating expenses. Over this same period, as 
shown in figure 3, corresponding FTEs remained fairly level. 

Figure 2: Trends in Annual Funding for FEMA's Non-DRF Operations, 
Fiscal Years 2001-2005: 

[See PDF for image] 

Source: GAO presentation of FEMA data. 

Note: FEMA's summary data for "FEMA without DRF" did not include other 
supplemental funding or funding for programs that were transferred out 
of FEMA at any point over this period. However, we added funding for 
these items back in to their appropriate category to present a more 
accurate picture of FEMA's actual funding for "operating expenses" and 
"other FEMA programs" over this time period. 

[End of figure] 

Figure 3: Trends in FTEs for FEMA's Non-DRF Operations, Fiscal Years 
2001-2005: 

[See PDF for image] 

Source: GAO presentation of FEMA data. 

Note: FEMA's summary data did not include FTEs from fiscal years 2001 
to 2003 for two programs that were transferred out of FEMA in fiscal 
year 2003--the Inspector General and the Working Capital Fund. However, 
we added the FTE for these programs back in to the figure to present a 
more accurate picture of FEMA's actual FTEs for "operating expenses" 
and "other FEMA programs" over this time period. 

[End of figure] 

The non-DRF funding category presents an inaccurate picture of 
resources for FEMA's day-to-day operations for two reasons. First, it 
includes funding, such as grants, that is not available to FEMA for its 
day-to-day operations because FEMA provides it to states and local 
governments. Much of the fluctuation seen in figure 2 can actually be 
attributed to changes in grant programs and associated funding that 
occurred through organizational changes--rather than funding increases 
and decreases for the same set of activities. For example, when FEMA's 
Fire Grants program grew by $595 million between fiscal years 2002 and 
2003, and then left FEMA by fiscal year 2004, under FEMA's 
categorization this appeared as an increase in operational funds in 
2003 and a decrease in 2004. In fact, those resources were passed on in 
the form of grants, mostly to state and local governments, and, except 
for the administration of the grants, should have had little--certainly 
much less than shown--effect on FEMA's resource trends for its day-to- 
day operations. Second, this presentation leaves out a key component of 
FEMA's day-to-day operations--the Disaster Support Activity (DSA). 
Although part of the DRF, the DSA provides funding for ongoing 
capabilities, such as training, that are not readily attributable to 
any one specific declared disaster.[Footnote 28] FEMA itself has deemed 
these support expenditures essential to providing (1) timely disaster 
response, (2) responsive customer service, and (3) cost-effective 
program management and delivery. Since the non-DRF funding category 
includes grant resources, which are not spent by FEMA, but excludes 
funding for DSA, which clearly supports day-to-day functions, this 
category does not present an accurate picture of FEMA's day-to-day 
resources. 

If FEMA were to create a definition of day-to-day operations that 
addresses these issues, changes in FEMA's resource trends might appear 
less dramatic. In figure 4 below, we used the non-DRF data provided by 
FEMA, added funding for DSA, and excluded funding for readily 
identifiable grants (i.e., those that are authorized in separate 
appropriation accounts). We were unable to back out grants that were in 
appropriations accounts that included both grant and other funds, 
because neither FEMA's Budget Office nor the program offices 
responsible for grants administration were able to tell us how much 
funding was allocated for grants separately from other operating 
expense funding provided in the same account. In these cases, rather 
than demonstrating that consideration had been given to how much of the 
resources available for day-to-day operations should be used instead to 
fund grants, FEMA could only report on how much had been obligated for 
grants, subsidies, and other contributions. 

Using this definition, funding for FEMA's operating expenses and DSA 
appears fairly constant, while funding for FEMA's other programs rose 
in fiscal years 2002 and 2003 and declined in fiscal year 2005. During 
this same period, as shown in figure 5, FEMA's FTEs for those day-to- 
day operations also remained relatively constant. 

Figure 4: Estimate of Funding for FEMA's Day-to-Day Operations, Fiscal 
Years 2001-2005: 

[See PDF for image] 

Source: GAO analysis FEMA data. 

[End of figure] 

Figure 5: Estimate of Actual FTEs for FEMA's Day-to-Day Operations, 
Fiscal Years 2001-2005: 

[See PDF for image] 

Source: GAO analysis of FEMA data. 

[End of figure] 

[End of section] 

Appendix II: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Susan J. Irving, (202) 512-9142 or irvings@gao.gov: 

Acknowledgments: 

In addition to the contact named above, Denise Fantone, Tiffany Tanner, 
Amy Rosewarne, Brian Friedman, and Heather Hill made significant 
contributions to this report. Thomas Beall, Carlos Diz, William 
Doherty, Kevin Jackson, Hannah Laufe, John Mingus, and Gregory Wilmoth 
also provided key assistance. 

FOOTNOTES 

[1] The President's budget request also includes some funding for the 
Disaster Relief Fund (DRF). This request is based on current DRF 
balances and estimates of past and future funding requirements for 
responding to presidentially declared disasters. 

[2] FTE is a measure of employment used by the federal government to 
calculate the total number of regular straight-time hours worked by 
employees divided by the number of compensable hours applicable to each 
fiscal year. 

[3] The Robert T. Stafford Disaster Relief and Emergency Assistance 
Act, as amended, (Pub. L. No. 93-288), known as the Stafford Act, 
constitutes the statutory authority for most federal disaster response 
activities, especially as they pertain to FEMA and FEMA programs. This 
act authorizes the President to issue a "major disaster" declaration to 
provide a wide range of federal aid to states determined to be 
overwhelmed by hurricanes or other disasters. FEMA is tasked with 
coordinating the response under the Stafford Act. 

[4] From enactment of the Homeland Security Act of 2002 in November 
2002 to September 2005, 11 preparedness functions or authorities were 
transferred from FEMA. In October 2005, FEMA's remaining preparedness 
functions were transferred to DHS's new Preparedness Directorate, which 
was created to consolidate preparedness assets from across DHS, 
facilitate grants, and oversee nationwide preparedness efforts. 

[5] Post-Katrina Emergency Management Reform Act of 2006, Pub. L. No. 
109-295, Title VI. 

[6] FEMA administers a mix of programs in the four areas of emergency 
management--Preparedness (now known as Readiness), Mitigation, 
Response, and Recovery. These programs include the predisaster 
mitigation, flood mitigation, map modernization, National Flood 
Insurance, and public health programs. 

[7] From fiscal years 2001 to 2005, the following numbers of FTE 
employees were paid out of the DRF: fiscal year 2001 = 2,521; fiscal 
year 2002 = 2,865; fiscal year 2003 = 3,289; fiscal year 2004 = 3,330; 
fiscal year 2005 = 5,458. 

[8] According to FEMA officials, the CORE was developed in the early 
1990s to improve management of administrative overhead in the DRF and 
to make disaster relief operations more efficient. The number of CORE 
FTE employees at FEMA from fiscal years 2001 to 2005 was as follows: 
fiscal year 2001 = 706; fiscal year 2002 = 733; fiscal year 2003 = 732; 
fiscal year 2004 = 730; fiscal year 2005 = 685. 

[9] Homeland Security encompasses those activities that are focused on 
combating terrorism and occur within the United States and its 
territories. According to the Budget of the U.S. Government, not all 
activities carried out by DHS constitute homeland security funding 
(e.g., response to natural disasters, Coast Guard search and rescue 
activities). 

[10] The National Strategy for Homeland Security, which was published 
by the Office of Homeland Security in July 2002, is available at 
[Hyperlink, http://www.whitehouse.gov/homeland/book/] (downloaded Oct. 
4, 2006). 

[11] Since 2003, the President's budget requests for discretionary 
funding for nonhomeland security, nondefense programs have increased an 
average of 2.82 percent per year, while the President's requests for 
discretionary funding for Homeland Security and Department of Defense 
programs have increased an average of 4.62 percent per year. 

[12] The Department of Justice was to transfer $30 million from the 
Immigration and Naturalization Service; the Department of 
Transportation was to transfer $25 million from the Transportation 
Security Administration and $3.5 million from the Coast Guard; the 
Department of the Treasury was to transfer $30 million from the U.S. 
Customs Service and $4.5 million from the U.S. Secret Service. 

[13] Although the term "tax" was used by officials, we use assessment 
to describe charges to DHS organizations for centralized services. 

[14] DHS determined what constituted "discretionary budget." This 
distinction is not synonymous with funding that is considered 
discretionary based on its distinction as such in an appropriation act. 
For example, FEMA received $1,146,800,000 in non-DRF funding (including 
supplemental funding) for fiscal year 2005, but DHS determined that its 
discretionary funding for the purposes of WCF assessments was 
$480,649,000. 

[15] For example, the explanation given for the DHS's Chief Procurement 
Officer's Strategic Sourcing Initiative charge was that it was based on 
actual usage of several variables. However, the algorithm for that 
particular charge was stated as: "Average of Component Percentage (of 
Percentage Share of each of three key measures: # of acquisition 
personnel, dollar volume, # of transactions) X initiative Amount 
Required = Contribution per component." The number of acquisition 
personnel would be constrained by FTEs and the dollar volume of 
transactions would be constrained by the budget. Furthermore, since the 
"initiative Amount Required" is not a straightforward number, it is 
hard to replicate the calculation for any component. 

[16] GAO, Congressional Oversight: FAA Case Study Shows How Agency 
Performance, Budgeting, and Financial Information Could Enhance 
Oversight, GAO-06-378 (Washington, D.C.: Mar. 8, 2006). 

[17] FEMA maintains a paper trail on reallocation requests for 3 years, 
but does not have a process or mechanism for analyzing this 
information. 

[18] From fiscal year 2001 to fiscal year 2003, FEMA's operating 
expenses consisted of funding from its Salaries and Expenses account 
and its Emergency Management Planning and Assistance account. In fiscal 
years 2004 and 2005, funding from the following accounts made up FEMA's 
operating expenses: Office of the Under Secretary, Preparedness 
Mitigation Response and Recovery, and Administrative and Regional 
Operations. In fiscal year 2005, the following accounts composed FEMA's 
"other programs" Pre-Disaster Mitigation, Flood Mitigation Fund, 
National Flood Insurance Fund, Emergency Food and Shelter, Disaster 
Assistance Direct Loan Program Account, Public Health Programs, and 
Flood Map Modernization. FEMA also reported data on its supplemental 
funding in two categories--DRF and Other. FEMA received supplemental 
DRF funding every year of our review, while other supplemental funding 
was provided only in fiscal years 2002, 2003, and 2005. 

[19] Reports issued by the U.S. Senate, the U.S. House of 
Representatives, the White House, and the DHS Office of the Inspector 
General all pointed to staffing shortages at FEMA as affecting the 
agency's ability to achieve its mission in the wake of Hurricane 
Katrina. Many of the FEMA officials that we spoke with also pointed to 
staffing as a primary challenge at the agency. 

[20] As we reported in Human Capital: Key Principles for Effective 
Strategic Workforce Planning, GAO-04-39 (Washington, D.C.: Dec. 11, 
2003), the steps of the strategic workforce planning process are as 
follows: (1) set strategic direction, (2) conduct a workforce gap 
analysis, (3) develop workforce strategies to fill the gaps, and (4) 
evaluate and revise strategies. Throughout the process, it is important 
to have the involvement of management and employees. 

[21] See GAO-04-39. 

[22] For more information about succession planning, see GAO, Human 
Capital: Succession Planning and Management Is Critical Driver of 
Organizational Transformation, GAO-04-127T (Washington, D.C.: Oct. 1, 
2003). 

[23] GAO, Highlights of a GAO Forum, Mergers and Transformation: 
Lessons Learned for a Department of Homeland Security and Other Federal 
Agencies, GAO-03-293SP (Washington, D.C.: Nov. 14, 2002), p. 9. 

[24] Projected retirement eligibility rates as of the end of fiscal 
year 2010 assume that everyone onboard at the end of fiscal year 2005 
stays employed at FEMA until September 30, 2010. The eligibility rates 
would drop as eligible staff retired between October 1, 2005 and 
September 30, 2010. 

[25] For additional information on training and development efforts, 
please see GAO, Human Capital: A Guide for Assessing Strategic Training 
and Development Efforts in the Federal Government, GAO-04-546G 
(Washington, D.C.: Mar. 1, 2004). 

[26] The goal of business continuity management is to keep operations 
running in the event of a disruption to normal business processes. As a 
program, it includes activities such as planning, risk analysis, 
providing backup facilities, succession plans, and impact assessments. 

[27] From fiscal year 2001 to fiscal year 2003, FEMA's operating 
expenses consisted of funding from its Salaries and Expenses account 
and its Emergency Management Planning and Assistance account. In fiscal 
years 2004 and 2005, funding from the following accounts made up FEMA's 
operating expenses: Office of the Under Secretary, Preparedness 
Mitigation Response and Recovery, and Administrative and Regional 
Operations. In fiscal year 2005, the following accounts composed FEMA's 
"other programs" Pre-Disaster Mitigation, Flood Mitigation Fund, 
National Flood Insurance Fund, Emergency Food and Shelter, Disaster 
Assistance Direct Loan Program Account, Public Health Programs, and 
Flood Map Modernization. FEMA also reported data on its supplemental 
funding in two categories--DRF and Other. FEMA received supplemental 
DRF funding every year of our review, while other supplemental funding 
was provided only in fiscal years 2002, 2003, and 2005. 

[28] The following activities are part of disaster support: Fixed 
Processing and Storage; Response Readiness; Recovery and Mitigation; 
Information Systems; Training; Disaster Support Operations; Disaster 
Dependent Management. 

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