Summary
Public Law No. 110-28 directed GAO to review how the Federal Emergency Management Agency (FEMA) develops its disaster cost estimates. Accordingly, GAO addressed the following questions: (1) What is FEMA's process for developing and refining its cost estimates for any given disaster? (2) From 2000 through 2006, how close have cost estimates been to the actual costs for noncatastrophic (i.e., federal costs under $500 million) natural disasters? (3) What steps has FEMA taken to learn from past experience and improve its management of disaster-related resources and what other opportunities exist? To accomplish this, GAO reviewed relevant FEMA documents and interviewed key officials. GAO also obtained and analyzed disaster cost data and determined that they were sufficiently reliable for the purposes of this review.
After a disaster is declared, FEMA staff deployed to a joint field office work with state and local government officials and other relevant parties to develop and refine cost estimates. The overall estimate comprises individual estimates for FEMA's assistance programs plus any related tasks assigned to other federal agencies (mission assignments) and FEMA administrative costs. The methods used to develop these estimates differ depending on program requirements including, in some cases, historical knowledge. FEMA officials told GAO that cost estimates are updated on a continuing basis. Decision makers need accurate information to make informed choices and learn from past experience. FEMA officials stated that by 3 months after a declaration estimates are usually within 10 percent of actual costs--which they defined as reasonable. GAO's analysis showed that decision makers did not have cost information within this 10 percent band until 6 months after the disaster declaration. These results cannot be generalized since this comparison could only be made for the 83 (24 percent) noncatastrophic natural disaster declarations for which final financial decisions had been made. Disaster coding issues also hamper FEMA's ability to learn from past experience. For example, in several instances the code for the incident type and the description of the disaster declaration did not match. Officials described several ways in which FEMA has learned from past disasters and improved its management of disaster-related resources. For example, FEMA uses a national average to predict costs for expected applicants for Individual Assistance. FEMA has also taken several actions to professionalize and expand the responsibilities of its disaster comptrollers. Nonetheless, FEMA could further learn from past experience by conducting sensitivity analyses to identify the marginal effect various factors have on causing fluctuations in its estimates. FEMA could improve its management of disaster-related resources by developing standard procedures for staff involved in entering and updating cost estimate data in its database.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change
from "In process" to "Implemented" or "Not implemented" based on our follow up work.
Director:
Team:
Phone:
Susan J. Irving
Government Accountability Office: Strategic Issues
(202) 512-9142
Recommendations for Executive Action
Recommendation: To better mitigate the effect of factors both beyond and within FEMA's control to improve the information provided to decision makers; to better inform future estimates, including the ability to incorporate past experience in those estimates; and to improve the management of FEMA's disaster-related resources, the Secretary of Homeland Security should instruct FEMA's Administrator to conduct sensitivity analyses to determine the marginal effects of key cost drivers to provide a range for the uncertainty created by factors beyond FEMA's control.
Agency Affected: Department of Homeland Security
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To better mitigate the effect of factors both beyond and within FEMA's control to improve the information provided to decision makers; to better inform future estimates, including the ability to incorporate past experience in those estimates; and to improve the management of FEMA's disaster-related resources, the Secretary of Homeland Security should instruct FEMA's Administrator to review the effect FEMA's own processes have on fluctuations in disaster cost estimates and take steps to limit the impact they have on estimates.
Agency Affected: Department of Homeland Security
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To better mitigate the effect of factors both beyond and within FEMA's control to improve the information provided to decision makers; to better inform future estimates, including the ability to incorporate past experience in those estimates; and to improve the management of FEMA's disaster-related resources, the Secretary of Homeland Security should instruct FEMA's Administrator to review the reasons why it takes 6 months or more for estimates to reasonably predict actual costs and focus on improving them to shorten the time frame.
Agency Affected: Department of Homeland Security
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To better mitigate the effect of factors both beyond and within FEMA's control to improve the information provided to decision makers; to better inform future estimates, including the ability to incorporate past experience in those estimates; and to improve the management of FEMA's disaster-related resources, the Secretary of Homeland Security should instruct FEMA's Administrator to undertake efforts--similar to those FEMA used to develop its model to predict hurricane costs--to better predict costs for other types of disasters, informed by historical costs and other data.
Agency Affected: Department of Homeland Security
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To better mitigate the effect of factors both beyond and within FEMA's control to improve the information provided to decision makers; to better inform future estimates, including the ability to incorporate past experience in those estimates; and to improve the management of FEMA's disaster-related resources, the Secretary of Homeland Security should instruct FEMA's Administrator to evaluate the benefits of using geographically specific averages in addition to national averages to better project Individual Assistance costs.
Agency Affected: Department of Homeland Security
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To better mitigate the effect of factors both beyond and within FEMA's control to improve the information provided to decision makers; to better inform future estimates, including the ability to incorporate past experience in those estimates; and to improve the management of FEMA's disaster-related resources, the Secretary of Homeland Security should instruct FEMA's Administrator to resume the distribution of surge account costs to individual disasters, as appropriate, to make cost data from past, current, and future disasters comparable.
Agency Affected: Department of Homeland Security
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To better mitigate the effect of factors both beyond and within FEMA's control to improve the information provided to decision makers; to better inform future estimates, including the ability to incorporate past experience in those estimates; and to improve the management of FEMA's disaster-related resources, the Secretary of Homeland Security should instruct FEMA's Administrator to review and revise incident coding types to ensure that they are accurate and useful for learning from past experience. At a minimum, incident codes should match the descriptions and be consistently entered and reflect what occurred, which may require permitting multiple incident types for each declaration.
Agency Affected: Department of Homeland Security
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To better mitigate the effect of factors both beyond and within FEMA's control to improve the information provided to decision makers; to better inform future estimates, including the ability to incorporate past experience in those estimates; and to improve the management of FEMA's disaster-related resources, the Secretary of Homeland Security should instruct FEMA's Administrator to develop training and standard operating procedures for all staff entering incident type and cost information into the DFSR database.
Agency Affected: Department of Homeland Security
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To better mitigate the effect of factors both beyond and within FEMA's control to improve the information provided to decision makers; to better inform future estimates, including the ability to incorporate past experience in those estimates; and to improve the management of FEMA's disaster-related resources, the Secretary of Homeland Security should instruct FEMA's Administrator to review reasons why "older" disasters remain open and take action to close/reconcile them if possible.
Agency Affected: Department of Homeland Security
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To promote a more informed debate about budget priorities and trade-offs, the Secretary of Homeland Security also should instruct FEMA's Administrator to work with OMB and Congress to provide more complete information on known costs from prior disasters and costs associated with catastrophic disasters as part of the annual budget request.
Agency Affected: Department of Homeland Security
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
