As Disasters Multiply, Billions in Recovery Funds Go Unspent

WASHINGTON — The Trump administration is sitting on tens of billions of dollars in unspent recovery money meant to help Americans recover from disasters, leaving people less able to rebound from the effects of Hurricane Dorian and other storms.

As of June 30, the government had spent less than one-third of the $107 billion provided by Congress following the hurricanes and wildfires of 2017 and 2018, federal data show. The Department of Housing and Urban Development, which received $37 billion — more than any other agency — had spent less than $75 million.

That money is meant to help cities and states rebuild after a disaster. It is often used to fix roads, drainage systems and other infrastructure, or to repair or elevate houses in low-lying, vulnerable areas.

The funds are being held up partly by laws designed in an earlier age of fewer and less severe disasters. In addition, states and cities already reeling from earlier floods or fires often struggle to meet the federal bureaucratic requirements. As climate change amplifies the disaster risk, the logjam threatens to worsen, with increasingly dire consequences.

“If we had all the money, and everything was flowing, we would be safer,” said Laura Hogshead, chief operating officer for the Office of Recovery and Resiliency in North Carolina, a state now being menaced by Hurricane Dorian. This year, the state created a new office to try to speed up those funds — a model that Dorian could test.

“There’s a lot of suffering while you wait,” she said.

The bulk of the money comes from just two federal offices: the Federal Emergency Management Agency, which helps communities recover from disasters by funding everything from clearing debris to rebuilding hospitals, and HUD, which helps repair homes, infrastructure and businesses.

The sluggish spending joins a long list of headaches for federal officials trying to protect Americans against climate change. Among them: The shrinking number of people with flood insurance compared with a decade ago; the growing number of homes being built in floodplains; the refusal of many states to impose mandatory, up-to-date building codes; and the emphasis on rebuilding in the same place, rather than somewhere safer.

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What sets this problem apart is that it’s largely of the government’s own making.

“There are opportunities to make the recovery process faster at every level,” said Marion McFadden, who ran the disaster recovery grants at HUD during the Obama administration. “We’ve got to fix this.”

Some delays are unavoidable, such as those associated with sprawling infrastructure projects — like building sea walls or deepening ports — requiring complex environmental reviews. But many other delays stem from a bureaucratic process for delivering federal money, coupled with state and local agencies that often lack the staff or expertise to spend it, observers say.

As a result, persuading Congress to provide money for recovery is just the beginning of the struggle for places hit by disasters.

“We build very complex systems in Washington,” said Craig Fugate, who ran FEMA under President Obama. “Then you apply it to a disaster, and it gums up the system.”

At the same time, the growing frequency of natural disasters, amplified by climate change, increases the urgency of rebuilding.

Part of the problem reflects the fundamental tension between speed and oversight, Mr. Fugate said. As disaster funding has increased, so has scrutiny from lawmakers wary of fraud and abuse. So FEMA and other agencies have responded by adding more safeguards and layers of review, which slows the process further.

States, too, have increased oversight, fearful of being ordered to pay the federal government back for money that might run afoul of the rules. For example, Florida audits every funding request its local governments submit to FEMA, Mr. Fugate said — a level of diligence he said slows recovery.

“Congress wants it both ways: They want it fast, but they also want full accountability,” Mr. Fugate said. “It is slowing down the process to a painful crawl.”

FEMA has yet to spend about $8 billion of the $34 billion allocated to it by Congress following the disasters of 2017 and 2018. An agency spokeswoman, Abigail Dennis, said that over the past few years FEMA has improved its Public Assistance program, which pays for rebuilding infrastructure and other needs, by simplifying the application process and retraining the staff who review applications.

The spending rate has been far slower at the Department of Housing and Urban Development: It has paid out less than 1 percent of its disaster funding from the past two years.

The department, which oversees the nation’s public housing, became involved in disaster recovery more by convenience than design, according to Ms. McFadden. After Hurricane Andrew struck Florida in 1992, Congress needed a vehicle for delivering large sums of money to cities and states, so it chose the department’s Community Development Block Grant program.

But the disaster-recovery function was never set up to be permanent. So Congress requires the department to essentially design a new program from scratch each time it receives disaster money, according to Ms. McFadden. That means writing new rules for how states and cities can spend that money.

“There is this period of a year or more where the money is just sitting essentially at HUD,” said Ms. McFadden, who is now senior vice president for public policy at Enterprise Community Partners, a Washington nonprofit organization. “That period is just lost.”

That problem has caught the attention of both political parties. In July, the House Financial Services Committee voted unanimously in support of a bill that would make the department’s disaster recovery program permanent, helping it get those funds to states and cities more quickly. A companion bill was introduced in the Senate the same month.

This year, Ben Carson, the secretary of housing and urban development, acknowledged that the program could be streamlined. “Some of the basic things that have to be done in order to get the grant money out is absolutely the same thing over and over again,” Mr. Carson told the House Financial Services Committee in May.

Reforming the federal government’s approach will solve only part of the delay in rebuilding, disaster experts warn.

Even once the housing department has set the rules for each batch of disaster funding, states must submit detailed plans for how they will use that money, and then help cities and counties spend it properly. That work often falls to staff who don’t have the time or expertise required, according to Rob Moore, a senior policy analyst at the Natural Resources Defense Council.

Mr. Moore offered an example. “Your office is normally handling $2 million a year. You’ve got five people to do that,” he said. But then, “A disaster hits. Suddenly you’ve got $100 million to spend. You’ve got the same five people on your staff. And you’ve still got to do your normal job.”

That tension is now playing out in North Carolina.

The state hadn’t gotten disaster recovery grants from the Department of Housing and Urban Development since 2003. Then it was hit by two hurricanes in quick succession: Matthew, in 2016, and then Florence in 2018.

With those disasters came a rush of federal funds. In August of 2017, almost a year after Matthew, the housing department awarded North Carolina $237 million in recovery grants. The state has drawn down less than $20 million of that money. (A spokeswoman for North Carolina, Bridget Munger, said the state has committed $98 million of that money to specific projects, adding that the $20 million figure “does not reflect the hundreds of projects that are in the planning stage or well underway.”)

“Things were not going very quickly,” said Ms. Hogshead, at the state recovery office. “And then Florence hit.”

So, this January, North Carolina created the Office of Recovery and Resiliency for that purpose, with money for 45 staff, and hired Ms. Hogshead, a former senior official at HUD, to help run it. “Standing up this office is recognition that it just wasn’t going very well,” she said. “The state did not have an expertise in spending this money.”

Keeping pace with the rising tempo of disasters will require more states to build that type of expertise, according to Josh Sawislak, who was a senior adviser for infrastructure resilience to the secretary of housing and urban development.

But it will require many other changes as well, Mr. Sawislak said: Not just reforming the housing department’s grant programs, but also integrating the sprawling set of federal programs that fund disaster recovery, and making communities less vulnerable to disasters in the first place by changing where and how we build.

“We have to start preparing for these things,” Mr. Sawislak said. “Dorian is the new normal.”

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