An Office of the Inspector General audit of FEMA grants paid in 2015 revealed the agency may have wasted around $3 billion in taxpayer funds.
Nearly 30 percent of the grants audited included wrongful costs like duplicate payments, improper contract costs and unauthorized expenditures, the IG said in a summary of its audit.
“The 29 percent questioned-cost rate is very troubling,” John Roth, inspector general for the Department of Homeland Security, said.
Of the $1.55 billion audited, the IG found $457 million in wrongful costs; the actual number wasted is likely much higher. “We are able to audit only a fraction of the grants awarded through the disaster relief fund. Assuming a similar problem exists in the funds we didn’t audit, we are looking at a total of $3 billion every year in improperly spent government funds.”
Some of the waste comes from grant recipients misusing federal money, and “FEMA must start holding grant recipients accountable when they improperly spend taxpayer dollars,” Roth said.
One hospital received a grant to rebuild after Hurricane Ike damaged its facility, but instead used some of the taxpayer money for things like gift cards, insurance payments, fire alarm repairs, and to pay its federal taxes. Because Riverside Hospital misused some of the funds, the IG questioned the entire $32 million grant, of which about $14 million has not been spent.
Several Riverside Hospital managers were indicted for scamming Medicare out of $158 million in 2012, but the remaining hospital managers continued to misuse FEMA grant money allocated after the 2008 hurricane.
In 10 separate cases, the IG discovered that $179.3 million of FEMA grants went to projects that insurance already covered, amounting to a breach of the Stafford Act, which makes it illegal to take federal money for a project that’s covered by insurance or another funding source.
Other cases of misuse fall under improper contracting procedures, like the city of Biloxi, Miss., which awarded a contract with federal money without considering competition. The city paid about $8 million more than was necessary, according to the IG.
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