Government officials’ bad math wasted millions of taxpayer dollars intended for disaster relief, a recent investigation has revealed.
In 2008, Cedar Rapids was granted $330 million to repair damage caused by the month-long flooding that had plagued much of eastern Iowa. Three hundred and ten city facilities and 5,390 homes in Cedar Rapids were damaged. The Federal Emergency Management Agency is supposed to apply what is known as the “50% rule” to determine whether to replace or repair a damaged building, which states that “federal funds can be used to replace damaged structures only when the cost of repairs meets or exceeds 50 percent of the repair costs.”
According to a recent audit, however, FEMA decided to replace four salvageable buildings instead of repairing them, and wasted millions of dollars in the process.
“Replacing the four facilities cost $20,674,433, while repairing them would have cost $8,570,454,” the investigation, conducted by the Office of the Inspector General, explained. The OIG is a government agency responsible for investigating misconduct, fraud, waste and abuse in other government agencies. FEMA officials weren’t willfully wasting money, though–they just don’t understand their own guidelines.
FEMA officials responsible for calculating the respective costs of replacement and repair miscalculated in all four instances, ignoring their own rules about what may be included in repair and replacement costs. The calculations for assessing the damage to the city’s main library, for example, not only overestimated the repair cost by including costs not related to the repair, but underestimated the replacement cost by omitting necessary ground elevation costs. They made the same errors in the calculations for a park maintenance shop, and underestimated the repair costs of two animal control facilities, again omitting ground elevation costs. These miscalculations led FEMA to incorrectly decide to replace the buildings, violating their own disaster relief guidelines–and wasting $12 million.
The audit also found that FEMA did not use the most cost-effective method of ground elevation, including $278,822 “of excessive and ineligible elevation costs” in the final cost for replacing a third animal control facility, which the OIG recommended be “disallowed” from the project. If FEMA concurs, the city may have to return that money.
Despite FEMA’s $12 million miscalculation, the OIG is not recommending that Cedar Rapids return any of that money, since it “found no evidence that the City provided false or misleading information to FEMA.” Instead, the OIG simply recommended that FEMA “review and revise 50 Percent Rule policies and procedures.”
“FEMA needs to improve and refine its calculations in regard to repairing or replacing damaged facilities,” said Inspector General John Roth. “We have made several recommendations that will assist FEMA in that process and hopefully prevent misspending on disaster relief.”