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State protests FEMA cash cut
'People will suffer' from antifraud rules
Tuesday, July 25, 2006
By Bill Walsh

WASHINGTON -- Louisiana lawmakers and state disaster officials expressed outrage Monday at new FEMA antifraud policies that would cut the level of emergency financial assistance for hurricane victims and force states to pick up 25 percent of the tab.

Federal Emergency Management Agency Director David Paulison said the get-tough approach this hurricane season, including ID verification and stricter limits on benefits, is meant to keep a rein on taxpayer money after reports of rampant fraud and abuse in the aftermath of Hurricanes Katrina and Rita.

The most visible change is the reduction in "expedited assistance" for postdisaster emergency expenses, which will be cut from $2,000 to $500 per household. State governments also will feel the pinch. The federal government paid all of the $1.5 billion in expedited assistance last year for Louisiana. This year, Louisiana will be on the hook for a quarter of the costs.

According to Paulison, if the states don't pay, neither will FEMA.

"It's their citizens," Paulison said during a news conference at FEMA headquarters. "If they don't agree to it, we won't do it."

Call for compassion

To disaster officials in Louisiana, the new policy smacks of mean-spiritedness. Mark Smith, a spokesman for the Governor's Office of Homeland Security and Emergency Preparedness, said that in Louisiana's case, the state wouldn't be able to afford to pay 25 percent of the emergency benefits since the government is still reeling from last year's storms.

Had the new guidelines been in effect for Katrina and Rita, the bill for Louisiana would have been about $375 million.

"If a catastrophic event like Katrina hits a poor state like Alabama, Mississippi or Louisiana, they most assuredly won't be able to pay and the people will suffer," Smith said. "They are citizens of their states but they are also citizens of the United States. Is (Paulison) saying the federal government will turn its back on its citizens, its taxpayers?"

After Katrina, FEMA was hit by a tidal wave of criticism when various investigations uncovered widespread fraud in the disaster relief programs. Some people received the $2,000 payments although they weren't affected by the storms. Some households collected more than one check. Others used Social Security numbers of dead people to qualify.

Of the $5.4 billion in individual assistance paid out by the federal government, the amount believed to have been misspent ranges from $600 million to $1.4 billion, although FEMA says it's lower.

To prevent a repeat, FEMA will register people for assistance before a storm makes landfall, getting a jump on entering their names into the agency's database and ensuring their information has been verified. The agency also has contracted with ChoicePoint, a national data broker, which will help prevent multiple claims from being filed for a single household, as happened repeatedly in Katrina.

ChoicePoint has had its own share of controversy. It announced last year that it had mistakenly sold personal data on 145,000 people to identity thieves, leading to a $15 million fine by the Federal Trade Commission. The company instituted changes and recently signed a five-year contract with the Internal Revenue Service to help track down assets of tax cheats.

Speedier response

To speed registration, Paulison said that FEMA could quickly add 3,000 people to its call center and register as many as 200,000 people per day. That would be double the capacity during Katrina, when many people complained of long delays in getting through.

For the first time, FEMA also will dispatch five mobile registration vans to a disaster zone equipped with 20 cell phones and 20 laptop computers to further aid in registration.

The agency also has put safeguards on the program that provides housing for disaster victims in hotel rooms and apartments for extended periods of time. Applicants would have to prove they resided in a disaster zone and would have to present a photo ID to get the benefit, which would be limited to six months.

Still, the steps causing the most alarm are the cuts in expedited benefits and the new state cost share.

"It's not clear to me how these (two) changes address the root of the problem," said Rep. Bobby Jindal, R-Kenner. "It's hard to see how a 25 percent cost share will make states act more responsibly with these funds. The federal government is administering the program."

Sen. Mary Landrieu, D-La., said that the reduction in FEMA emergency benefits would "penalize future disaster victims."

"Taxpayers have a right to expect that their dollars will be spent efficiently and honestly," she said in a written statement.

9/11 fraud rampant, too

Hurricanes are not the only disasters that invite fraud. A recent hearing on Capitol Hill highlighted schemes hatched to steal federal recovery money after the 9/11 terrorist attacks. Investigations found that about $63 million in debris removal work was given to companies with mob ties and that thousands of people whose homes were untouched by the calamity applied for and received air conditioners courtesy of the federal government.

FEMA officials noted that it was only last year that the individual disaster benefits reached as high as $2,000. Victims of the Florida hurricanes in 2004 received $500, according to the agency. The money is intended for such basics as food, clothes and fuel.

"There are very few households that need that kind of money for a week," said David Garrat, deputy director of the recovery division.

The new $500 cap is flexible, Paulison said. He has the ability to spend more if the need arises, although it is unclear what the criteria would be for drawing additional money.

"This is still going to be a compassionate agency," Paulison said. "But we've got to put the checks and balances in place to protect the taxpayers' dollars."

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Bill Walsh can be reached at or (202) 383-7817.