Texas disaster recovery plan is based on bad data and faulty assumptions

Today I continue the analysis begun yesterday of the draft plan developed by the Texas Office of Rural Community Affairs (ORCA) for spending $1.3 billion in federal CDBG funds set aside to help Texans recover from Hurricanes Dolly and Ike.

Yesterday I described how the ORCA plan proposed to turn over all the funds to local, self-appointed Councils of Governments (COGs) to decide how to divide the money between public works, economic development and programs that directly help Texans rebuild their homes. I discussed how transferring the decision making authority from the Governor to the COGs creates a pork barrel allocation process to the benefit of local politicians and the detriment of hurricane survivors.

I noted that this approach represents a complete abdication of responsibility and leadership by the state government and by the Governor in particular. Furthermore, it violates the federal rules for the expenditure of the CDBG disaster recovery funds.

Today we look at the ORCA plan’s proposed formula for the division of the CDBG disaster recovery funds into these eleven COG controlled pork barrels.

The ORCA plan states…

“Allocations were provided to 11 COGs that received damage under FEMA -1780 or FEMA 1791. Allocations were calculated using preliminary FEMA damage assessments as of December 1, 2008 for both individual assistance and public assistance. Adjustments may be made to future Percent of Total Damage estimates as additional funds are allocated due to the preliminary nature of the available data.”

In other words, to divide the $1.3 billion in CDBG funds between the eleven COGs ORCA simply took the requests FEMA received from hurricanes survivors for individual assistance and from local governments for public assistance received by December 1 and divided the available money based on those applications, holding back five percent of the money for administration and a whopping fifteen percent for “planning.”

The ORCA plan’s allocation is deeply flawed for at least eight reasons:

1)  The data used in the ORCA plan allocation formula is bad. The first problem is with the December 1 cutoff date for the data used in determining regional funding levels. Applications for assistance are still being received and thus needs presented after December 1 are not included for allocation purposes.

2)  The second problem is that the use of FEMA assessments greatly understates the housing rebuilding needs of low income households. There is ample evidence that FEMA assessments have systemically discounted or ignored the damage to homes of the poor. For proof consider the stories of low income families whose homes were damaged by Hurricane Dolly and who were denied assistance based on FEMA’s damage assessments. FEMA assessors systemically and illegally denied assistance to low income households whose homes were in deteriorated condition prior to the hurricanes. This systemic bias in the FEMA assessment process is the subject of a lawsuit filed in South Texas. By relying on the FEMA assessments to make geographic allocations for funds the ORCA plan denies the most needy hurricane survivors access to their share of disaster assistance.

3)  The third problem is with the nature of the requests for public assistance. There are simply no plans or cost estimates for many of the long-term public infrastructure rebuilding activities that need to take place. Current public assistance requests to FEMA are for immediate disaster recovery rather than long-term rebuilding needs. In fact, it would be inappropriate to submit most long-term rebuilding requests to FEMA since that agency focuses on short-term recovery. The funds the ORCA plan proposes to allocate are intended for long-term rebuilding assistance yet these projects are not generally captured in the current requests. Therefore, the allocation formula fails to set aside funds fairly to meet these critical long-term rebuilding projects because it bases the allocation of long-term rebuilding funds on requests for short-term emergency recovery funds.

4)  The fourth problem is that FEMA has not provided meaningful data from the individual damage assessments needed to make a funding allocation. Dr. Elizabeth Mueller (University of Texas at Austin, School of Community and Regional Planning) and I have been working for many weeks with both TDHCA and FEMA to develop estimates of housing needs of families in different income categories based on FEMA certification of household damages. The fact is that the data currently available is incomplete and unreliable. The data released by FEMA thus far does not provide the level of detail to determine whether applicants for individual assistance qualify for CDBG housing assistance. The available data permits no conclusion about the amount of damage incurred by families that fall within the CDBG eligibility limits. Thus, it does not provide information that would allow any assessment of amount of CDBG housing rebuilding funds a particular geographic region requires. There is simply no way the available FEMA data can be used to develop a fair regional allocation formula. The ORCA plan’s reliance on this data makes the allocation invalid.

5)  Fifth, there is no indication in the plan that ORCA controlled for the incomes of the homeowners. In the Hurricane Rita rebuilding program eligibility was restricted to families who were low or moderate income (defined as earning less than 80 percent of the area median adjusted for family size). Yet the ORCA allocation appears to include all damages to houses regardless of family income. This will greatly skew the allocation of funds to higher income regions by including damages to ineligible households in the ORCA allocation equation.

6)  The sixth problem is that it appears from the plan’s narrative that ORCA has included both reimbursed and non-reimbursed damages in the allocation formula. CDBG funds may only be used to reimburse for damage that is not reimbursed to the homeowner by insurance. This completely invalidates the allocation formula.

7)  The seventh problem is that the ORCA plan combines FEMA individual damage estimates with public infrastructure damage estimates giving equal weight to both. Thus, the regional formula allocates funds equally to public infrastructure damages and housing damages. Yet every previous disaster recovery program, in Texas and in every other state, has prioritized the use of funds to repair the homes of hurricane survivors. The ORCA allocation plan fails to provide fund allocation on this basis

8)  The eighth problem is the absurdly high level of funding ($197,248,528.95) set aside for “planning”. The ORCA plan does not tell us who will undertake this planning, what will be planned for, or how the planning will relate to the allocation of funds. indeed, the planning seems to have no impact on where the money goes since that decision will already be made based on the flawed data I have discussed above. Presumably this planning will also not inform or direct the program design for the COGs’ expenditure of “their” money since the ORCA plan implies that these “planning” activities will be undertaken during and after the COGs define and undertake the various public infrastructure, economic development and housing programs. In other words, this is a backwards process. The planning will take place after the decisions are already made as to how to spend the money.

The ORCA plan is a disaster in itself. As I described yesterday it does not establish priorities and establishes pork barrel spending programs for unaccountable local politicians. As we have seen today it allocates funds geographically in an unfair manner that will result in many families being denied assistance and it institutionalizes and inequitable funding distribution system.

Tomorrow I will continue the examination of the tragically flawed ORCA plan for Texas disaster recovery.