Last Thursday, the Government Accountability Office (the GAO), released a report examining the progress made toward rebuilding Puerto Rico after Hurricane Maria.
Nearly $4 billion was committed to Puerto Rico’s disaster assistance, and just about 43% of those funds have actually been spent. Why has less than half of the funding been used a year and a half after the disaster?
One of the problems for Puerto Rico has been extra paperwork. Governor Ricardo Rossello has described this as being made to “jump through hoops” states don’t have to deal with. The GAO explained that unlike in the standard Public Assistance program used by states, in which FEMA will fund the actual cost of a project, Puerto Rico has to follow “Public Assistance alternative procedures,” that are more complicated.
This system has never before been used to cope with a major disaster.
Delays caused by the “Public Assistance alternative procedures” were made worse by a lack of “guidance” in using the alternative procedures. Some municipalities received verbal instructions in how to make requests for funds and then had to submit and resubmit paperwork repeatedly, receiving additional — apparently confusing — verbal guidance along the way. Some municipalities told the GAO that they were still waiting for instructions.
Puerto Rico was also required to establish an oversight authority supported by third-party experts. There was a requirement to establish and submit a disaster and economic recovery plan.The PROMESA Fiscal Oversight and Management Board (FOMB) was also empowered to oversee any expenditures over $10 million in disaster recovery.
These additional layers of accountability slowed down the process of distributing funds significantly.
Why were these slower procedures used? The report says that FEMA “instituted a manual reimbursement process for subrecipients in Puerto Rico for federal funds, including Public Assistance funds, to mitigate fiduciary risk and decrease the risk of misuse of funds. Specifically, FEMA officials stated that they decided to institute this process because the government of Puerto Rico had expended funds prior to submitting complete documentation of work performed. According to FEMA officials, they also decided to institute the manual reimbursement process due to Puerto Rico’s financial situation…”
One result is that municipalities, which often do not have funds on hand, had to stop disaster recovery efforts until they were reimbursed for funds already spent.
Much of the funding for Puerto Rico’s disaster assistance has not yet been spent, meaning that the work has not yet been done. For example, one of the largest budget items is for debris removal. Only 24% of the funds for this project have been spent. This suggests that debris from the hurricanes of 2017 probably continue to present problems for Puerto Rico.
Municipalities that have not yet been reimbursed for emergency actions are suffering “financial hardship.” Many have been unable to complete emergency work. One has had to reduce the frequency of garbage pick up as a result of the lack of reimbursement.
Asked about the delays, FEMA acknowledged the problems and reported that they are now having weekly meetings with Puerto Rico’s Central Office of Recovery, Reconstruction, and Resilience.
Of the $1.7 billion spent so far, $23 million has gone for roads and bridges.
The report does not contain recommendations.