Congressional Republicans haven’t gotten over the last government shutdown fight — perhaps because it wasn’t a clear win. They’re probing FEMA’s accounting practices in the last week of September, suggesting the agency manipulated its disaster relief fund to help Democrats avoid a political fight with Republicans. But FEMA officials were on the record, both publicly and in private briefings with members of both parties, about the tools they were using to keep themselves in the black through the fiscal year. So what’s this really all about?
Recall that the September government shutdown fight centered on the GOP’s demand that there should be matching budget cuts to make up for funneling emergency money to FEMA’s disaster relief fund.
FEMA originally expected the account to be drained a few days before the end of the fiscal year on September 30. To keep its operations across the country in motion Congress was prepared to appropriate the agency $1 billion in bridge money to carry it into October…except for that pesky disagreement about offsets! Republicans insisted on paying for it by nixing a popular and effective hybrid vehicle incentive. Democrats refused, both on principle and because the specific manufacturing program on the chopping block was a successful one. Neither party was prepared to cave. But with the deadline only days away, FEMA moved aggressively to shore up its fund and announced it could get by without any emergency help from Congress and the shutdown was averted.
Republicans say something fishy was going on.
“I’m disappointed … that the agency has apparently been playing games with the numbers, and my committee is closely examining why FEMA’s estimates changed at the eleventh hour,” said House Appropriations Committee Chairman Hal Rogers (R-KY) on the House floor last week.
“You kind wonder about FEMA’s credibility on these issues, when they say they’re out of money tomorrow and now they’re out of money at the end of the fiscal year,” said Sen. Roy Blunt, the GOP senator from Missouri where the town of Joplin was destroyed by a tornado. “If you can come up with four more days of disaster funding after you said you’d run out, it will be interesting to see how they came up with that four days of funding.”
But FEMA officials had explained their methods long before the shutdown showdown threat became real. Indeed, FEMA administrator Craig Fugate and his deputy Richard Serino testified to this very question before key House and Senate subcommittees. At a July hearing before the Senate Homeland Security and Governmental Affairs Subcommittee on Disaster Recovery and Intergovernmental Affairs, at which Blunt was in attendance and asking questions, according to Congressional Quarterly’s transcript services, Serino explained, “We have been very busy, but at the same time we’ve also been going back and looking at some of our previous disasters that we had and seeing how we can look at different money that we can de-obligate from previous disasters so we’re able to free up some dollars into that so we’re actually able to meet and take care of some of the issues now with current disasters.”
Fugate outlined the same process to the House Appropriations Subcommittee on Homeland Security in April. He explained that FEMA was able to recoup over $100 million a month by de-obligating residual funds from completed projects, and that in March alone FEMA was able to draw over $200 million back into the fund.
“What happens many times is when we do a project, the project may be approved for, let’s say, for a debris mission of $100 million,” Fugate said. “When the actual work is done, all the bills are paid; it may only have $80 million. But as long as that obligation is there, that $20 million that could have been returned is not available to the DRF because it’s considered obligated. So, as we go through that process and de-obligate those funds, they go back into the [disaster relief fund]. And so, this process, this year is focused on those open disasters with state and local governments where the work has been done.”
In addition to de-obligating unspent funds, FEMA also began operating on what’s known as an “immediate needs funding” basis in late August — guaranteeing assistance payments to individuals and reimbursing states for the critical costs of disaster relief. This too was disclosed publicly. In the days before the end of the fiscal year, FEMA officials briefed members and the media, including me, on both the fluctuating state of the disaster relief fund and on the methods they were using to keep it solvent. In each case, the updates included caveats about the inherent uncertainty of the de-obligation and immediate needs funding processes, and of the unpredictability of natural disasters. Any surprises could have left FEMA closed for business for several days.
Republicans are peeved that FEMA claimed to need money, but ultimately didn’t. They say it amounts to playing politics with the disaster relief fund, and exposes a flaw in the agency’s accounting method going back years.
“The Chairman wants them to be honest in their assessments, and request funds to fulfill the existing as well as expected needs,” said a committee aide. “No one can know when a future disaster will hit and what recovery could cost, and so we can’t discount additional supplementals. But the Chairman’s view is that FEMA can’t continue playing games with the numbers every time they get political pressure from the White House.”
A spokesperson for Blunt did not respond to a request for comment.
This reflects a larger disagreement about how FEMA budgets. But it’s hard to identify a scandal. The lead up to the September shutdown fight is a pretty clear matter of public record. The administration expected FEMA’s disaster fund to run dry and requested a supplemental appropriation. No doubt FEMA and the administration would have preferred Congress comply quickly and quietly rather than come so close to draining the account. But when the request became the focal point of another fight that threatened to shut down the government, FEMA stepped up the effort to buy themselves running room, and recouped enough money to stay in the black through the end of the year.
As a FEMA spokesperson explained to reporters on September 27 when the standoff ended, “Our goal has always been to extend the balance of the Disaster Relief Fund for as long as possible, while providing Congress with daily updates on the status of our fund — which continues to be fluid. While FEMA is constantly working year-round to recover unused funds from completed recovery projects, since Hurricane Irene, FEMA undertook an aggressive effort to recover any possible funds from completed recovery projects to provide critical assistance to disaster survivors and prevent the fund from lapsing. In total, FEMA recovered nearly $180 million in September, stretching funding by five additional days. Without these recoveries, FEMA would have run out of disaster funding this past Sunday and all disaster operations would have been shut down.”
Update: This post originally referred to FEMA deputy administrator Richard Serino as Richard Ferino.
Brian Beutler is TPM's senior congressional reporter. Since 2009, he's led coverage of health care reform, Wall Street reform, taxes, the GOP budget, the government shutdown fight, and the debt limit fight. He can be reached at email@example.com.