Disaster Recovery: Better Monitoring of Block Grant Funds Is Needed
Fast Facts
Use of the $35 billion in federal Community Development Block Grant Disaster Recovery funds for the 2017 hurricanes has been slow.
Over a year after the first funds were appropriated, much of the money remains unspent because grantees in Florida, Puerto Rico, Texas, and the U.S. Virgin Islands are still in planning phases. Also, the Department of Housing and Urban Development doesn't have the review guidance and monitoring plans it needs for good grantee oversight.
We recommended ways to improve the oversight of disaster funding and better meet disaster recovery needs.
St. John, U.S. Virgin Islands, after Hurricane Irma
Downed power lines, barren and broken trees, and twisted street lights
Highlights
What GAO Found
As of September 2018, the four states and territories that received the most 2017 Community Development Block Grant Disaster Recovery (CDBG-DR) funds had signed grant agreements with the Department of Housing and Urban Development (HUD). Before signing the agreements, HUD certified the grantees' financial processes and procedures. It also approved the grantees' assessments of their capacity to carry out the recovery and of unmet needs (losses not met with insurance or other forms of assistance). Before funding begins to reach disaster victims, the grantees need to take additional steps, such as finalizing plans for individual activities. As of January 2019, Texas had drawn down about $18 million (of $5 billion) for administration and planning only, and Florida had drawn down about $1 million (of $616 million) for administration, planning, and housing activities. Puerto Rico and the U.S. Virgin Islands had not drawn down any of the $1.5 billion and $243 million, respectively, they had been allocated.
HUD lacks adequate guidance for staff reviewing the quality of grantees' financial processes and procedures and assessments of capacity and unmet needs, and has not completed monitoring or workforce plans. The checklists used to review grantees' financial processes and procedures and assessments ask the reviewer to determine if the grantee included certain information, such as its procurement processes, but not to evaluate the adequacy of that information. In addition, the checklists, which include a series of “yes” or “no” questions, do not include guidance that the HUD reviewer must consider. HUD also does not have a monitoring plan that identifies the risk factors for each grantee and outlines the scope of monitoring. Further, HUD has not developed a workforce plan that identifies the critical skills and competencies HUD needs and includes strategies to address any staffing gaps. Adequate review guidance, a monitoring plan, and strategic workforce planning would improve HUD's ability to oversee CDBG-DR grants.
Without permanent statutory authority and regulations such as those that govern other disaster assistance programs, CDBG-DR appropriations require HUD to customize grant requirements for each disaster in Federal Register notices—a time-consuming process that has delayed the disbursement of funds. In a July 2018 report, the HUD Office of Inspector General found that as of September 2017, HUD used 61 notices to oversee 112 active CDBG-DR grants. Officials from one of the 2017 grantees told us that it was challenging to manage the multiple CDBG-DR grants it has received over the years because of the different rules. CDBG-DR grantees have faced additional challenges such as the need to coordinate the use of CDBG-DR funds with other disaster recovery programs that are initiated at different times and administered by other agencies. HUD officials said that permanently authorizing CDBG-DR would allow HUD to issue permanent regulations for disaster recovery. Permanent statutory authority could help address the challenges grantees face in meeting customized grant requirements for each disaster, such as funding lags, varying requirements, and coordination with multiple programs. The expected increase in the frequency and intensity of extreme weather events underscores the need for a permanent program to address unmet disaster needs.
Why GAO Did This Study
The 2017 hurricanes (Harvey, Irma, and Maria) caused an estimated $265 billion in damage, primarily in Texas, Florida, Puerto Rico, and the U.S. Virgin Islands. As of February 2019, Congress had provided over $35 billion to HUD for CDBG-DR grants to help communities recover. Communities may use these funds to address unmet needs for housing, infrastructure, and economic revitalization. GAO was asked to evaluate the federal government's response to the 2017 hurricanes. In this initial review of CDBG-DR, GAO examined, among other things, (1) the status of the 2017 grants, (2) HUD's review of the initial steps grantees have taken and its plans for future monitoring, and (3) challenges HUD and grantees face in administering grants.
GAO reviewed documentation from the four largest 2017 CDBG-DR grantees and HUD. GAO also reviewed prior work on CDBG-DR and interviewed officials from HUD and the four grantees.
Recommendations
Congress should consider permanently authorizing a disaster assistance program that meets unmet needs in a timely manner. GAO also makes five recommendations to HUD, which include developing guidance for HUD staff to use in assessing grantees, developing a monitoring plan, and conducting workforce planning. HUD generally agreed with three recommendations and partially agreed with two, which GAO clarified to address HUD's comments.
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| Congress should consider legislation establishing permanent statutory authority for a disaster assistance program administered by HUD or another agency that responds to unmet needs in a timely manner and directing the applicable agency to issue implementing regulations. | Two bills were introduced during the 118th Congress (S. 1686 and H.R. 5940) that would permanently authorize the Community Development Block Grant Disaster Recovery program. (Multiple bills also were introduced in the prior Congress.) However, as of March 15, 2024, no bill had been enacted. |
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Housing and Urban Development | The Assistant Secretary for Community Planning and Development should develop additional guidance for HUD staff to use when assessing the adequacy of the financial controls, procurement processes, and grant management procedures that grantees develop. (Recommendation 1) |
In response to this recommendation, HUD acknowledged that providing additional guidance to staff on defining the specific conditions that must exist within these documents would improve its proficiency determination. Specifically, HUD revised its checklists for review of grantees' financial controls, procurement processes, and duplication of benefits requirements to include specific guidance indicating examples of acceptable responses and documentation that would address the program requirements. Since these checklists are disaster-specific, HUD also confirmed that it plans to include similar guidance in checklists for future CDBG-DR grants and provided an example of where they had done so for a disaster after 2017. The inclusion of additional guidance for HUD staff to use should help them assess the quality of grantees' submissions and ensure that its reviews are thorough and consistent.
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| Department of Housing and Urban Development | The Assistant Secretary for Community Planning and Development should develop additional guidance for HUD staff to use when assessing the adequacy of the capacity and unmet needs assessments that grantees develop. (Recommendation 2) |
In response to this recommendation, HUD acknowledged that providing additional guidance to staff on defining the specific conditions that must exist within the documents grantees submit to HUD would improve the review of grantee capacity. HUD also agreed that there was an opportunity to improve the consistency of HUD's review of grantees' action plans, including their unmet needs assessments. Therefore, HUD included more guidance in the checklists for 2020-2022 disasters that staff used to review grantees' capacity and unmet needs assessments. For example, HUD included examples of information and data staff should look for when reviewing these assessments. In addition, in July 2023, HUD provided training to staff on assessing unmet needs and grantee capacity, which included additional guidance. HUD confirmed that the training would be included in its new employee training moving forward. Providing this additional guidance for HUD staff to use in assessing the quality of grantees' assessments of capacity and unmet needs should help HUD provide reasonable assurance that its reviews of these submissions are thorough and consistent.
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| Department of Housing and Urban Development | The Assistant Secretary for Community Planning and Development should require staff to document the basis for their conclusions during reviews of grantees' financial controls, procurement processes, and grant management procedures and capacity and unmet needs assessments. (Recommendation 3) |
In response to this recommendation, HUD acknowledged the need for this documentation and stated that it would require staff to better document their analysis. Specifically, HUD revised the checklists used for the disasters in 2018 and 2019 to require grant managers to indicate the basis for their conclusions used to review financial controls, procurement processes, grant management procedures, and capacity and unmet needs assessments. HUD also confirmed that it plans to continue to use these checklists that track HUD staff feedback on reviews and provided an example of the checklists used for a subsequent disaster. Documenting the basis for conclusions will help provide information on why HUD concluded that grantees' submissions were adequate.
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| Department of Housing and Urban Development |
Priority Rec.
The Assistant Secretary for Community Planning and Development should develop and implement a comprehensive monitoring plan for the 2017 grants. (Recommendation 4) |
In response to this recommendation, HUD acknowledged that such a plan is necessary to effectively manage the growing portfolio of CDBG-DR grants. According to HUD, after completing a risk analysis of the 2017 grantees and prior to the award of the second allocation of CDBG-DR funds, HUD piloted a pre-award risk assessment tool in the fall of 2019 that incorporated information from the financial certifications, capacity assessment, public information, and other submissions. Based on these assessments, HUD identified the following as high-risk areas for the four largest 2017 grantees: grant management, financial management, and services and satisfaction. HUD developed a fiscal year 2020 monitoring schedule and strategy that described the scope of review for the monitoring visits for the 2017 grantees. Specifically, in fiscal year 2020, HUD conducted at least one monitoring review for the 2017 grantees that covered grant and financial management, which were areas HUD identified as high-risk areas. In fiscal year 2021, HUD plans to conduct at least two monitoring visits for the 2017 grantees that would focus on the same high-risk areas previously mentioned. By identifying risk factors to determine the scope of monitoring and incorporating these factors in a monitoring plan, HUD has taken steps to help ensure that its oversight of grantees' compliance with grant requirements is focused on grantees' areas of greatest risk.
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| Department of Housing and Urban Development |
Priority Rec.
The Assistant Secretary for Community Planning and Development should conduct workforce planning for the Disaster Recovery and Special Issues Division to help ensure that it has sufficient staff with appropriate skills and competencies to manage a growing portfolio of grants. (Recommendation 5) |
In response to this recommendation, HUD acknowledged the need for improved workforce planning and stated that the Disaster Recovery and Special Issues (DRSI) Division had developed a staffing plan to address long-term oversight and management of CDBG-DR grants. Specifically, it conducted a workload analysis in fiscal year 2019, assessing organizational functions, work products, and resources to determine the staffing gaps within DRSI. Since then, HUD has hired 28 staff to fill gaps identified. HUD's identification of the skills and competencies needed and hiring of staff to address gaps will help it to oversee the growing number of CDBG-DR grants.
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