Ten Years Later: Katrina Recovery Leaves Legacy of Taxpayer Waste

August 29th marked the 10th anniversary of Hurricane Katrina making landfall in the Gulf Coast.  Katrina’s aftermath brought a legacy of physical and emotional damage to a region that is still working to rebuild a decade later. There is also another unfortunate legacy that was left in the wreckage of the devastating natural disaster: government waste. One of the most memorable symbols of government failure was the thousands of pounds of ice sent to Louisiana that was eventually sent back and than melted at a cost of $12.5 million. The recovery for residents in Alabama, Florida, Louisiana, and Mississippi has been a long process and still ongoing for many. However, the taxpayer money that has been wasted is something that gets little attention in the coverage yet it’s critically important to understanding the level of waste so that when future disasters occur taxpayer money can be better spent.

The incompetent response to the disaster was apparent immediately.  The waste, fraud and abuse of taxpayer-funded aid following Hurricane Katrina was apparent to government watchdogs less than a year after the storm. Eric Lipton wrote an extensive piece for the New York Times in June of 2006 detailing many of the worst offenses of taxpayer waste related to the post-Katrina recovery:

The estimate of up to $2 billion in fraud and waste represents nearly 11 percent of the $19 billion spent by FEMA on Hurricanes Katrina and Rita as of mid-June, or about 6 percent of total money that has been obligated.

A list of some of the worst cases of waste from the New York Times piece includes:

• Nearly $500 million worth of mobile homes that sat empty;
• $10 million in rental & disaster-relief assistance was given to 1,100 Gulf Coast area prison inmates;
• $7.9 million spent to renovate a former Army base in Alabama (poor attendance forced FEMA to shut down within a month)
• Hotel owner in Texas was charged with submitting $232,000 in bills for phantom victims
• Thousands of scams involving fraud & bribery, some carried out by government officials

There were also systemic failures in the federal contracting process that resulted in wasted taxpayer money. The Project On Government Oversight (POGO) released a study in 2006 about how those failures could be addressed for future disaster response:

1. Poor Planning – To make every effort to get the best results for taxpayers, the government must have an acquisition strategy based on informed market research.
   
2. Inadequate Competition – To better evaluate goods and services and get the lowest practical cost, the government must promote aggressive arm’s–length negotiations with contractors and encourage competition, correcting the current trend of entering into non-competitive contracts in nearly 50 percent of government dollars spent.
   
3. Lack of Accountability – To ensure that taxpayer dollars are being spent responsibly, the government must regularly monitor and audit contracts.
   
4. Minimal Transparency – To regain public faith in the contracting system, the government must ensure that the contracting process is open to the public, including requests for proposals, contract data, and contracting officers’ decisions and justifications.

The abuses of taxpayer money spent on Hurricane Katrina didn’t stop in 2006. Over the course of the last yen years there have been numerous reports and investigations uncovering more waste that the taxpayers will never recover.

The mechanisms put in place and new programs created have also come at a cost to taxpayers.  For example, FEMA spent $247 million for the Logistics Supply Chain Management System (LCMS) to address the logistical problems that were apparent in the government’s response to Hurricane Katrina. An IG report from Homeland Security (DHS) in September 2014 revealed the program was not up to the task of disaster response logistics:

The OIG found that after spending more than $247 million on a high-tech LSCMS developed over the course of nine years, the system cannot interface with the LSCMS of FEMA’s partners, making it difficult to track and locate emergency supplies.

FEMA estimated that the life cycle cost of the system would be about $556 million—$231 million more than the original life cycle cost estimate.

Congress has made some progress on addressing the failures of response management to natural disasters in the wake of the waste seen not just in the post-Katrina recovery, but also Super Storm Sandy. Just last month the PREPARE Act, H.R. 3190, was introduced in the House of Representatives by Rep. Matt Cartwright (D-Penn.).  The PEPARE Act would streamline the federal government’s processes and coordinate agency response to extreme weather events, TPA signed a coalition letter supporting the bill and welcomed the Rep. Cartwright  on the ‘Taxpayer Watch’ podcast to talk about his legislation.

Ten years is a long time and for residents impacted by Hurricane Katrina, they will never fully recover from how their lives were turned upside down that August weekend in 2005. In that time, there has been a great deal learned about the bureaucratic failures regarding the post-Katrina cleanup and recovery that amounted to billions in taxpayer money wasted. The 10^th anniversary provides a teachable moment for future disasters and how government responds and manages the allocation of resources used for recovery. TPA can only hope that Washington and local leaders are paying attention, not just for the sake of taxpayer dollars but also for the people who will need help the most.