Waste of the Day: Disaster Relief Fund in Danger After $104 Billion COVID Spending

Topline: The Federal Emergency Management Agency greatly underestimated how much money it needed to spend on the COVID-19 pandemic and now might not have enough funds to address future disasters, according to the Government Accountability Office.

Too big a COVID-19 budget

Key facts: FEMA predicted in early 2020 that it would spend $17.6 billion on pandemic programs, but officials say that estimate was “blown out of the water” by the actual price tag. FEMA has already spent $103.6 billion on pandemic aid and expects the total to reach $171.6 billion by August 2026. But lawmakers have only provided $97 billion in supplemental funding because Congressional budgets were written based on FEMA’s incorrect estimates. The goal is for estimates to be within 10% of FEMA’s actual spending, but that hasn’t happened since 2021.

That’s already posed issues for FEMA. Its Disaster Relief Fund had such a low balance in August 2023 that officials had to pause all spending that was not “essential for lifesaving or life-sustaining activities” for two months, leading to delays in funding for local governments, according to the GAO.

Yet FEMA continues to approve new expenses related to COVID-19, even though the public health emergency ended on May 11, 2023. Officials are still reviewing grant applications submitted before a November 2023 deadline and allowed 67 other projects to submit applications after the deadline.

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Purpose of the Disaster Relief Fund

Background: The Disaster Relief Fund is normally used to support state and local governments and individual families after hurricanes, earthquakes or other catastrophes.

The pandemic was the first time it was used for a public health emergency, and it ended up being the most expensive event in at least 32 years, according to the Congressional Budget Office. Between 1992 and 2021, 20% of all disaster funding went toward COVID-19 programs.

FEMA sent money to state governments to provide medical care and distribute protective equipment like masks. The agency also reimbursed families up to $9,000 for funeral expenses, $300 to $400 per week for lost wages, and paid for “crisis counseling” to combat the “psychological effects” of the pandemic.

Critical quote: FEMA officials disagreed with the GAO’s recommendation that they review their mistakes to prepare for future emergencies. The agency “does not plan to assess or change the overall estimation process for declared catastrophic disasters based on its experience with COVID-19” because “they do not expect another pandemic to occur.”

Summary: Pretty soon, the biggest “disaster” facing FEMA may be its inability to manage its budget properly.

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This article was originally published by RealClearInvestigations and made available via RealClearWire.