A new Office of Inspector General (OIG) report has identified significant financial mismanagement in FEMA’s oversight of COVID-19 emergency protective measures grants, resulting in over $8.1 billion in questioned costs and at least $1.5 billion in over-obligated funds. The report, covering fiscal years 2020 through 2023, found that while grant recipients and subrecipients received federal funds as intended, FEMA failed to validate cost estimates and did not determine the allowability of billions in expended funds.
One of the key findings was FEMA’s handling of a medical staffing grant for one state, where the agency over-obligated at least $1.5 billion without verifying the reasonableness of cost estimates before approving the funding. Additionally, FEMA did not determine whether the $8.1 billion drawn down by the state was allowable under federal regulations. The report also examined 20 other grants and found approximately $32.8 million in improper payments.
FEMA did not issue determination memorandums when denying or reducing reimbursement requests, as required. According to the OIG, these oversight failures were driven by the unprecedented circumstances of the COVID-19 pandemic and FEMA’s deviation from established Public Assistance funding requirements. The agency faced delays in improper payment reviews due to the increased workload from COVID-19 and other major disasters, and rather than taking immediate action to recover unsupported costs, FEMA worked with the state to maximize reimbursements during the review process.
The lack of sufficient oversight resulted in FEMA obligating $1.5 billion that could have been allocated to other disaster relief efforts, disbursing $8.1 billion in funds without determining cost allowability, and making $32.8 million in improper payments. These findings underscore the need for stronger internal controls and stricter adherence to financial oversight protocols when managing disaster response funds.
For a comprehensive review of FEMA’s oversight challenges and the full details of the OIG’s findings, read the full report here.