Hearing of the Subcommittee on Emergency Communications, Preparedness and Repsonse of the House Homeland Security Committee-Fema's Gulf Coats Rebuilding Efforts

Hearing of the Subcommittee on Emergency Communications, Preparedness and Response of the House Homeland Security Committee - FEMA's Gulf Coats Rebuilding Efforts

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REP. CUELLAR: The Subcommittee on Emergency Communications and Preparedness and Response will come to order.

The subcommittee is meeting today to receive testimony regarding "FEMA's Gulf Coast Rebuilding Efforts: The Path Forward."

Good morning. On behalf of the committee, on behalf of the members of this subcommittee, let me welcome the witnesses from the Government Accountability Office, the GAO; the Federal Emergency Management Agency, FEMA; the city of Galveston mayor; the Brooklyn (sic) Institution also.

And please let me note from the very beginning, members, that David Garratt, FEMA's acting deputy administrator, will testify in the place of James Stark of the FEMA Gulf Coast Recovery Office. This is in light of an investigation into the recent allegations of fraud, nepotism and sexual abuse at FEMA's Recovery Office in Louisiana.

Mr. Garratt is accompanied by Mr. James Walke, FEMA's acting assistant administrator of the Disaster Assistance Directorate.

I've been also made aware of the troubling allegations are of keen interest to one of our newest members of the subcommittee, Mr. Cao. I believe he's on the way -- weather-related -- like we have other members, also. Mr. Cao -- we know that the allegations are disturbing to all of us. And we can tell that to Mr. Cao -- to all of us, and the members of the subcommittee and the full committee, also. As such, I will inform the committee staff -- is looking into this matter. Furthermore, Secretary Napolitano committed at last week's full committee hearing to the chairman that she was looking into the matter, and will report back to the committee on the department's finding.

Now, on to the matter of the day. Today's hearing is entitled "FEMA's Gulf Coast Rebuilding Efforts: The Path Forward." It is an opportunity to examine how the lessons learned from the past incidents can be leveraged to help state and local governments navigate the federal maze to enhance our capacity to recover from future large- scale incidents.

On August 29, 2005, Hurricane Katrina barreled toward the Gulf Coast of Louisiana, Mississippi and Alabama, and resulted in one of the largest natural disaster relief-and-recovery operations in United States history.

The public health concerns, the environmental challenges, and communications failure have been well documented. But what is more seared in our -- minds of the public was the lack of preparation and response to assist the survivors of Hurricane Katrina and the slowness of the recovery.

Less than one month later, on September 24, 2005, Hurricane Rita slammed through parts of Louisiana and southeast Texas and destroyed some coastal communities and cost more than $10 billion in damages, while leaving more than 2 million people without power and electricity. Several tornadoes from the Hurricane Rita's outer bands also damaged the state of Mississippi.

More than three years after the 2005 hurricanes, the Gulf Coast embarked upon another recovery effort in the wake of the 2008 Hurricane Gustav and Ike.

With all of the storms, President George W. Bush issued a major disaster declaration in accordance with the Robert T. Stafford Disaster Relief and Emergency Assistance Act, triggering assistance from the federal government.

Today's hearing will provide members the opportunity to learn about the importance of the following: one, the need for creating a clear, implementable and timely recovery plan; two, the application of public assistance to enhance state and local government capacity; three, the benefit of implementing strategies for business recovery; and, four, the importance of adopting a comprehensive approach to combating fraud, waste and abuse.

Let me welcome Mr. Stanley Czerwinski, director of the Strategic Issues at GAO, who explain -- will explain how his examination of six of these major incidents, from 1989 to -- through 2005, ranging from Loma Prieta earthquake in northern California to Hurricanes Katrina and Rita in the Gulf Coast, offer recovery lessons -- recovery lessons for the Gulf Coast region affected by Hurricane Ike and Gustav and future disasters in general.

Next, the subcommittee will hear from Mr. David Garratt, acting deputy administrator of FEMA. Mr. Garratt will explain the public assistance process, specifically as it relates to recent storms that have impacted the Gulf Coast. FEMA will also discuss how and why states differ in their drawing-down of public assistance funds. And I believe there is a handout, members. You all should have a handout about the different states and how they are drawing down from their -- those public assistance funds. FEMA will also discuss the possible impediments, as well as opportunities for improvement, in the recovery process.

Our third witness is Ms. Lyda Ann Thomas, the mayor of the city of Galveston, in Texas. Mayor Thomas will detail to this committee the lessons that her city learned from the Hurricanes Katrina and Rita as it struggles to recover from the Hurricanes Ike and Gustav. She will offer her experience with the public assistance process, and her recommendations to FEMA and other jurisdictions which may face a major disaster in the future.

Our final witness is Ms. Amy Liu, the deputy director of the Metropolitan Policy Program at the Brooklyn's (sic) Institute. As someone who has been avidly monitoring the recovery of the Gulf Coast in the aftermath of Hurricane Katrina, Ms. Liu will explain what she learned from her assessment of the Katrina recovery process, and the lessons they hold for other jurisdictions.

As the committee receives testimony from the panel, I want to note that I'm very much looking forward for the proposal from the witnesses that will help to eliminate the culture of "us versus them." And this is something we've been emphasizing. We're all in this together. But there's -- in the past, we've seen this "us versus them." And we want to make sure that we eliminate that culture and work together as a team.

The reality is that the impact of a terrorist attack or a major disaster is felt by all, regardless of one's political party, or whatever you are -- a federal official versus a state or local official. It's one team together.

Therefore, I look forward to the testimony of our witnesses that highlight how we can work together -- work together, I emphasize -- to improve the recovery process, not finger-pointing.

The people of the Gulf Coast region have been badly served. We can do better. I know there's been instances how we've served well. But we can do better as a team. We should not allow the inefficiency, the bureaucracy or the scandals to further deprive the people of this region from a timely and effective recovery process.

With that, I want to thank the witness for coming here today. And I look forward to a robust discussion centered on sound governance that promotes creative solutions and coordinated planning to rebuild the resilient Gulf Coast.

The chair now recognizes the ranking member of the Subcommittee of the Emergency Communications, Preparedness and Response, the gentleman from Alabama, Mr. Rogers, for an opening statement.

REP. MIKE ROGERS (R-AL): Thank you, Mr. Chairman.

And, first, I'd like to thank all the witnesses for taking the time out of your schedules to be with us today. It's very helpful and important, and it's very much appreciated by us.

As the chairman said, the hearing is being held today to discuss FEMA efforts to facilitate Gulf Coast recovery and rebuilding after Hurricanes Katrina and Rita, and the need to continue applying lessons learned from them, as well as Ike and Gustav, to future recovery efforts.

I look forward to testimony from David Garratt, from the Office of Gulf Coast Recovery, as well as Stan Czerwinski, from the GAO. I hope you will discuss the progress that FEMA has made in developing a strong emergency management system, particularly in the areas of disaster recovery and mitigation.

We also look forward to hearing from Ms. Liu and Mayor Thomas, who can provide insight into the details of recovery under way, as well as the need to strengthen information sharing and coordination between FEMA and state and local governments.

After Hurricanes Katrina and Rita struck the Gulf Coast, emergency-management officials in my home state of Alabama helped Alabama residents and displaced victims from Louisiana and Mississippi find emergency housing. Hurricanes Katrina and Rita, and more recently, Ike and Gustav, have taught us all to appreciate the state and local partnerships that become crucial during times of disaster response and recovery.

I feel strongly that while more work remains to be done, FEMA has made significant progress in the last two years, and would lose valuable resources and suffer a major setback if it was pulled out of DHS.

We all know that this nation cannot afford to be distracted or unprepared to respond when a natural disaster or terrorist attack occurs on our soil. This hearing presents an opportunity to look at what should be done to improve response and recovery efforts in going forward.

And I yield back, Mr. Chairman.

REP. CUELLAR: Thank you, Mr. Rogers.

And, again, just for the record, Mr. Rogers and I have sat down before and we've talked about how we can work this committee in a bipartisan way. And I appreciate his input, his staff's input, working with our committee staff also.

At this time, the chair now recognizes the chairman of the Committee of Homeland Security, the gentlemen from Mississippi, Mr. Thompson, for an opening statement.

Mr. Chairman?

REPRESENTATIVE BENNIE THOMPSON (D-MS): Thank you very much, Chairman Cuellar.

First, let me thank our panel for being here today.

We all are aware of the destruction caused by Hurricane Katrina and Rita in 2005 and Gustav and Ike in 2008. What we need to understand though is how we move ahead with the recovery process.

As you know, I have been very vocal about my displeasure with the pace at which the Gulf States are drawing down and spending disaster relief funds provided by FEMA and other federal agencies.

In particular I'm bothered by the lethargic pace that FEMA, Mississippi and Louisiana are spending the public assistance grants from Katrina and Rita.

These funds, which are intended to restore critical infrastructure in the region, are vital to a full recovery. We cannot afford to fail in effectively leveraging these funds.

Mississippi has been awarded $2.9 billion by FEMA. But about 1.3 billion of these funds still have not been spent. Louisiana was awarded 7.5 billion. But the state has yet to disburse 3.4 billion.

We are three-and-a-half years removed from the 2005 hurricanes. And we still have nearly $5 billion sitting there, waiting to be used. Meanwhile as of February 1st, Texas has roughly 85 percent of the funds FEMA has obligated to them, as a result of the 2005 and 2008 hurricanes.

I'm concerned that the governors of Mississippi and Louisiana are going to develop a reputation for being poor stewards of taxpayers' money. Let me be clear though. I don't think it's entirely a problem with the states.

FEMA's inflexible funding structure and their lack of quick resolution, during disputes, is also delaying the speed of recovery. I hope we can get someone here today to agree on what the problems are and hopefully start a conversation that will help streamline these funds, to get them to the people who need them.

At a full committee hearing last week, Homeland Security Secretary Napolitano agreed that post-disaster funds need to be streamlined. However I was concerned to find out that Mr. Garratt was testifying at the same time, before another committee, that the public assistance appeal process is meant to be a thoughtful, deliberative process, not a quick resolution.

I understand Mr. Garratt's position of protecting taxpayers' funds from fraud, waste and abuse. But I am convinced that we can improve accountability of the funds and streamline the bureaucratic red tape.

It is important that FEMA and the states work together to find a quick and effective way to distribute these funds. Unfortunately most of the stories we're hearing are about disagreements between FEMA and the states.

For example, after Katrina, New Orleans claimed that the majority of damage, to the city's sewer system, was from the storm. But FEMA claimed that most of the damage was due to poor maintenance.

Because of this dispute, FEMA did not even begin in-depth damage assessment of the sewer system until July 2007, nearly two years after the storm. This is an example of the us-versus-them mentality that has greatly hampered the recovery in the gulf.

I'm hoping today that we can find common ground, that we can put the us-versus-them mentality behind us and find a way for all parties to work together toward the common goals of a complete recovery in the gulf. To accomplish this, we must identify and learn from our past mistakes.

I look forward to the testimony. And again thank you for being here.

REP. CUELLAR: Thank you, Mr. Chairman.

REP. THOMPSON: Thank you.

REP. CUELLAR: Other members of the subcommittee are reminded that under the committee rules, opening statements may be submitted for the record. At this time, we'll go ahead and move on to the witnesses' statements. Again I certainly want to welcome the panels. And again members, I've given you the names of the first witnesses.

Our first witness will be Mr. Stanley Czerwinski, the director of Strategic Issues of the U.S. Government Accountability Office. Our second witness will be Mr. David Garratt, who's the acting deputy administrator of the Federal Emergency Management Agency. Our third witness is miss Lyda Ann Thomas, the mayor of Galveston, Texas. And our final witness is Ms. Amy Liu from the Brookings Institute, deputy director there.

Again we appreciate it. And without objection, the witnesses' full statements will be inserted into the record. I now ask each witness to summarize his or her statement for five minutes, beginning with Mr. Garratt.

Members, I'm sorry, before we get started, I handed a copy to members -- it should be in your notebook or handed over -- that has the assistance and the grants that have gone down, to the four states, and what's been obligated, what's been drawn down. So that will give you an idea of the overall picture for a state.

So at this time, we can start off with the first witness.

MR. GARRATT: Thank you.

Good morning, Chairman Cuellar, Ranking Member Rogers and other distinguished members of the committee. It is a privilege to appear before you today, on behalf of the Department of Homeland Security and the Federal Emergency Management Agency. As always, we welcome your interest in and appreciate your continued support of the challenging emergency management mission.

I am joined at the table today by James Walke, the acting assistant administrator of the Disaster Assistance Directorate at FEMA. Mr. Walke is the agency's premier authority on Public Assistance. And we look forward to some productive dialogue on the subject.

FEMA's Public Assistance Program is, with rare exceptions, a fundamentally critical element of any major disaster recovery. Through Public Assistance, grants are provided to states, local governments and certain private non-profits, to reimburse for the removal of debris, for emergency protective measures and temporary relocation of certain services or functions and the repair and replacement of infrastructure damaged or destroyed by a disaster event.

The repair or replacement of infrastructure can include public roads, bridges, drainage structures, water control facilities, public buildings, public utilities, parks and other facilities.

So funded through FEMA, the Public Assistance Program is administered and managed by states. Local governments and other eligible applicants receive their funding through the states.

The state controls the pace of such disbursements. Federal regulations authorize states to disburse funds for small projects up front, if state regulations allow such payments.

For large projects, federal regulations authorize states to disburse funds to applicants on a reimbursable basis. However in an effort to meet the financial challenges of local applicants, the States of Louisiana and Mississippi have both established policies to provide advance funding to begin design work and construction.

To date, the Louisiana Governor's Office of Homeland Security and Emergency Preparedness has disbursed 4.1 billion of the 7.5 billion FEMA has obligated to applicants. The Mississippi Emergency Management Agency has disbursed 1.6 billion of the 2.9 billion FEMA has obligated to applicants.

There are sometimes disagreements between FEMA and applicants about the extend of disaster-related damages to facilities that were not well-maintained prior to the disaster.

The Stafford Act authorizes FEMA to reimburse applicants to repair disaster-related damages but not damage attributed to deferred maintenance and neglect through other causes.

Applicants who disagree with a FEMA determination have the right to appeal and have 60 days from the written determination to file a first appeal with the appropriate FEMA regional office. If the regional administrator denies the first appeal, the applicant has 60 days to file a second appeal to FEMA headquarters.

The recently enacted American Recovery and Reinvestment Act of 2009 contains a provision that directs the president to establish an arbitration panel to expedite recovery efforts in the Gulf Coast for Hurricanes Katrina and Rita. And FEMA and the department are developing procedures to implement this new requirement. In the meantime, FEMA will continue to work with the states and applicants to resolve disputes.

Recognizing that the scale of devastation demanded maximum flexibility within the Public Assistance Program, FEMA developed a number of innovative strategies, consistent with the authorities of the Stafford Act and designed to address some of the unique challenges of recovering from Hurricanes Katrina and Rita.

FEMA will continue to adapt its policies, wherever possible, to expedite the recovery process. We have made, I believe, significant progress in promoting recovery in the Gulf Coast.

To date, FEMA has obligated over 10.5 billion in Public Assistance funding to the Gulf Coast states. FEMA has taken aggressive steps to speed the provision of funds to the states and to encourage the states to provide funds to local applicants.

While FEMA has obligated the majority of Public Assistance funds to the states, it is important to recognize that the approval of projects and the obligation of funds is just the beginning of the rebuilding process.

Local jurisdictions continue to confront a lengthy and challenging rebuilding period. Nevertheless FEMA will remain on the ground, shoulder to shoulder with our state and local partners, as they undertake these major repair and construction projects to their roads, bridges, schools, utilities and other public facilities.

As brick-and-mortar projects are begun, we will continue to identify additional eligible work as it emerges or is identified and continue to reimburse actual costs for any eligible work.

Repairing and rebuilding damaged and destroyed infrastructure has been, and will continue to be, a challenge. But FEMA's public- assistance presence and support can be counted on until that challenge is met.

Thank you. We are prepared to address any questions you may have.

REP. CUELLAR: (Mr. Mahoney ?) and members, also, Mr. James Walke, who's FEMA's acting assistant administrator for the Disaster Assistance Directorate, is also present for -- to answer any particular questions that you all might have.

At this time, I would like to recognize Mr. Czerwinski to summarize his statement for five minutes.

MR. CZERWINSKI: Mr. Chairman, members of the subcommittee, thank you for inviting us here today to testify on lessons about better rebuilding after disasters, particularly in the Gulf Coast.

And I need to thank you, Mr. Chairman, because you actually summarized part of my statement, including my overriding message, and that is, we're all in it together, federal, state and local governments. And we have to be partners for this to work.

And as Mr. Garratt pointed out, in the Stafford Act, the primary responsibility for doing the rebuilding is at the state and local level -- at -- but the money to pay for the rebuilding is from the federal government. And this works best when the state and local governments are empowered and capable to do the work and the federal government delivers the funds as simply as possible.

As you know, there are several phases to disaster assistance. There's preparedness; there's responding to the emergency needs and immediate afternath -- aftermath; and there are rebuilding after disasters.

Frankly, the disaster community tends to focus on the preparedness and on the immediate response. You have exercises to enhance capacity, to be prepared. You have a national response plan that's been around for years that lays out detailed roles and responsibilities for the federal, state and local level.

We don't have such a structure for rebuilding. So in the wake of hurricanes Katrina, Ivan and Gustav, and the Midwest floods, we felt that we -- that state and local governments and the federal government could benefit from some lessons that we learned from looking at past disasters.

And as you mentioned, Mr. Chairman, we went back and visited sites and talked to people involved in the response and the rebuilding -- from Katrina and Rita in the Gulf Coast, Andrew in Florida, the Red River floods in North Dakota and Minnesota, the earthquakes in California -- both Northridge and Loma Prieta -- and we even sent a team to Japan to look at how they did things after Kobe.

And we also did a review of the public-assistance program. And, as Mr. Garratt points out, public assistance is a very procedural- process-intensive program. And we have some ideas about how it might go better.

Today, I want to share a few simple lessons for you. And the -- we got these from our examples. The first lesson that we have is you've got to have a plan, and you have to have that plan as soon as possible. I'll give you an example. After Loma Prieta, in Northern California, there were two communities that were nearby, similarly affected, Santa Cruz and Watsonville.

And in Santa Cruz they had a -- had a vision. They had a strategy for what they wanted to do. They wanted to maintain their local businesses. In the immediate aftermath of the disaster, they set up pavilions where their businesses, right next to downtown, were able to reconstitute. They kept their businesses open. The Loma Prieta earthquake was in late October. It was going into the Christmas season, vital to small businesses. These people stayed in business and they went through the holiday season. And when they rebuilt, they were back in Santa Cruz.

Watsonville did not have a plan. It did not have a strategy. And their businesses went. They went out to the strip malls around the area. They never did come back.

And today, if you look at Santa Cruz, they have a thriving downtown. If you look at Watsonville, just about 10, 15 miles away, they are struggling with unemployment and they have a stagnant economy that goes beyond the current recession.

The second lesson that I -- that I want to talk about is that it takes money to spend money. And a good example of that is that the FEMA public-assistance program requires state and local governments to front the money for their projects.

There's a reason for this. It -- the idea is that they want the state and local governments -- they have skin in the game. They want to have some accountability that we're not going into projects that are too expensive or that we don't want to do. But it also can have a choking effect.

You're talking about local governments and state governments that have been devastated. They just had a disaster. Their infrastructure has been torn apart. Their lives have been torn apart. And on top of that, their finances are decimated. They don't have the revenue streams. They don't have the economic bases. And yet they have to come up with the up-front money.

There have been some creative ways that we've seen to handle this. One was in Mississippi. The state went out and floated a 200 billion -- a $200 million -- in this current environment today, with the stimulus, we get our millions and billions all mixed up -- but this was a $200 million bond issue. This was then used for the three Gulf Coast communities, to provide the money up front.

A downside to not having the money up front is that it does two things to local governments -- and I'm sure the mayor can talk about this much better than I can. It inhibits the ability to do the up- front planning and the up-front design work that you need for your projects. What it also does is it limits who you can contract with. You can only contract with contractors who can wait to be paid.

And if you're waiting to be paid, well, that's going to close out a lot of the smaller businesses. What it's also going to do is it puts the contractor in the position of strength in the negotiation, because they know you need them, and they'll wait for their money. And believe me, there will be a carrying cost when that contract is actually consummated.

The final lesson that I want to talk a little bit about -- and as the GAO, we wouldn't be here if we didn't talk about fraud, waste and abuse -- and that is that there's a vulnerability that is inherent in a disaster area after it occurs. And it's a vulnerability to fraud, waste and abuse. There's a lot of money flowing in. There are people in need. And sometimes the people in need don't know who the good contractors are and who the bad contractors are.

We saw a really good example of how to deal with this up in -- after the Red River floods in North Dakota. The city of Grand Forks brought together what they called a "one-stop shopping" credentialing operation. Any contractor who wanted to do business there had to go in there, and they were covered by the Bureau of Licensing, the Criminal Investigations and the secretary of state. They did background checks. They did criminal checks. They did financial checks. They then looked at bonding and licensing, and issued photo IDs that these contractors had to carry with them. Therefore, if you were a homeowner and looking to have your home rebuilt, if the contractor did not have that kind of licensing and approval, you didn't want to deal with them.

So that was a simple idea. And what we saw was after the recent Midwest floods, the city of Cedar Rapids, Iowa adopted that same idea.

With that, what I'd like to do is just close off by saying there's a lot of other lessons that we've learned. And we'd be happy to talk to the -- talk to you about them during the questions and answer -- if you're interested.

That concludes my statement, Mr. Chairman. Thanks for asking us to testify.

REP. CUELLAR: Let me ask you before I move on: Could you provide us a little checklist of the lessons learned? I'm sure you've got a report --

MR. CZERWINSKI: Oh, sure.

REP. CUELLAR: -- but if we could have a checklist, we'd appreciate it.

MR. CZERWINSKI: We'd be delighted to.

REP. CUELLAR: Thank you.

All right. Thank you again for your testimony.

At this time, I'd like to recognize Mayor Thomas to summarize her statement for five minutes.

MAYOR THOMAS: Thank you.

Subject of the hearing, "FEMA's Gulf Coast Rebuilding Efforts: The Path Forward."

Response and recovery from a devastating -- from as devastating a hurricane as Ike, with its catastrophic 12-to-20-foot surge, has presented not only challenges but opportunities for positive changes as Galveston rebuilds and moves into the future.

Galveston was as prepared as we could be for Ike. We had Katrina and Rita in our rearview mirror, and the state and FEMA by our side. Using our own resources, having built a reserve to support city operations for three months out, partnering with the state to care for our citizens through pre-conditioned contracts and interlocal agreements, securing legislation and enabling the city to borrow emergency funds, and arranging that with local banks, partnering with the University of Texas Medical Branch to swiftly and safely evacuate citizens dependent upon medical assistance and public transportation, the city was prepared. So was the business community, having arranged in advance for loan capacity for our businesses.

Had it not been for our seawall, Galveston would have looked, after Ike, like it did after the 1900 storm, which killed 8,000 Galvestonians. Ike flooded over 75 percent of our homes and businesses, displaced and dispossessed an estimated 15(,000) to 20,000 of our residents, reducing our population almost a third. Galveston was in shambles. We literally looked to FEMA as our lifeline. FEMA personnel were positive and helpful, meeting high standards of performance.

However, the blanket practice of reassigning personnel every four to six weeks is disconcerting and discouraging for our city staff, our citizens as well as myself. From top to bottom and all sections in between, there often seems to be a willingness but an inability to act positively.

Precious time is lost as inquiries flow up all the way to Washington and wait for instructions to flow down. This can take weeks. Deadlines for assistance and temporary housing were set and then routinely changed at the last minute.

As much as FEMA made itself available to the public, the inherent difficulties met within the application process for assistance were then compounded by requirements for citizens to reapply for their housing vouchers every two weeks. A month to 90 days would be far more humane, considering the upheaval in people's lives.

A sense of urgency must continue to motivate as weeks stretch into months and months stretch into years. FEMA must reevaluate the funding process. We need to have pre-assessment tools and personnel, as well as advanced funding mechanisms that the state can activate as soon as the governor and the city declare a major disaster. For pre- qualified cities, 100 percent reimbursement or 50 percent prepayment is not out of the question.

I definitely think that FEMA's path forward leads through Galveston; that lessons learned and experience shared along the way from New Orleans to my historic city should be heeded, and recommendations implemented where possible, as soon as possible. Some changes may take time, but the time to start is now.

My greatest hope is shoreline protection for my city, our entire Gulf Coast region, including the ports of Galveston, Houston, Texas City, Freeport, Port Arthur, the Houston Ship Channel, Galveston Bay, the Intracoastal Waterway; a region embracing major fishing, petrochemical industries, ecologically significant wetlands and millions of people, representing a healthy chunk of the gross national product.

My request is a personal response to the legacy left by my grandfather, Isaac H. Kempner, called "Ike," when he helped Galveston recover from the 1900 storm and led in funding for the sea wall to protect the island from future storms.

Certainly I, his granddaughter, in response to a hurricane ironically called Ike, could do no less than seek to save our city and distinguished institutions as the University of Texas Medical Branch and Shriners Burns Hospital for Children, by asking Congress and FEMA to begin this long-term solution to an age-old problem.

I ask FEMA, working with other federal and state agencies, to take the necessary steps to build a front line of defense behind which an entire region can move forward with greater confidence.

FEMA is efficient when it comes to supplying generators and heavy equipment. Its PODs did help people boost their morale. But they are gone, and soon the hotels will be emptied of our citizens, and Galveston will need to find homes on the island for them and we'll need to find jobs so they can feed their families.

The path forward, ladies and gentlemen, may not be rosy. But with FEMA's assistance and your help and that of the Congress, Galveston and all communities that have been destroyed by these horrific events will reclaim their future.

Thank you very much.

REP. CUELLAR: Thank you, Mayor.

At this time, I'll recognize Ms. Amy Liu to summarize her statement for five minutes.

MS. LIU: Good morning, chairman and members of the committee. I am pleased to appear before you this morning, and very much appreciate your invitation.

I do want to preface my remarks by saying that I am not an expert on FEMA or emergency preparedness, as are some of my colleagues here today. I am primarily an expert on the role of -- the federal, state and local government play to create healthy and prosperous cities in metropolitan areas large and small. And I hope that unique perspective will be of value to you today.

In general, I have three observations. But before I do that, I want to affirm what you started off by saying today, which is that any post-disaster recovery effort requires a well-greased federal, state and local partnership, with the stress on "partner," or, as you said, "team."

Hurricane Katrina brought into sharp focus the reality that there's no one single level of government -- has the resources and know-how to address the scale of post-disaster recovery alone. If any one of those levels of government is not performing their role well in rebuilding impacted communities, the whole system is ineffective. But in this federalist system, it is incumbent for the federal government to not simply push massive amounts of money out the door and then adopt a wait-and-see mode with states and localities, or even over- regulate with distrust.

Instead, the federal government has a shared stake in recovery success, and must be a proactive partner with states and localities by giving the tools and the flexibilities to succeed, so -- which brings me to my three main points.

First is, after a mega-disaster, I do think that the federal government needs to get its own house in order by creating a White House-based office of disaster recovery that is focused on results. Many state and local leaders have certainly praised the current Office of the Federal Coordinator for Gulf Coast Rebuilding, which is situated in the Department of Homeland Security. In practice, though, the office does not have the independence or sufficient authorities to deliver optimal impacts on the ground.

In short, what we need is a lean, White House-based, outcome- oriented operation. It should be placed in the White House, with direct report to the president, to demonstrate that long-term recovery success is a priority, and then to effectively mediate conflicts between two federal agencies that are stifling state and local implementation, such as the conflicts that we're seeing between the use of FEMA and CDBG funds on a single project.

But most importantly, such an office should be given the mandate to identify explicit goals and outcomes for post-disaster recovery, working with state and local leaders. What does this mean?

For instance, this office should set such critical goals and targets such as ensuring a hundred-percent spend-down of FY 2006 and 2007 federal appropriations at the end of a date certain; for instance, ensuring on-time quality delivery of federally led initiatives, such as the public-housing redevelopment and levee modernization; and, ensuring that by a date certain, all dislocated families will be in safe, affordable, longer-term housing.

The office should then be given the authorities and the accountability to work across these key federal agencies to meet these goals and benchmarks. It is not sufficient to merely coordinate. Instead, the situation we have today is that we are not organized around goals and we are not organized to deliver results. And if there are -- and if there are goals, they are certainly buried within a sea of other goals in each of the different agencies.

Second, the federal leaders should then, in turn, reward state and local leaders for achieving a clear set of recovery outcomes, not just critique them on slow spend-down or only play "gotcha" with regulations of fraud and prevention.

Now, most philanthropists ask their grantees today, "What are your indicators of success?" Most private investors ask, "What is my return on investment?" When it comes to Gulf Coast recovery, I think far too often, federal leaders, and even the media, tend to ask, "How fast is the money going out the door, and how responsibly are you spending those funds?"

Now, don't doubt it is important to spend down funds efficiently. And we all certainly applaud efforts to prevent fraud, waste and abuse. However, at the end of the day, when people ask me, "Is New Orleans coming back?" the question about speed and responsible spending does not answer that question.

Imagine what we could accomplish if the federal government, instead, helped and rewarded state and local leaders for achieving explicit recovery goals with benchmarks: for instance, that in two years, we will restore 75 percent of the jobs lost in the city of New Orleans; in two years, we will repair or replace 20 percent of all the damaged small-unit apartment rentals in the Gulf Coast; that we will ensure that at least 20 percent of existing residents will benefit from new-skills training from the jobs that are being created by all the housing repairs and reconstruction in the region.

By doing this, we will ensure that taxpayers are getting a return on their investment by, in the case of New Orleans, not replicating the same city and metropolitan area as before, but ensuring that our taxpayer funds are helping create a New Orleans that rebounds as a better version of itself.

To do this, the federal government can consider providing planning grants to states and localities to develop unified plans with community goals and concrete performance outcomes, so that will help guide and prioritize federal spending and activities. It can also help evaluate the impact of fraud prevention and increased economy goals to make sure they don't hamper state and local achievements of these goals and outcomes. And then finally, the federal government needs to provide better data and transparency to help federal, state, and local leaders track recovery progress and get these key goals and outcomes.

To hold each level of government accountable for outcomes assumes that we can quantify and keep track of these outcomes. It's not true. Since the fall of 2005, the Brookings Institution Metropolitan Policy Program has been tracking over 40 indicators of trends in New Orleans and in Louisiana, called -- in the New Orleans Index. Despite all the data, we do not know the following. If our goal is to ensure that New Orleans remains a diverse city, home to many original residents, we don't know -- home to many original residents, we don't know how many residents today are returnees, how many are newcomers, and their characteristics.

We don't even know the status and location of all the city's former federally assisted housing residents.

If a goal is to save the small mom-and-pop shops that are at the heart of many tourist communities and others in the Gulf Coast, there is no good data on the health and vitality of small businesses. Even if the goal is to help accelerate the spendout of existing funds, we don't have the status of federal spending by state, by parish or county, in the aggregate, or by funding type, beyond the FEMA public assistance and temporary housing assistance. And, as we know, we get a lot of questions about spending and where it's going.

So for future mega-disasters, I think the federal government should consider mandating the (reporting/recording ?) of all federal short- and long-term recovery spending across the agencies and the project and at the geography level. We should set aside appropriations of staffing for the Census Bureau to conduct special population and housing estimates for disaster-impacted areas.

And we should create a federal one-stop shop for all the population, labor, economic and housing statistics for disaster- impacted areas, for easy access for reporters, for decision-makers and researchers, so that we can make sure that we are reaching the kind of outcomes we see in the Gulf Coast.

Thank you very much. And I very much appreciate any -- I welcome any questions that I can help you with.

REP. CUELLAR: Thank you again -- to you, Ms. Liu, and to all the witnesses -- for your testimony. I remind each member that he or she will have five minutes to question the panel.

I now will recognize myself for questions.

Let me -- let me do a what-if scenario. What if I would ask each of you all to get together -- because I think all of you all had some good points -- could I ask you, Mr. Czerwinski, to take the lead on this -- with all due respect to FEMA -- with everybody else, ask you to come up with a plan on -- tell us what we're doing for preparedness? We spend a lot of time on preparedness.

Tell us what we do for the immediate response, because we spend a lot of time.

But I think the weakness here is the long-term recovery. You know, what do we prepare? What are we doing? What are the goals? What other measurements are we looking at?

I would ask you to take the lead.

And I'm going to ask, Mr. Rogers, if you can assign one of your staff persons, along with our committee clerk also, to work with you; within two weeks -- and Mr. Garratt, I don't want to hear, with all due respect, that you got to get that cleared up with some of the folks. But I think we're asking you to work with us to get a plan on adding the measurements, the results, the ideas that the mayor had, that Ms. Liu had, Mr. Czerwinski, the plans that we talked about -- and Mr. Walke, I'll ask you to work with us on this, and just ask (us to put it in a ?) plan.

And you can consult with anybody else. Ask anybody else you want to bring in, that's -- but I want it within two weeks. Tell us what we're doing on the preparedness part. I think we know what the steps -- strengths and weaknesses -- the immediate response. But more importantly, of course, is the recovery, which we're emphasizing right now. What are the weaknesses? What are the strengths? What do we need to do to make this work better?

Because, apparently, there are some disconnects here. And I think -- Mr. Chairman, I think, you know, when we talk to our constituents -- I think the bottom line is they don't want to know about process. They just want to know, when are we going to get our assistance? You know, when are we going to get -- and if we started to explain the processes, they -- frankly, they're just not interested on that. They want to know when they're going to get the assistance as soon as possible.

Does everybody know what the assignment is?

MR. CZERWINSKI: (Yes, Mr. Cuellar ?).

And, of course, as far as asking us to do that, we work for you. So we don't -- we don't have to get anybody's approval. (Laughs.)

REP. CUELLAR: Oh -- yeah. And I'm -- I just want -- and Mr. Garratt, I just want to make sure -- I want you to tell us if there is a problem with you getting involved in this.

MR. GARRATT: I don't think there's a problem, Chairman Cuellar. The timeline might be a little aggressive in terms of pulling together the sort of comprehensive plan -- if what you're looking for is a plan as opposed to an outline -- that you're asking for. But we will -- we'll throw our whole support behind this effort.

REP. CUELLAR: Why don't we do this: thirty days from today. That should be more than sufficient time to get a comprehensive -- tell us what we need to do to improve this.

And, Ms. Liu, definitely get involved, because I do want to see some of the results-oriented outcomes there. And again, it's not trying to "gotcha" here. We're just trying to say, how do we make this work better?

And, again, I'm -- Mr. Rogers will assign one of his staff persons. We'll assign our clerk also. She'll be the lead, working with Mr. Czerwinski. And if there's a problem, would you let us know way before, not afterwards? I just want to make sure we're all in agreement. I just want to see this comprehensive -- because, I mean, there's a lot of ideas. And we want to come up with this meeting with something concrete that we can work with.

And if there's any legislative solutions, then, you know, the chairman here will take the lead on any changes that we need to make. But tell us if there's anything structural. Because, I mean, if it's people problems, then we need to replace people. But if it's a structural issue, a deficiency, then we need to know what the structural issue is, there.

So, Ms. Liu, can you do that?

MS. LIU: I'd be happy to participate.

REP. CUELLAR: Mayor Thomas?

MAYOR THOMAS: Yes.

REP. CUELLAR: Mr. Czerwinski?

MR. CZERWINSKI: Oh, absolutely.

REP. CUELLAR: Mr. Walke?

MR. WALKE: Yes, sir.

REP. CUELLAR: Mr. Garratt, no issues? We're not going to hear that there's a problem later on?

MR. GARRATT: We're right with you, sir.

REP. CUELLAR: Okay. All right.

At this time, I'll recognize Mr. Rogers for his five minutes of questions.

REP. MIKE ROGERS (R-AL): Thank you, Mr. Chairman.

Last week, we had Secretary Napolitano with our committee. And I brought to her attention my concern that there had been some discussion that FEMA may be pulled out of the department. And I'm adamantly opposed to that.

I think that we've gone through a growing phase at the department over the last several years that is -- it's starting to work. We're starting to see some synergies and some coordination. And I think FEMA's a perfect example. The last couple of years, we've seen FEMA perform exceptionally well in several incidents, in concert with the department.

But for Mr. Garratt, I would like to know, if FEMA were pulled out of the department, what do you think would be the kind of impact that you would anticipate?

MR. GARRATT: Sir, I'd like to think that FEMA, regardless of where we're located, is going to continue to press ahead and do our job as well and as successfully as we can.

I know there's been a lot of discussion about this subject. I suspect if you asked any federal agency if they would like to be a direct report to the president, the answer is very likely going to be yes.

But, quite frankly, where we sit in an organizational chart should in no way affect our ability to be successful. So I think FEMA would be successful either way. And I think FEMA will be successful either way.

REP. ROGERS: Do you not believe -- or do you believe -- I guess that's a better way to -- I won't be leading in my question. Do you believe that there would be some adverse consequences to FEMA being able, prepared, to respond to a natural or manmade disaster while undergoing another major reorganization?

MR. GARRATT: Sir, I believe that a reorganization is likely to have some disruptive impacts on FEMA -- or would likely have some disruptive impacts on FEMA during that transitional period. So it's entirely possible that there could be some adverse effects from separation.

REP. ROGERS: Are there some resources that you currently, as a department, have available to you, as a member of the DHS department or team, that you would -- that just jump to mind, that are beneficial, that you would lose were you to pull away and be a standalone department?

MR. GARRATT: No, sir. Under the Stafford Act, the president is authorized to direct any federal agency, with or out -- with or without reimbursement, to provide any form of assistance necessary to support state and local governments. That authority is delegated through the secretary to FEMA. So we have that authority under the Stafford Act.

REP. ROGERS: Okay. Thank you.

I want to go to the mayor, Thomas.

Mayor, you made reference a little while ago about the slowness with which you found FEMA able to respond to your inquiries. Has that been a consistency? Or is it -- have you seen any improvement over time?

MAYOR THOMAS: In the beginning, after the storm, they were -- the answers came very quickly. But after about 30 days, the whole system slowed down.

I can speak to you, for instance -- just to give you an example, FEMA's rule is that after a catastrophic event, a school would be opened as a Red Cross shelter. However, there were no schools that we could open in Galveston. They all went underwater. The Red Cross, then, had to hire a vendor to come and put up tents and supply those tents with food and blankets and bedding and so on.

We're six months out, and FEMA is still questioning whether or not IT should pay the vendor, or the city of Galveston. And it's about a $3 million price tag.

REP. ROGERS: So after -- because Galveston obviously is in a position where they've endured these natural disasters, in the past, there has been no coordination between your city and FEMA and your state agencies, as to prepositioning of resources and contracting for services, to anticipate these kind of decisions that have to be made.

MAYOR THOMAS: The state has done a good job of prepositioning, because of Rita and Katrina, prepositioning high-water vehicles and supplies. The state has done that in various locations around the state.

The slowness is when those -- and that's all been done and a lot of it came in. But the argument continues, as to who is going to pay for these prepositioned materials and when they're going to get paid. When are the vendors going to get paid? When are the contractors going to get paid? Because FEMA has a difficulty in deciding who owes what to whom.

On the other hand, the states and the cities go forward as quickly as they can, in restoration and recovery, feeling secure that FEMA will pay the bill. But FEMA has not paid the bill in a timely manner.

REP. ROGERS: Thank you, Mayor. And I look forward to my next round of questions so I can ask Mr. Garratt and Mr. Walke to respond as to why that's happening.

Thank you, Mr. Chairman. I yield back.

REP. CUELLAR: Yes, sir.

The chair now will recognize other members for questions that they may wish to ask the witnesses. In accordance with our committee rules and practice, I will recognize the members who were present at the start of the hearing based on seniority on the subcommittee, alternating between the majority and the minority.

Those members coming in later will be recognized in the order of their arrival.

The chair now recognizes for five minutes the gentleman from Mississippi, Mr. Thompson, Chairman Thompson.

REP. BENNIE THOMPSON (D-MS): Thank you, Chairman Cuellar.

Let me pronounce that -- indicate that the men and women of FEMA respond heroically to all the natural disasters that -- that we've suffered with. One of the issues that we now face is, how do we provide an orderly recovery process? And that is still one of the reasons for this hearing.

Mayor, I'm going to try to help you on two issues today. I was a mayor in the '70s, and I understand clearly what you're going through. Your phone rings constantly.

Mr. Walke, are you familiar with that reimbursement issue that the mayor just outlined?

MR. WALKE: I'm not, sir.

REP. THOMPSON: All right. I'm going to ask you, as your responsibility, that if, in fact, the school was nonexistent, that whatever the regulation is, if the school is not there, and if we can show pictures of the tents, and prove within a reasonable doubt that this activity did occur, can we get that vendor paid?

MR. WALKE: We will look into that, sir, and report back on -- on the situation. But --

REP. THOMPSON: How much time do you need?

MR. WALKE: Well, I can make a call this afternoon.

REP. THOMPSON: I'll give you until Thursday.

MR. WALKE: Fair enough.

REP. THOMPSON: Mayor, you happy with that?

MAYOR THOMAS: You bet. Yes, sir.

MR. WALKE: I'll need to get more specifics from the mayor on that so I can --

MAYOR THOMAS: I'll be glad to give them to you.

REP. THOMPSON: Let's talk a little bit more, because part of the recovery process is -- is the city's either having difficulty with FEMA or the state, or what have you.

You have a seawall in Galveston that you have had some difficulty. I want you to tell me a little bit about the seawall, and I'm going to try to help you with the seawall, too.

MAYOR THOMAS: Well, after the 1900 storm and -- the seawall -- money was found by the leadership of the city using their own personal good names and credit to go to New York and other places in order to secure bonding -- bond money to pay for the seawall.

It was designed by the Dutch. It's about 15 miles long. It's 17 feet high. It was completed in 1904. And it has withstood every storm since.

Now --

REP. THOMPSON: What is your problem right now?

MAYOR THOMAS: The problem is that the island of Galveston is 32 miles long. Because of the surge that was caused by Ike, the water came very close to coming over the seawall. It rose about 15 feet. And you have some documentation and some pictures in front of you that show the waves in part of the -- coming over that seawall during Ike.

The island is not totally protected by the seawall, and it needs to have that protection, as I explained in my narration.

REP. THOMPSON: What has FEMA said?

MAYOR THOMAS: We have not formally talked to FEMA. The city hasn't. There is a committee getting ready to go to FEMA. We believe -- we hope -- that there will be Corps of Engineer money and hazard- mitigation money that can be used to protect our shoreline all the way to Sabine Pass.

REP. THOMPSON: Mr. Garratt, are you aware of mitigation efforts that have been utilized in the past for similar kinds of issues the mayor is talking about now?

MR. GARRATT: Negative, sir.

REP. THOMPSON: Well, I'm going to ask you, Mr. Walke, since you are the expert: Do we consider mitigation as a fundable issue with respect to the -- what we're talking about?

MR. WALKE: Sir, FEMA funds two types of mitigation, one under the 406 program, which is a public-assistance program, and one under the 404, which is a stand-alone program. Under our program, the public assistance, we have not funded seawalls as a mitigation measure, because our mitigation is limited to repairing the damaged facility into better shape than it was before.

REP. THOMPSON: So to say that if you put it back in the present form, even though all the research says that it's just a matter of time before something worse happens if you don't do something else.

MR. WALKE: Again, the statute authorizes us, under the PA program -- and I want to be clear what I'm talking about. Under the program, we pay for damaged structures. Now, the mayor is requesting funding to repair -- or to construct a seawall for the remaining 15 miles or so. Under the public-assistance program, we would not fund that.

Now, under the --

REP. THOMPSON: Well, thank you very much. And we'll work with the mayor.

If I might, Mr. Chairman, I have one other question.

Mr. Czerwinski, you and Ms. Liu both talked about the need for coordination. And did you give -- did you look at why Texas is doing such a good job at spending public-assistance money, and Louisiana and Mississippi is not?

MR. CZERWINSKI: We didn't look, specifically, at the comparison of Texas and Louisiana, although we did look at characteristics in general in the public-assistance program. One of the things to think about is the scope of the projects and the overall scale of the disaster. And the spend-out rates will be quicker in the smaller devastation. I think Texas is around about a billion dollars, whereas you're talking a lot more money, a lot bigger projects, in Louisiana and Mississippi. And given the nature of the public-assistance program, which is very procedural -- it is iterative, there's a lot of cost estimating -- what that does is it magnifies the difficulties in handling the larger projects.

REP. THOMPSON: Thank you.

Mr. Walke, if a community has a dispute with reimbursement, like we've heard before, who's the final arbiter in this issue?

MR. WALKE: Sir, may I add to his response on your previous question first? You talked about the payout versus Texas versus Louisiana. I think there is a fundamental difference for the rate of payout. When you look at Texas and Ike, 80 percent of the funding there is for debris removal and emergency protective measures. And these are costs that the states and local communities already incurred. If you look at Louisiana, we're looking at perhaps about 35 percent or 40 percent of the cost in debris removal and emergency protective measures.

So in communities that have a large share of permanent rebuilding, then that process is much slower, as evidenced by the situation in Louisiana versus Texas.

Now, to your question about who's the final arbiter on the PA projects, well, there are several levels. Initially, we have a PA manager in the joint field office, near the disaster site, who makes a decision on a particular project.

If, in fact, there is a dispute at that point, then there's a first-level appeal to the region administrator, who has the authority. And then subsequently to that, if there's a second appeal submitted, then it comes up to our office, and the assistant administrator for disaster assistance makes the decision.

REP. THOMPSON: So it's strictly within the department. There is no independent judge or some -- it's a FEMA employee who makes the final decision?

MR. WALKE: It's a FEMA employee who has not been previously involved in the determination, sir. But you're right. It is --

REP. THOMPSON: It is a FEMA employee that settles the dispute.

MR. WALKE: That is correct.

MR. GARRATT: Sir, I would like to pipe in on this one. In fact it is a FEMA employee who makes the final decision on the appeals process. And there has been concern in the field that perhaps they're not going to get a fair shake from FEMA because, in fact, FEMA continues to render appeals on decisions in the field.

But I would like to point out that in fact, across the Gulf Coast, for Mississippi and Louisiana, the -- the rate of success of appeal is approaching 50 percent for those states combined.

In other words, of the appeals that they've submitted, close to 50 percent of those appeals are being found in favor of the appellant, either in whole or in part.

And I think that speaks volumes about how objective and flexible the appeals process is.

REP. THOMPSON: Well, if you're on the positive side of the appeal, it does. But if you're on the short end of the appeal, then those individuals would say, "Well, the same people turned me down at the final appeal who rendered the decision. They're all FEMA employees."

What I'm talking is, we probably, as a committee, Mr. Chair, ought to look at -- at some independent entity to settle disputes when FEMA and local governments are at odds with each other.

The last item -- and I apologize for this -- I've heard so much from mayors and other elected officials that we rotate employees too many times during recovery efforts.

Mr. Garratt, do we require any written transfer of data to that next employee coming in, so that the continuity of information and everything flows?

MR. GARRATT: Yes, sir. That's a standard part of the transitional process, is that the incoming employee -- or the -- excuse me -- the employee who is going to be replaced is required to do a full transition briefing, transition-management overview, with the incoming employee.

And, typically, they will spend at least a week together managing that transfer of information and (corporate ?) understanding of what's transpired to that point. Standard operating procedure, sir.

REP. THOMPSON: Okay. Well, then, I wonder why Mr. Czerwinski would say just the opposite in his report -- "developing protocols to improve information and documenting -- sharing among FEMA staff, such as requiring that staff maintain a record of project decisions to share with rotating staff."

Now, Mr. Czerwinski, can you help me out on that?

MR. CZERWINSKI: Yes, Mr. Chair.

I think there's actually two things that go on here. One, in terms of rebuilding, it takes a long time. And it's not reasonable to keep the staff there that whole time. So then you have to build in a system where you have the transfer information.

And when we looked at examples in the Gulf Coast, we found that was not happening the way we wanted. And that's where our recommendation came from. And, frankly, this goes back to your other point about the appeals process. This was a -- this problem was exacerbated in the appeals process, and with FEMA decisions, where a subsequent employee would come in and give a different determination.

And the way the process is set up, all the burden is on the state and local government. So even if FEMA approved something up front and later on changed it, that's not FEMA's responsibility. That is the state's responsibility. And what the state and local officials told us is this hamstrung them from some things they wanted to do, because they weren't sure how it would play out.

REP. THOMPSON: Thank you.

REP. CUELLAR: Think -- I mean, would ask you, on that comprehensive plan, if you can add it -- the point that the chairman asked about -- what happens if there's a, you know, dispute? And, I mean, how long do we have to wait, and what is the procedure? What's the timetables involved?

If you all can add that point also, so we can follow up on that also, Mr. Czerwinski.

At this time, I'd ask for unanimous consent to permit Ms. Jackson-Lee, who is a member of the full committee of the Homeland Security, permission to sit and to question at today's hearing.

At this time, I would like to recognize the gentlemen from Texas, Mr. Olson, for five minutes of questions.

REP. PETE OLSON (R-TX): Thank you, Mr. Chairman. And I'd like to thank you and the ranking member for putting this important hearing together.

I'd like to welcome all the witnesses.

A special welcome to Mayor Thomas, coming up from Galveston, and my good friend Doug Matthews (sp), in the back, from the University of Texas Medical Branch. Thank you all so much for coming up.

My questions today are for you, Mr. Garratt and Mr. Walken (sic). However you want to handle them, that's -- I'll leave that between you. But my questions focus on Hurricane Ike recovery. And from what I've heard from local officials -- and Mayor Thomas echoed that today -- FEMA's support on the ground has been much improved.

But the problem -- one of the lingering problems we're having in Texas are some discrepancies that exist between victims of Hurricanes Katrina and victims of Hurricane Ike. As all of you know, Ike was the third most expensive storm -- hurricane -- to hit our country in U.S. history. And so I have a couple questions on that.

As I mentioned earlier, the University of Texas Medical Branch in Galveston was hit hard by the storm. It's been nationally recognized as one of the finest medical schools and medical facilities in the country. It suffered $670 million in capital damages. But unlike Hurricane Katrina victims, Ike victims can only get 75 percent from FEMA for their capital damages and mitigation. As a result, they've been forced to turn to state and local agencies for millions of dollars that those agencies simply don't have.

And my question to you is, why have -- why has Texas's victims of Hurricane Ike not been treated like the victims of Hurricane Katrina in receiving FEMA reimbursements at the 100 percent rate for capital damages and mitigation?

MR. GARRATT: Sir, the determination of the cost share that a state receives following a disaster is made by the president. The president is authorized by the Stafford Act to provide no less than 75 percent federal support.

Under the regulations that FEMA operates by when we make a recommendation for above 75 percent is a requirement that a state meet a certain per-capita threshold. When a state reaches that threshold, FEMA is required to make a recommendation to the president to increase the cost share to 90 percent.

And Texas is -- has not reached the threshold that would -- Texas has not reached that threshold yet. And, therefore, FEMA has not recommended a 90 percent cost-share bump-up as a result of that.

REP. OLSON: Okay. Thank you.

Do you know if Texas made that threshold when Hurricane Rita hit in 2005?

MR. GARRATT: I do not know if they made that threshold when Hurricane Rita hit. However, for Hurricanes Katrina and Rita, I believe that Congress, per legislation, directed that both -- that those states affected by Katrina and Rita receive 100 percent funding for those disasters.

REP. OLSON: Okay. Thank you very much. And one more question for you, if I have time, and it looks like I do.

Again -- and I'm not -- this is not to be interpreted as anything against my fellow colleagues from Louisiana and Mississippi. We're just looking for some equitable treatment here in Texas, as my colleagues from Texas know. But Louisiana and the city of New Orleans received full- imbursement deadline extensions that stretched over a (period of ?) years when it came to Category-A and Category-B expenses. However, Ike victims, the deadline for Category-B reimbursement passed last October. And the Category-A deadline is rapidly approaching.

Cities and towns are just now beginning to hit their stride on their path to recovery from Hurricane Ike, and they desperately need a deadline extension. And why is FEMA not -- hasn't authorized -- or refusing to extend the deadlines like it did for our fellow citizens in New Orleans?

MR. WALKE: The state of Texas had requested an extensive -- 100- percent funding. And a decision was made that -- the president made the decision that for Category-A, that would be extended through April. And, at the time, given the pace of -- or debris removal, there was a consensus that that would allow sufficient time for most of the communities to remove most -- all of their debris. And that's the decision that -- the reason that decision was made.

Conversely, the decision was to extend the 100 percent for Category B till whatever the date was. I think it was 44 days from the date of the declaration, at which time I think most of the Category-B cost would have been incurred by the local governments.

REP. OLSON: Okay. Well, thank you for that answer.

And I appreciate your time today.

Thank you, Mr. Chairman.

REP. CUELLAR: Thank you, Mr. Olson.

At this time, I'd like to recognize the gentleman from Missouri, Mr. Cleaver, for his five minutes of questions.

REP. EMANUEL CLEAVER (D-MO): Chairman Cuellar, Chairman Thompson and Ranking Member Rogers, thank you for this opportunity.

I want to kind of zero in on some things that have already been raised, and perhaps take them a little further.

Mr. Garratt, you or Mr. Walke, who appoints the FCO?

MR. GARRATT: FCO's appointed by the president.

REP. CLEAVER: Now, is the FCO an FCO-in-waiting? Or is he or she appointed after the event?

MR. GARRATT: FCO -- both. An FCO -- our FCOs are part of a cadre of FCOs that FEMA maintains in -- either in advance of an event or after an event. When a declaration is made -- emergency or major disaster declaration, at that time, the FCO is named and appointed by the president who will be responsible for that particular emergency or disaster.

REP. CLEAVER: Okay. I raise the question because the GAO report speaks about inexperienced staff. They talk about the inability of the staff sent into these areas to be in sufficient numbers.

So I'm wondering how much expectation there is and what preparation is made, realizing that there will be another event. I mean, is -- if the FCO is appointed after the event, then it stands to reason that the staff is then assembled after the event. Am I right about that?

MR. GARRATT: Depends on how much notice we have for that event, sir. In fact, if we see an event coming, we'll begin assembling the staff to support that event before it hits. In addition, we can send out one of our Incident Management Assistance Teams, who are also led by an experienced FCO. They typically are designed to arrive and provide that initial assistance to the state.

REP. CLEAVER: Okay. Thank you.

Now, I only have five minutes, so I have to -- then there is a trained staff available and ready to go as soon as the event occurs?

MR. GARRATT: We have teams, Incident Management Assistance Teams, who are on active alert around the clock, that Congress mandated. We stand up these teams, and we have done that. Yes, sir, we do.

REP. CLEAVER: Okay, Ms. Liu -- excuse me. Thank you.

Ms. Liu, the GAO report talked about "inexperienced" and staff shortages. Is that something that you have also concluded, that we have insufficient staff and --

MS. LIU: I apologize, but I have not reviewed FEMA staffing capacity in the work that I have done.

REP. CLEAVER: Mayor, was that something you recognized after the event?

MAYOR THOMAS: And could you clarify your question?

REP. CLEAVER: Well, when -- after the flood -- the hurricane hit, did you experience that FEMA had sufficient staff and -- in terms of numbers -- and people who were knowledgeable, who were able to come into Galveston immediately?

MAYOR THOMAS: They did have sufficient numbers. And they were very well trained, very experienced.

REP. CLEAVER: Is there a simulation that goes on with -- in terms of the training, Mr. Walke?

MR. WALKE: Sir, regarding the public assistance, we do have contractors at our disposal. We have a reserve force of folks who are experienced in managing the public assistance program.

But when one has a disaster the size of Katrina, for example, that required us to supply about 1,500 public assistance employees, that requires bringing in folks who have technical knowledge, but perhaps may not be as well versed in public assistance doctrine. And that's what we experienced in Katrina; to some lesser extent, in Texas. So there's a requirement for constant training once we deploy people to the field.

REP. CLEAVER: Okay. Let's change direction for just a minute.

I'm -- I have some concern about the lack of spending the dollars. I know you don't just spend it because you have it. But, you know, we borrowed that money. And we -- we're -- we owe China, give or take, 1.9 trillion (dollars). And Japan we owe more.

And the third leading expenditure in the U.S. budget is the interest on the debt -- the interest, not the principle -- the interest on the debt. And so when we see money laying around like this, I'm not sure the taxpayers are going to be very happy.

What -- when I -- when I go home, if somebody raises that question, what should I tell them that makes sense and won't get -- and won't get -- and won't force them to curse me out?

MR. WALKE: I'm not a --

REP. CLEAVER: That won't make -- that won't curse me out, now.

MR. WALKE: No, no, no. I'm not a budgeteer, but I sort of -- don't think the money's just lying there. I mean we actually obligate monies to the state, which really is just a bill -- (inaudible). The money is there, and it's not really put on the books until they draw it down. So I don't -- (inaudible) --

REP. CLEAVER: So it's just laying there?

MR. WALKE: No, no. The promise to pay is there. The money is not in the bank. When the states submit a request for --

REP. CLEAVER: Well, that makes it even worse.

MR. WALKE: Well, let me --

REP. CLEAVER: That makes it even worse.

MR. WALKE: How so?

REP. CLEAVER: You wouldn't have money under your mattress. I mean, you'd want to put it some place. Right now, probably only thing is Treasury notes. But, I mean, I want it to trouble you that we're in a financial crisis, and we are -- we have money that was appropriated for a crisis, and that it's not doing anything. And we -- and it's -- the third-leading expenditure in the U.S. budget is interest. Your answer would have got me cursed out.

Mr. Garratt?

MR. GARRATT: I think the point Mr. Walke was trying to make is that this funding comes from the disaster relief fund. And we don't, once we obligate funding, take a chunk of that money and provide it to the state. What we do is notify the state now that you are eligible to begin pulling this money.

So that money is not sitting in a bank at the state. What the state knows is that we can now draw that money down to support this approved project.

REP. CLEAVER: Okay. Thank you.

Thank you, Mr. Chairman.

REP. CUELLAR: Thank you.

At this time, I would like to recognize, for five minutes, the gentleman from Louisiana, Mr. Cao.

REPRESENTATIVE JOSEPH CAO (R-LA): Thank you, Mr. Chairman, and the ranking member, for holding this meeting.

And, first of all, I'd just like to express my appreciation and gratitude to the FEMA personnel who are working in New Orleans, because we all owe a great debt of gratitude to them.

With respect to Mr. Garratt or Mr. Walke, I have two questions, possibly three. First and foremost, the criteria for the loan -- community loan forgiveness program -- is already late. When do you expect those criteria to come out?

MR. WALKE: We have prepared regulations to implement that provision of the law that contains the forgiveness provision. And that's working its way through the process. I can't -- I don't have a date definitive that I can share with you as to when it's coming out, other than the fact that it is in process. I would add, though, that the loans for those communities don't come due until 2010, and we should have these regulations in place well before then.

REP. CAO: And then, with respect to the arbitration language in the stimulus bill, and based on the report of Mr. Garratt that you are developing procedures to implement this new requirement, when do you expect these procedures to be finished? And whether or not we could work into -- I believe that we spoke several times before about a possible lump-sum settlement, whether or not we could work on a lump- sum settlement through this arbitration process.

MR. GARRATT: Sir, I don't recall a discussion on the lump-sum settlement. However, I can assure you that the work to develop that arbitration protocol -- excuse me -- is under way. In fact, we worked over that, back and forth, over the weekend.

I don't know when we're going to have a final version of that. I do know that our secretary is very committed and very interested in fielding that protocol as soon as possible. And I can, again, assure you that it will be fielded very soon.

REP. CAO: And with respect to money that had been obligated versus money that has been drawn down, is it the reason why money -- the money has not been drawn out is because of disputes between FEMA versus state and local government with respect to damage evaluations? Is that one of the problems why the money has not been drawn down?

MR. WALKE: That could very well be, sir. But I don't have any stats on that.

The project worksheets that you -- that the state has said that the communities are not happy with the scope of work and estimates on those, perhaps that is a subset of the money that has already been obligated.

REP. CAO: So even though -- the money already obligated cannot be drawn down unless FEMA approves of the amount that's being drawn.

Is that correct?

MR. WALKE: The mere fact that FEMA has obligated the project worksheet is in fact an approval for that scope of work. So if the applicant plans to accomplish the scope of work that we approve, they can draw the money down.

REP. CAO: So basically, based on the amount you've given, these $7.5 billion that have already been obligated in -- corresponds to all the projects that FEMA has already approved?

MR. WALKE: That is correct.

REP. CAO: Okay.

And I have one last question to Ms. Liu. You said that the goals are not -- I'm sorry. I guess the -- this whole federal, state and local process is not organized around goals and objectives. What do you see presently as the organization? Is there any organization around FEMA, state and the local governments?

MS. LIU: Well, I think what's -- I tend to look at long-term recovery efforts from the ground up. And I know that, as a local leader -- and the folks who have been working very hard in New Orleans to recover and for many of the communities in the Gulf Coast -- it isn't just FEMA.

What they need is the levees to be repaired, the housing recovery to happen. All kinds of aid is important. And so it's -- it cuts across multiple federal agencies. And at this point, when you wake up every day, there is not one single person in the federal apparatus who has made recovery a priority in terms of unifying and accelerating the efforts of the independent agencies.

And at the same time, I -- this is not just a federal issue. The fact that it's taken -- I still ask folks locally if there is a plan in New Orleans that governs federal and state spending -- how are you prioritizing, what are your goals.

It -- you know, the federal government should respond in service of local and state priorities and goals. And there's obviously been three different planning efforts in -- at least in the New Orleans area.

But I still -- when you talk to folks who implement recovery, they don't really -- there isn't a path forward, except for at the project -- individual project level -- making sure that individual piece or project gets funded.

So I think it's not -- it's -- I think the hard part is -- it's that these are not efforts that are unified towards a direction. They are being leveraged with private-sector funding. We're not scaling up the federal investment in a way that could be optimized. It's a lot of very small, independent efforts that I think represent a lot of missed opportunities.

REP. CAO: Thank you very much.

REP. CUELLAR: But Ms. Liu, you are going to get an opportunity to put that path forward.

MS. LIU: (Chuckles.)

REP. CUELLAR: Thank you, Mr. Cao.

At this time I'd like to recognize the gentlewoman from California, Ms. Richardson, for five minutes.

REP. LAURA RICHARDSON (D-CA): Thank you, Mr. Chairman.

I'm going to be as brief as I can in asking the questions, and I'm going to ask that you do the same in answering, because we've got less than five minutes to get them through.

I'm going to focus my questions on Hurricane Katrina and the impacts in New Orleans, in Louisiana, because we've heard much discussion so far about Texas.

How many current staff members are located in New Orleans with FEMA? (Pause.)

MR. GARRATT: Approximately 800 total in Louisiana.

REP. RICHARDSON: Okay. And do these folks actually go out into the lower Ninth Ward, St. Bernard Parish, et cetera? Are they walking around, or are they just in an office, doing paperwork?

MR. GARRATT: Both, Congresswoman. In fact, we have teams that do nothing except specialize in interacting with their counterparts at the jurisdictional and local level.

REP. RICHARDSON: Okay. I participated in a congressional trip with Majority Whip Mr. Clyburn and Speaker Pelosi back -- July 19th through the 22nd. So I personally went there and observed some of the progress and some of the lack of progress.

So therefore, my questions are -- I had an opportunity -- I went into -- one person -- they were currently renovating their home. They were living in a trailer -- about eight people in one trailer. They were clearly, I would say, 75 (percent), 80 percent done. And yet even though they were almost done, FEMA was saying, "Hey, you got to get out of this trailer, you know, Sunday."

And there was a clear -- had someone just walked out there and seen the situation, as opposed to pushing paper and accepting and denying, they would have clearly seen that by giving them another, you know, two weeks, 30 days, whatever, it could have resolved the issue.

Is -- do you have a process in place to actually talk to people, where people can come in and talk to someone once their request has been denied?

MR. GARRATT: Yes, ma'am, we certainly do. And I'd like to just explore this issue. Was this a trailer? Was this on somebody's private property --

REP. RICHARDSON: Yes.

MR. GARRATT: -- of a home that they were repairing?

REP. RICHARDSON: Yes.

MR. GARRATT: FEMA has not required that anyone turn in their trailers. What may have happened is that a local jurisdiction has an ordinance in place that they're enforcing which requires those trailers to be removed. But FEMA has not required, to this point, that anybody -- anybody's trailer on private property be removed.

REP. RICHARDSON: Okay. I'll get you the contact of the individual, because it's my understanding it's FEMA.

My next question is, it seems quite clear that people say time and time again that FEMA is underestimating and undervaluing the damages of what has occurred to people's homes. Is there any process in place to have someone look at that process and the inspectors who are doing that job?

MR. GARRATT: Any applicant who believes that their home was not accurately valued or it was undervalued can appeal that decision, and can get another inspector to come out and reevaluate their home.

REP. RICHARDSON: But again, as our chairman said, if you have the same group of people who are all working together, and Susie said, "Oh, you know, the value was only 50,000 (dollars)," and then Johnny goes out -- Johnny doesn't want to make Susie angry by going in and saying, "You know what? Susie was wrong. It's actually $200,000." So you've got the fox watching the hen, and it's not working.

So have you thought of a process, or are you doing something in place, based upon what the chairman said, to possibly reconsider that maybe that system is not working?

MR. GARRATT: I would challenge that that system in fact is not working. And what I have in fact seen is that on a routine basis, when a housing evaluation is challenged, and we send in another inspector who doesn't know the other inspector to go in and revisit that, they will very often find that there are additional damages, and that they will write that up. So we have not seen, at least from my perspective --

REP. RICHARDSON: Excuse me one --

MR. GARRATT: -- any systemic problem is this regard.

REP. RICHARDSON: Excuse me. Excuse me. I've only got 50 seconds.

We have a mayor here who is chomping at the bit, I think. Would you like to join in and assist me in this?

MAYOR THOMAS: The issue is the change in personnel. One inspector puts the house at a certain value. Another one comes and changes it by appeal. And another appeal can take place. And what we're talking about is time. People are out of their houses. They're renting off the island or out of their cities. They're paying mortgages and rent. And FEMA takes too much time to make the assessments. They should be done immediately. We're still in the assessment stage six months after the hurricane in Galveston.

REP. RICHARDSON: Okay.

So, Mr. Garratt, I'm going to -- I'm new on the committee, so I'm looking forward to working with all of you. And I'm going to supply you with some information that I think might hopefully cause you, as well as what the chairman has said, to maybe reevaluate and reconsider.

My last question -- housing supplement in New Orleans -- what's the status? I know of folks who have been paying $1,300 a month on their own, with no assistance from FEMA. And you know, although we had tremendous goals of how quickly we wanted to resolve things, it wasn't quite as easy as maybe we had hoped it would be. So what's the status?

MR. GARRATT: I'm sorry, ma'am. You meant --

REP. RICHARDSON: Is there no longer any housing supplement for folks who were impacted by Hurricane Katrina?

MR. GARRATT: No. In fact, HUD is extending or -- excuse me -- what they are doing is transitioning from DHAP, which ended at the beginning of March, to a(n) additional assistance period. And they are providing continued assistance until June 1st to DHAP participants.

And those individuals who were in the Disaster Housing Assistance Program that HUD is managing are either being transitioned into the Housing Choice Voucher program; or they are being transitioned into Section 8 programs; or they, if they are eligible or able to take care of themselves, are being transitioned out of the program.

REP. RICHARDSON: Okay. If you could supply my office and the committee some of that information, it would be helpful.

And as I close, Ms. Liu, I would just like to say, in your statements, you said, "We need not to focus so much on how much has been expended but in fact what are the goals."

With all due respect, ma'am, what I would say to you is, we just passed a recovery act of over $700 billion. And you know why some of these areas didn't get more money?

It's because some of what they already have has not been spent.

So when you make those comments, you may want to keep that in mind, because others would argue that we could use not only the money that we have, but more. Thank you.

REP. CLEAVER: The chair recognizes the gentlelady from Nevada, Ms. Titus.

REP. DINA TITUS (D-NV): Thank you, Mr. Chairman.

I just want to change direction a little bit. I would address this question to Mr. Czerwinski and ask the two representatives from FEMA to also comment.

My district includes parts of Las Vegas. So you can imagine that it's very important to us, for business, to be able to recover after a disaster, which is not likely to be a hurricane but could be equally catastrophic.

But as I look at the suggestions that you offer -- and they would be good to help our small businesses -- you talk about technical assistance and relocation and a tent where businesses can operate. That's really not going to apply to us very much, because we have several things in place that are very different.

I mean, if you look at it, our major business is tied to tourists, not to local patrons. And so being able to get in and out of the city, those transportation routes are going to be what's very, very important.

You talk about coordination among the different levels of government. We also have an incredible private security system in place, with all the major hotels, with manpower and technology, that probably should be part of this coordination, because I think they can offer some value services -- valuable services.

We can't relocate the MGM Grand into a tent somewhere and let it keep operating.

And finally, there's a certain bias against gaming when it comes to the use of public dollars to help it, even though that is a source of many jobs and the kind of golden goose of the state's economy.

So I worry about this -- what I'm hearing. It kind of -- seems to be kind of a one-size-fits-all when it comes to setting priorities, drawing up plans, determining who's eligible for grants and loans. So I would ask you, is there any room for flexibility here? And how can we design some things that would accommodate more tourist industry or some things like Las Vegas might have?

MR. CZERWINSKI: Sure. You make very good points. And the key that we want to talk about is the importance of considering the business sector in whatever rebuilding plans you develop --

REP. TITUS: And I agree with that.

MR. CZERWINSKI: -- particularly small business, because they are the most vulnerable, and they can also provide a good start-up.

So what we would suggest is exactly what you're saying. It's not a one-size-fits-all. It's actually tailoring the business recovery plan to the specifics of that disaster and of that area. And the two areas that we think that do cover anything, regardless of what the specifics are, are the idea of financial and technical assistance.

But they would play out very differently in very different circumstances. You'd want your businesses to be given the assistance they need in terms of the money they need to keep operating, but also it's a changing environment.

There's an example that we had from Los Angeles, where there was a fish market that was in business. And the whole landscape of their neighborhood changed. And -- but -- and the business got money. They came back. But they were selling the exact same kind of product, but their whole clientele had changed.

And that -- so that points at your idea about being flexible. By putting a one size, one idea out there, it no longer worked in the new environment. So we would agree a hundred percent what you're saying.

REP. TITUS: Gentlemen?

MR. GARRATT: We would also agree.

One of the things I'd like to do is follow on, on the remarks of Ms. Liu and the gentleman at my left, and that is to talk a little bit about the Emergency Support Function 14.

Emergency Support Function 14 is long-term community recovery. It's a relatively young emergency support function. It first appeared with the National Response Plan. It was developed a couple of years ago. The purpose of that function is to facilitate a comprehensive recovery strategy at the community level.

They're designed to bring in federal, state, local, private sector, voluntary agencies into the discussion and into helping develop what is a comprehensive approach to -- for that community's recovery.

In many respects, that function is designed to help facilitate the sorts of things that we're talking about here. Can they do that better? Yes, they can. It requires everyone to come aboard, everyone to be willing to play. But that function is designed to help kick- start that process and help move that process forward.

REP. TITUS: I yield back my time. Thank you, Mr. Chairman.

REP. CUELLAR: Thank you, Ms. Titus.

At this time I'd like to recognize Ms. Jackson Lee, the gentlewoman from Texas, for five -- I mean, for five minutes of questions.

REP. SHEILA JACKSON LEE (D-TX): (Chuckles.) Thank you very much, Mr. Chairman. Might I thank you and the ranking member for your indulgence and your kindness, which speaks to the collaboration of this committee, the Homeland Security Committee, and the committee chairs. I look forward to joining with Chairman Cuellar for a hearing in the region. And I'm very grateful for his acquition (sic) or the -- acquiescence, rather -- excuse me -- for this idea. And we look forward to doing so where we can reflect on what happened, but then also look forward to the hurricane season.

We are about three months away from the hurricane season. And I want to thank the chairman and the ranking member for a very vital hearing, and their indulgence, again.

Let me also add my appreciation overall to the hardworking FEMA employees who leave their families in the cold of winter or the heat of summer to come to give aid to those who are suffering. I've experienced their great and diligent work. Those are the ones that are on the ground, that are sleeping on the ground, that are sleeping in tents through Hurricane Katrina and Rita.

As a member of this committee, I have been in places as the winds have lifted. I was in east Texas as we were trying to get water trucks and ice trucks in to the region, as we were speaking to county commissioners who were living in conditions much less desirable than they would want to have.

I visited Mayor Thomas, who has a long legacy of philanthropic work, in a building that was -- days of sewage. I'm aware of her work, that she did not cease throughout the storm. As we met with the president of the United States, the sewage seeped into our meeting. Mayor Thomas continued her work. And I think we owe a great deal of debt -- debt of gratitude to local leaders such as herself.

Mr. Garratt, let me try to be quick, and I need to have you be quick as well. Are you familiar with UTMB? Have you heard of that?

MR. GARRATT: Yes, ma'am.

REP. JACKSON LEE: All right.

I would like a full report as the amount of money that is either in the hands of FEMA or in the state, and the status and position of FEMA with respect to UTMB. I want an urgency put on that. I'd prefer it at the end of the day, but if tomorrow morning is necessary -- I want you to tell me: What are the obstacles for the full, complete operation of UTMB? I know the mayor may have some answers, but I'm really going to direct this to FEMA.

I've spoken to the state legislature in Texas. I'm aware of their attempt and efforts to turn around what had been a dastardly decision to close it. This reminds me of the charity hospital in Galveston that has not closed -- so a full report on UTMB.

The second is that there is a contract -- there is a funding for disaster housing that I helped secure in Texas three years ago. The contractor is Heston House. Could you give me a full report as to why houses are not on the ground with respect to that contract?

I visited, over the weekend, a warehouse full of modular homes, ready to go -- 60, in fact. And they're being stalled by FEMA dilatory tactics, and I'd like to know when we will get that housing on the ground, including the housing in Houston, Texas.

I also need to ask you -- and I'd like an answer on this -- there are 30,000 cases that social workers are dealing with, between a contract -- because of Hurricane Ike -- and a contract between Texas and HHS. There are nonprofits who are ready with their caseworkers to work on these cases -- 16,000 of them in Harris County.

FEMA will not engage in a contract until April. These agencies are now laying off workers, quite contrary to the president's intent. And by the way, I want to thank the president for his commitment to Homeland Security. And they are not able to do their work because FEMA will not even indicate to them we'll reimburse you for those cases that are tied to Hurricane Ike.

Can you tell me why FEMA is still standing in the way of Hurricane Ike victims getting relief?

MR. GARRATT: Ma'am, first thing -- I need a clarification. And that is the second issue that you mentioned; that is, regarding the Heston Homes.

Are you referring to the contract that was -- or the competitive grant that was awarded, to Texas, as part of the alternative housing pilot project?

REP. JACKSON-LEE: Yes, because those are the houses that they are now using, to help East Texas and also Harris County. Yes, sir.

MR. GARRATT: In terms of our commitment to the citizens and residents of Texas, I think, we're very committed to that. And I think we've demonstrated that. Regarding the issue specifically of case management, we have a couple of case management efforts under way in Texas.

One of them is being managed by HUD, under the DHAP-Ike program that they manage in their case, managing the individuals and households that are part of that. We have another case management programs that, as you indicated, is part of a pilot effort that we're working, with the Department of Health and Human Services.

REP. JACKSON-LEE: And can I stop you a moment, sir? I do appreciate you. The time runs on members. And I'm asking for -- if the chairman could yield me an additional three minutes. I ask unanimous consent I be yielded an additional three minutes, to pursue the questioning.

I think what would be helpful is, and I understand the DHAP program. This is specifically the HHS and it is a specific question. And what I'm asking you to do is to pull it out of the ashes.

The question is, FEMA indicated that they will not engage in a contract until April. The question is, you have social workers that are being laid off. You have cases that are not being handled.

And the answer that I would hope, as you review it, that you would expedite either the contract or that you would engage with the social work agencies that you've already confirmed, that they could continue their work and be reimbursed.

What I'm saying is, you have people who are not being helped, waiting and languishing, because FEMA is not engaging in a contract. That money is already in place.

So I think that requires you to go and investigate and to give me an answer, as to how we can work together to jumpstart that contract. That's the HHS one.

MR. GARRATT: I would agree with that.

REP. JACKSON-LEE: All right, sir. And I thank you very much. I'm sorry, did you want to finish? No.

All right. So I will be back in touch with you.

Ms. Liu, let me thank you for your recommendations. But what I'd like to get on the record is the difficulty of doing anything, with FEMA, with an antiquated Stafford Act.

Would you agree that we need to either overhaul or have an extensive review, of the Stafford Act, that provides the match, that does not take into consideration Mayor Thomas's predicament of having literally no income. She's celebrating the fact that 65 percent of the businesses are in. But I know her economy. Thirty five percent of businesses out hurts Galveston.

Can we -- can you assess that, through your further studies, the review of the Stafford Act as antiquated and needing some revisions and/or total reconstruction?

MS. LIU: I agree with that. And I believe there have been a lot of really good studies and reports done, including those by GAO, that reviews and makes recommendations to the Stafford Act.

I think that the most important thing at this point, because we know that disasters are going to continue to happen and happen at a more frequent rate, is that we need to all -- not only do we need to streamline the emergency response and find a much more human way, of dealing with the emergency response, but we don't really have a policy on longer-term recovery.

And I know that there are concerns and recommendations about whether or not longer-term recovery is really the province of FEMA. And in the past, historically FEMA does short-term emergency response. The longer-term recovery is done by others.

And when I think about again from the ground up, what is needed for longer-term recovery, FEMA has really good systems in place for emergency response. But they are not waking up every day thinking about community development, economic development, the mental health of the people who are there.

That is a different set of responsibilities, part of a different kind of interagency response. And in fact, it is a different kind of set of outcomes. So I do think that those are things that need to be visited certainly by this committee.

I do want to even respond a little bit to some of Congressman Richardson's comment about case management and --

REP. JACKSON-LEE: I'll yield to you. So that means I'll have just a little bit more time. I'll let you answer that question.

Mr. Chairman.

MS. LIU: Oh, I'm sorry. I was going to say, it responds a little bit to your question about FEMA as well.

REP. JACKSON-LEE: That's all right. I'll yield to you to respond to that question.

MS. LIU: Thank you very much.

I do think there are -- there's certainly case management on all kinds of temporary housing, whether it's DHAP vouchers or the trailers, families in trailers.

I think that if we went back and talked about outcomes, there are certainly concerns raised, by me, that the case management that's being done right now certainly is mostly about collecting people's income data, demographics, characteristics.

But the goal of case management isn't to make sure that they have a place to live, at the end of the term of expired assistance, not like the way we do case management for welfare reform or TANF, where we actually actively work to find placement of jobs, even if temporary jobs.

That is a federal mandate on TANF recipients. So I think that again when we think about temporary housing and people who get temporary housing, we should not treat them as paperwork but as humans.

And there should be a case management process that really thinks about, what are the different kinds of services, whether it's mental health or housing assistance or employment assistance, and get them into a stable situation.

REP. JACKSON-LEE: Let me thank you for that answer.

Mr. Chairman, if I could have the last question to Mayor Thomas. I think you've made a very valid point.

Mayor Thomas, I have studied your statement. And I want to thank your city manager and others who are here.

And I'd like to ask on the record, Mr. Garratt, if you would, I realize the work. And your deputy who's here, Mr. Walke, would you take the memorandum or the statement of Mayor Thomas? She has 14 recommendations. I know those answers cannot come to me tomorrow. But I want to engage you. I'm going to use that document.

I want to engage you. I'd like to have you in my office. But I'd like a response to those 14 recommendations that she has given. I frankly believe that they are a peephole into hurricanes to come.

Let me ask Mayor Thomas, what was the most difficult aspect of dealing with FEMA? I would argue that the Stafford Act needs to be completely overhauled. I think there are instances where money should come directly to the jurisdiction where there is a crisis, where the -- as long as capacity is there.

If the city fathers and mothers are no longer there, if the devastation is so bad that everybody has completely, literally left the area, then that's a different story. But if there are local governments trying to function, all right, they're trying to deal with renters, which you've indicated is a big issue, they're trying to deal with public housing, then I frankly believe those dollars should come directly to the local jurisdiction.

Would you comment? And you might also comment on how North Galveston is doing. I've also mentioned Harris County. I think all these things impact the Hurricane Ike victims all over. And they also speak to Hurricane Rita and Katrina victims. We're not leaving them out. It is a complete continuity, because these people are still suffering as well.

Mayor Thomas.

MAYOR THOMAS: Yes, ma'am. I'd be happy to answer.

Number one, our most difficult issue was and is housing. As far as FEMA is concerned, regarding housing, Galveston is an island. FEMA has a rule that no FEMA trailer or modular house will be built on land that is not -- I think it's six feet above sea level. So we have been again six months out and finally getting some housing, temporary housing.

I also feel that Galveston has a very clean record of dealing with federal money, because of the millions of CDBG money that we've had since 1974. And I would ask that FEMA pay in advance certain millions of dollars to the local communities, on the ground, who can get our people into temporary housing. And they don't have to wait six and seven months, as we are now doing that.

So housing is a huge problem. And it is further complicated by the delays, by the requests for leases, for insurance, for school records, for medical records that have been drowned in a flood. And our residents nor could they in New Orleans come up with these unending requests for paperwork.

The people who live in Galveston know who their people are. And we know whether they have been a resident in federal housing or whether they're renters. And we can get them under cover if we have the funds in advance to do it.

The other issue, Mr. Chairman, that I would like to just remind is this group, and it has to do with shoreline protection. It has to do with the fact that Galveston Bay rose. So when we talk about funding for shoreline protection, we want our fair share, as it has been given to New Orleans.

New Orleans had to rebuild its levees. We need to build levees on the north side of town, which is the side of town that we're talking about here that went underwater first. And that's where our low-to-moderate-income population is.

So we need protection, levee protection, the same kind of reimbursement, the same kind of 100-percent funding that's been given to New Orleans, Louisiana and Mississippi.

And we need to cut out the unending paperwork that FEMA requires for our folks, our people to get shelter.

Those are our main concerns -- housing, too much paperwork, shoreline protection for an entire region.

REP. JACKSON-LEE: Thank you, Mr. Chairman.

I would just -- if I may speak to the chairman -- I would hope that the FEMA witness could give a response to those questions that the mayor has asked, because they are now still in the midst of fighting the battle of recovery.

And I would hope that it would not be perceived as a Hurricane Ike gift; that we could begin to look at how we relate, overall, to hurricanes, because I do believe the money trail is stalled when it goes to the state. And I do believe the Stafford Act is an obstruction to long-term recovery. And I believe this committee, with your leadership, and this full committee can, during this term, really look at how we help those who are suffering and experiencing disasters.

I thank you, Mr. Chairman, for your indulgence.

REP. CUELLAR: Thank you again.

And I just want to just clarify the materials and the questions or the responses that have been requested by Congresswoman Jackson-Lee and, of course, going also to the mayors, I would ask that you send the originals to us, to the committee, so they can become part of the record and copies -- copied to Ms. Jackson-Lee. But just make sure they come to our committee.

Also, I would like to ask unanimous consent to insert the following document from Mayor Thomas that includes a pictorial description of the city damages, an index of Hurricane Ike orders from the city of Galveston, Hurricane Ike response and recovery statewide activity report, and, of course, a rental -- FEMA's rental repair pilot program -- ask that to be part of the record also.

I -- before we close, I would ask also the witnesses, before you take off -- ask you to meet with Denton Herring -- gentleman right here -- before you leave, so you can organize the report on the recovery recommendations that I asked for.

The only thing is -- I was telling Denton one of the things that I want is -- I don't want to have five different -- or five reports -- should I say four different reports. I just want to have one, which means that you all have to sit down and talk about it on that. And if there's a difference on one recommendation, just say -- just add in, "This recommendation was not agreed upon." But I really would like to have consensus as much as possible on the report: one report, not four different reports.

So before you leave, I would ask you to sit down and take note. I know I've had a couple members who have asked me that they want their committee staff to be involved. So any committee member that wants to get involved with their staff on the reports -- and the first report will be this Friday at 12:00 noon.

I've asked for every -- at least a status report, not the full report -- a status report every Friday, 12:00 noon. You'll all be talking to Mr. Herring here to give us a report on this, because I don't want to be surprised at the end of 30 days -- "And guess what? We haven't even got started on it."

So I would ask you to go ahead and do that. Make sure you all share phone numbers, get to know who's who here, because you're going to be spending a little bit of time together for the next 30 days.

Any questions from anybody?

MAYOR THOMAS: Mr. Chairman, I want to be sure that when you say that we're going to work together every Friday, you're talking about by conference.

REP. CUELLAR: It's up to you.

MAYOR THOMAS: I mean, I don't -- we're not -- I don't think I can come to Washington --

REP. CUELLAR: No, no, I'm not -- I know. I'm not asking that.

MAYOR THOMAS: -- especially when it's this cold.

REP. CUELLAR: Yeah. No, I -- if I had my way, we'd be going down to Galveston. I was asking the chairwoman -- we'll go down to Galveston, but make sure it's warm when we go down there.

MAYOR THOMAS: And so the meeting today, after this, because we all have other places to go, is simply to exchange information.

REP. CUELLAR: Yeah.

MAYOR THOMAS: And then Mr. Czerwinski will set up conference calls in order to pursue your request? Is that --

REP. CUELLAR: Right, under the direction of the committee. And I think you all met the committee staff person who will be in charge -- if you want to wave and make sure everybody sees you.

Just make sure that it'll be under the committee staff. The lead person will be Mr. Czerwinski, but they will be under the committee supervision.

MAYOR THOMAS: Thank you.

REP. CUELLAR: Okay.

All right, I thank all the witnesses for their valuable testimony and the members for their questions. The members of the subcommittee may have additional questions for the witnesses, and we ask you to respond to those as soon as possible in writing to those questions.

Hearing no further business, the hearing is adjourned. Thank you. (Strikes gavel.)

END.

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