Saturday, June 16, 2007

Behind the Headlines

The headline on nola.com:

Help with Road Home applications available at churches
Translation: If you haven't applied yet, start praying.

Okay, that's not really what the church article is about. It's about churches helping residents get through the paperwork to apply for the Road Home Program. But, if you are of the religious lot and have not applied yet, a novena might be in order:
Based on most conservative estimates of the shortfall, the aid program is on schedule to run out of money with 41,000 eligible applicants left out in the cold.

***

There are now more than 145,000 Road Home applicants of which the state expects at least 132,000 to be found eligible for aid from the program. That compares to the original FEMA estimate of 123,000 total properties with major or severe damage. The state also budgeted for an average Road Home grant of $60,000, while the current auditor's estimate is that the average will end up being close to $79,000.
If you read this blog, you know I like numbers. They tell all kinds of stories. Let’s see what stories these numbers tell.

The state has $6.2 billion in community development block grants to use for homeowners in the Road Home Program plus $1.14 billion in hazard mitigation grants from FEMA – $7.34 billion in all. The $1.14 billion from FEMA is being withheld right now, but it must have been included at the beginning to calculate how much money the Road Home Program would have to give to homeowners:
$7.34 billion (estimated money available) divided by 123,000 (estimated households eligible) = $59,674 (average grant per household – rounded up to $60,000)
That equation corresponds to the Times-Picayune’s numbers.

The actual numbers as of June 11, 2007:


Important numbers:
* 145,252 homeowners have applied
* 87,100 benefits have been calculated at an average of $74,214 each, which promises $6.46 billion to homeowners

$6.46 billion is less than the $7.34 billion, which includes the $1.14 billion in hazard mitigation grants, but more than the $6.2 billion in CDBGs. If the state really has $7.34 billion to work with, then there is $940,000,000 left to give out. With the average of $74,214 per household, that means 12,666 more homeowners can have their grants calculated from the original $7.34 billion which the state thought it had at the beginning of the program.

87,100 + 12,666 = 99,766. At this rate, if the state and/or federal governments do not put more money into the Road Home Program, only 99,766 households will receive Road Home grants. That’s 23,234 less than 123,000 households, which was the number used at the beginning of the program to estimate how many homeowners would be eligible. It’s 45,486 less than the 145,252 homeowners who had applied as of last Monday. And the deadline to apply isn’t until July 31, so more are coming.

This isn’t news, but the current allocation of federal money is no where near enough to fully fund the Road Home Program.

Whose fault is this?
The state says the program was underfunded because of inadequate storm damage estimates by the Federal Emergency Management Agency. The funding pool was based on those estimates.

But Don Powell, President Bush's Gulf Coast recovery chief, told a congressional committee the state is handing out payments for damage that is excluded under federal guidelines.
Hmmm... You know what? Both the state and Don Powell are right.

The state’s position is that Louisiana got far less money for its program than it needed and far less in comparison to other states, particularly Mississippi. I have commented on this before:
For perspective, consider that in January 2006, one year ago, the first round of Community Development Block Grants was given out.

Mississippi received $5,058,185,000.

Louisiana received $6,210,000,000.

Mississippi got 86.8% more in that first round of CDBGs than it has paid out more than halfway through their housing plan. If we had paid out at the same rate at Mississippi’s lower average payment, we would have used up over half (61%) of our first allocation. In fact, assuming our average calculated payment remains consistent at $82,581, we will completely use up that first allocation about three quarters of the way through our total applications.
In fact, our average payment went down. But, because there are more households eligible than first thought, we have actually used up that first allocation less than 2/3 the way through.

The point remains the same: Mississippi had way more than it needed at the offset, and Louisiana had way less.

Don Powell’s position is that the state gave money to households that weren’t eligible under the federal government’s conception of the plan.

He has made statements in the past that back up this assertion. While announcing hurricane aid in the the 2006 budget, Chairman Powell defined where he thought the CDBGs were going (my emphasis):
Housing. As you know, part of the announcement that was made about 10 days ago, $11.5 billion for CDBG monies. Those grant monies was allocated, $6.2 billion, to Louisiana and $5 billion, a little bit more than $5 billion to Mississippi, and other monies went to the state of Alabama, Florida and Texas.

It's a common objective and a common goal that somehow, we meet the needs of those people, those homeowners that were outside the flood plain whose homes were destroyed. Homeowners outside the flood plain whose homeowners--whose homes were destroyed.

***

We believe that the CDBG grant money in Louisiana is more than enough money to meet the needs of the homeowners outside the flood plain. we believe that number is somewhere in the neighborhood of a billion dollars, so there would be excess of $5 billion to meet other states within the state. Again, that's meeting the needs of homeowners outside the flood plain whose homes were destroyed.

***

Chairman Powell: We believe that the CDBG money meets the needs of the uninsured homeowner outside the flood plain.

***

Question: What about non-homeowners who are inside the flood plain? Are you suggesting that the Federal Government doesn't have a role in assisting them, which is, I think, the goal of the Baker plan?

Chairman Powell: Yeah. People inside the flood plain, obviously insurance was available to those folks, and most of those people either had--a lot of those people had hazard insurance or in fact did have flood insurance; a lot of them did.

***

Question: How come we have more people being helped in Mississippi, where there were a lot fewer left homeless, than in Louisiana?
And how can you say that that's enough?

Chairman Powell: Well, our focus is on housing, as I mentioned to you. I'm talking about homeowners outside the flood plain.

***

Chairman Powell: I think it's enough, it's more than enough money to take care of the uninsured homeowners outside the flood plain. And again, Louisiana can direct that money however they deem necessary, so they may want to--whatever plans they come up with, they may want to expand just what I said. That's their option. That's their option to do.

***

Question: But is it your sense that the private insurance will be adequate to take care of the people of New Orleans, in particular?

Chairman Powell: It's my sense that there's enough CDBG money that will meet the needs of the uninsured outside the flood plain and, again, that's something around [inaudible] billion, and that the state of Louisiana can direct the balance of that money as they see fit, including administering and meeting some of the needs of other homeowners.

Question: So in other words, you expect the one billion to go to the people outside the flood plain who are uninsured, and then Louisiana can take the 5 billion and apply it to people who are living within the flood plain, like in the Lower Ninth or in other--

Chairman Powell: That's true.

Question: Okay.

Chairman Powell: They can do, they can develop whatever plan they want.

***

Question: Do you think 5 billion will cover people who were within the flood plain?

Chairman Powell: Depends upon the percentage of damage and who had hazard insurance, who had flood insurance. But again, we believe that there's enough CDBG money to meet the needs of the uninsured outside the flood plain [inaudible].

Question: How much was that CDBG money again?

Chairman Powell: $6.2 billion.
I am not sure who “the uninsured homeowners outside the flood plain” are and why he only wanted to help them, but I think it is obvious that Powell felt the federal government’s responsibility was to those homeowners. Powell made it clear that they could be taken care of with the $6.2 billion in CDBGs and that Louisiana could use the rest how it saw fit.

I’m not saying he was right. I am just saying on February 2, 2006, Powell was clear in where he thought the CDBGs were going.

Whose fault is it? I don’t know. But I do know there is a chasm between what the state says it needs from the federal government and what the federal government says the state is going to get.

Just to show you how far apart the state and federal government have gotten over the past year and a half, take these two statements.

The state this week:
Gov. Kathleen Blanco on Friday said she'll meet with key members of Congress next week to ask for $3 billion to $4 billion to help cover the shortfall in the Road Home program, which may only have enough money to pay two thirds of its eligible applicants.

Blanco said nobody can be sure what the exact shortfall is until the last application is received July 31, but she said it will probably be close to the $5 billion estimate offered by Legislative Auditor Steve Theriot.
The federal government in February 2006:
We believe that the CDBG grant money in Louisiana is more than enough money to meet the needs of the homeowners outside the flood plain. we believe that number is somewhere in the neighborhood of a billion dollars, so there would be excess of $5 billion to meet other states within the state.
Blanco says today that we are $5 billion short. Powell said at the beginning that we would have $5 billion extra.

That’s far apart. It seems as if no one has been communicating to anybody this whole time.

That’s everyone’s fault.

And the consequence:
Road Home has already committed more than the $6.2 billion on hand. [Road Home spokeswoman Gentry] Brann said the state had "always implied" that grants would be based on available money and that letters to applicants make that point clear.
St. Jude, pray for us and for all who honor and invoke thy aid...

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