A Look into Puerto Rico’s Disaster Numbers

A Look into Puerto Rico’s Disaster Numbers

Published on May 13, 2019

Rosanna close-up
Director, Washington D.C. Office

In the aftermath of disasters, man–made or natural, the government plays a crucial role. It provides the necessary support, monetarily and otherwise, to help communities recover and get back on their feet. As these processes unfold, there is a tendency to highlight large dollar figures and give credit only to those who negotiated them. Yet that is not, nor should be, the primary lens through which we analyze a recovery process. Rather, the focus should be on the timely disbursement of the recovery funds and ensuring the money reaches the intended recipients.

Most recently, there has been a lot of attention and debate on the amount of federal funding Puerto Rico has received for disaster relief.  Despite the amount of funds Congress has appropriated, the needs of the island are still evident and unmet. Thousands of homes are still sheltered by temporary blue tarps, and many others are simply abandoned. There are few doctors available to meet the health needs of residents, and hospitals are taking an ever-rising load of patients. It all begs the question: how much funding has Puerto Rico actually received in federal disaster assistance since the 2017 hurricanes?

Part of the confusion lies with the federal appropriations process and its terminology. A blog post published today by CNE explains how the federal appropriations process works. Read here.

FEMA’s Disaster Relief Fund (DRF) and HUD’s Community Development Block Grant – Disaster Recovery (CDBG-DR)

There are instances when unforeseen circumstances require Congress to go beyond the regular order of business and extend supplemental appropriations for unexpected federal expenditures.  After natural disasters, the President may issue a major disaster declaration that makes federal assistance available to damaged communities through federal agencies, primarily the Federal Emergency Management Agency (FEMA).  The Disaster Relief Fund (DRF) is the primary source of funding. It is funded through the annual appropriations process and through supplemental appropriations to ensure it has the necessary resources to respond at any given time.

Congress may provide additional emergency funding through the Department of Housing and Urban Development’s (HUD) Community Development Block Grant – Disaster Recovery (CDBG-DR) grant program. Congress has appropriated funds for the CDBG program and its use in Puerto Rico through different legislative vehicles. These include: the Bipartisan Budget Act of FY2018 (P.L. 115-123), featuring $28 billion for CDBG, the Continuing Appropriations Act of 2018 and the Supplemental Appropriations for Disaster Relief Requirements Act of 2017 (P.L. 115-56), which provided $7.4 billion for CDBG.

On February 9, 2018, HUD allocated $1.51 billion to Puerto Rico, and nearly one year later – on February 2, 2019 – Governor Rosselló announced the disbursement of that initial tranche of funding. On April 10, 2018, HUD allocated another $8.2 billion that has not yet been disbursed.  Puerto Rico is also still expecting a separate notice related to the $2 billion appropriated for electrical power system enhancements and improvements in areas affected by Hurricane Maria.

Notwithstanding HUD’s approval of the most recent disaster recovery action plan for Puerto Rico, Secretary Ben Carson has publicly indicated Puerto Rico “has a history of fiscal malfeasance,” and in response, the agency is “putting additional financial controls in place to ensure this disaster recovery money is spent properly.” The financial controls include “enhanced monitoring of expenditures and other measures designed to ensure Puerto Rico’s legal and prudent use of the funds.”  It remains to be seen what those additional restrictions will be.

According to data from the website of the FEMA Recovery Support Function – Leadership Group, as of March 31, 2019:

  • Puerto Rico has been allocated $42.30 billion in disaster assistance funds through 17 different agencies;
  • Of the total allocated amount, some $20.37 billion had been obligated; and
  • Of the total obligated amount, the sum of $12.62 billion had been disbursed.

Other Noteworthy Allocations

The Additional Supplemental Appropriations for Disaster Relief Requirements Act of 2017 (P.L. 115-72) provided Puerto Rico $1.27 billion  to support the island’s food assistance program, known officially as the Nutrition Assistance Program (NAP). Given the increased needs on the island after Hurricanes Irma and Maria, Puerto Rico used those funds to increase benefits and expand the pool of eligible recipients. Despite repeated warnings that Puerto Rico would hit a NAP “cliff” in March 2019, Congress failed to approve additional funding for the program. As a result, the Government of Puerto Rico has now exhausted all of its disaster relief NAP funds.

The Governor has previously indicated this will force an abrupt reduction in benefits for NAP participants who were eligible prior to the hurricanes. As opposed to SNAP (or food stamps), NAP cannot expand or contract to meet rising nutritional needs given the program is financed annually through a capped block grant. Because Puerto Rico was forced out of the SNAP program in 1982, eligibility and benefits were already far lower than they would be if Puerto Rico’s NAP was not funded through a limited block grant.  According to the Center on Budget and Policy Priorities, nearly 1.4 million Puerto Ricans will face cuts of up to 25 percent to their nutritional aid, and nearly 230,000 of those could be cut off the program entirely.

Congress also appropriated a temporary lifeline for Puerto Rico’s Medicaid program, a total of $4.8 billion – available from January 2018 to September 2019 – as part of the Bipartisan Budget Act of 2018, but those needs predated the timing of the hurricanes.

Ongoing Negotiations and Puerto Rico’s Recovery

On April 1, a highly anticipated disaster funding package was defeated in the Senate in a party line vote of what has been publicly viewed as a political “hot potato” between Democrats and Republicans.   On May 10, the House passed (in a 257-150 vote) another disaster supplemental package authored by House Appropriations Chair, Rep. Nita Lowey. The measure, H.R. 2157, provides $600 million in disaster nutrition assistance for Puerto Rico, waives local cost-sharing requirements for FEMA projects, and includes $45 million to be used in “construction of authorized Corps of Engineers ecosystem restoration projects that have incidental flood risk management benefits in areas impacted by Hurricanes Irma and Maria”, which addresses the flood mitigation project at Caño Martín Peña. Without sharing many details on the package to be considered in the upper chamber, Senate Majority Leader Mitch McConnell has indicated he intends to pass the disaster bill before Memorial Day recess.

Beyond fixating on an absolute amount, what is clear and most important is that the longer it takes to distribute federal disaster dollars, the harder it is for individuals to recover from their losses – potentially resulting in harsh consequences for broader economic recovery.  There is widespread expectation that federal disaster aid will dynamically respond to local needs and spur economic growth. Yet if aid lags behind a bureaucratic government process, it could instead, give rise to additional outmigration and decrease the government’s revenue collection capacity.

Equally important to the speed of disbursements is the dollar amount that stays in local hands. Puerto Rico has historically fallen prey to federal programs designed to provide economic benefits to the island and unintendedly result in promoting little local economic activity.   Existing trends seem to suggest that Puerto Rico is headed once again in the same direction.  A report published by CNE in September of last year concludes that only 10 percent of contracts awarded since the Hurricane have gone to local firms, signaling that typical local economic development opportunities stemming from post disaster funding could be lower than expected.

Economic growth, meanwhile, hinges on managing an effective a recovery process.  The objective for policymakers should be supporting a sustainable economy that can survive when disaster aid interventions cease.