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States, Towns Return FEMA Aid

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WASHINGTON (AP) — Years after coming to the rescue of victims from California earthquakes to Pennsylvania blizzards, the government demanded nearly a half-billion dollars back from states and local communities, federal records show.

The Federal Emergency Management Agency insisted on the refunds after auditors found the aid wasn't deserved. In some cases, the work was not completed as promised or the recipients got paid twice — by the government and insurers.

The sheriff's office in New Orleans had to return $56,000 it charged for flood cleanup work performed by prisoners working for free, an Associated Press review of more than 100 recent audits found.

California was required to repay $1.4 million from a wildfire that duplicated money recovered in a civil lawsuit.

And a former Florida parks official was indicted after authorities couldn't locate the federally purchased palm trees his agency was supposed to replant after a hurricane. The investigation continues.

The nation's disaster relief agency has recouped $442 million over the last decade, according to FEMA. That total likely will rise as more audits are completed. Examples were gleaned from the most recent audits in 1999 and 2000.

The effort has alienated some local officials.

In California, auditors in 1999 began questioning National Guard aircraft costs from the 1994 Northridge earthquake, but the aircraft logs had already been destroyed.

``They were questioning something that doesn't even exist. We had some concerns that maybe this is a little overkill,'' said Paul Jacks, the state's deputy director of disaster assistance.

FEMA officials say the effort is needed to improve accounting for money that is distributed quickly in the aftermath of catastrophes to ensure that victimized communities get the help they need.

``I don't think a very high percentage of local governments and states knowingly try to rip off the disaster program,'' said FEMA Director James Lee Witt. ``I think there are mistakes made at different times.''

FEMA's public assistance funds are provided to state and local government agencies and nonprofit organizations to help rebuild communities after disasters.

If auditors find money was paid contrary to federal law or FEMA regulations, the agency demands refunds from the state emergency agencies that distributed the aid. Sometimes, repayment amounts can be drastically reduced during negotiations and states can cover debts owed by local communities.

After taking years to recover from 1989's Hurricane Hugo, Sullivans Island, S.C., Town Administrator Linda Tucker called the FEMA audit nearly a decade later ``the disaster after the disaster after the disaster.''

``The records had all been put away in the attic,'' she recalled. The town eventually returned about $7,000 of $103,000 that auditors had challenged.

In Pennsylvania, the state repaid $3.9 million due to ineligible claims by the state Transportation Department following blizzards in 1994. One invoice totaling more than $234,000 covered just one 24-hour day but charged 39 hours of labor for one supervisor and 201 hours of equipment usage for a single truck, records showed.

The Virgin Islands Water and Power Authority was cited for $8.9 million in improper expenditures after Hurricane Marilyn in 1995. Auditors found the utility paid workers double time for all hours after the first day, and in some instances billed two and three times for the same work.

Auditors challenged $15 million in claims submitted by Albany State University in Georgia, primarily because the college used aid after a 1994 flood to upgrade its facilities. FEMA rules limit funding to the cost of repairing or replacing facilities to pre-disaster conditions.

In all, FEMA has been able to return to the U.S. treasury some $1.3 billion in federal disaster aid since April 1996. That includes some of the $442 million reimbursements recovered by auditors, as well as funds set aside for particular disasters but never spent.

While cleaning up the books from the prior decade, Witt is taking steps to avoid future problems. FEMA now sends insurance experts and auditors with initial disaster teams to screen for ineligible claims.

In one case, it was the news media, not FEMA auditors, that uncovered an apparent misuse of funds: In Dade County, Fla., FEMA was unable to account for 4,200 coconut palm trees it had paid for after Hurricane Andrew eight years ago.

A criminal investigation ensued, and former Miami-Dade County parks director Guillermo ``Bill'' Cutie was indicted for signing invoices that ``falsely attested'' to receipt of the trees. Cutie has denied wrongdoing.

FEMA no longer pays for communities to replant trees and shrubbery destroyed by disasters. ``We're not a resource to replace everything everyone's lost,'' Witt said.

After the North Carolina National Guard claimed $216,471 for use of aircraft after Hurricane Fran in 1996, FEMA auditors found only 21 percent of the missions claimed for reimbursement were related to disaster projects.

FEMA also secured nearly $19,500 in reimbursement after the City of Grafton, Ill., took flood aid for work that also was covered by insurance.

Federal officials blame most of the problems on poor oversight, not corruption.

``I do believe some of these communities do not have a sophisticated accounting system,'' said Nancy Hendricks, FEMA's assistant inspector general for audit. She added many small communities receiving FEMA grants ``never had that much money in the coffer before.''

Even with the audits, money likely is being lost, according to Leonard E. Wheeler Jr., a former Florida disaster inspector. That's because FEMA only checks a small sampling of projects before closing out a disaster.

``For those who dragged their feet and didn't keep good records, FEMA waved a magic wand and said, 'Keep it,''' Wheeler said.

In Oakland, Calif., where auditors questioned $1.3 million after a massive 1991 fire, city emergency services director Henry Renteria said officials often don't have time in the midst of catastrophe to document every expenditure.

``When you're responding to a disaster, we don't have time to dot all our I's and cross all our T's,'' he said. ``It's not necessarily a screw-up. Sometimes you're responding to a life-and-death situation and you don't have time to do all the paperwork.''

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