We audited the U.S. Department of Housing and Urban Development’s (HUD) State Community Development Block Grant (CDBG) Hurricane Disaster Recovery program for hurricanes that hit the Gulf Coast States from August 2005 through September 2008. Our audit objective was to assess the program overall. Specifically, we wanted to (1) determine what had been accomplished using the funding and the funds remaining to be spent; (2) compare actual versus projected performance; and (3) identify best practices, issues, and lessons to be learned.

We found that the Gulf Coast States had made progress in recovering from the presidentially declared disasters as a result of several hurricanes. As of August 2012, the States had spent more than 87.5 percent of the available Katrina, Rita, and Wilma funds and 27.2 percent of the available Gustav, Ike, and Dolly funds. Thus, States had received almost $24 billion and disbursed almost $18.4 billion, resulting in about $5.6 billion remaining to be spent. However, the States had budgeted only $22.6 billion of the $24 billion in Disaster Recovery funds. Some of the delay in budgeting funds could be attributed to the States revising their programs, State delays encountered due to lawsuits, or HUD’s rejection of a State’s Action Plan. The States primarily used the funding to assist communities in repairing and rebuilding housing, compensating homeowners, repairing infrastructure damage, and providing economic development. The States could improve on reporting their activities, as some of their activities had no or nominal progress reported because they did not generally report their progress until the projects were complete. In addition, while the States generally met the various statutory mandates, Texas and Louisiana had not met two mandates.

Although the States had made progress, based on our prior audits and a review of the program’s data, there have been some lessons to be learned regarding deadlines, program guidance, information system technology acquisitions, procurements, and homeowners’ insurance. If HUD makes needed changes, it should improve the effectiveness and efficiency of the program.

We recommend that the Director of the Office and Block Grant Assistance (1) require the States to report their actual achievements; (2) work with the States to ensure that they promptly budget all remaining funds in a timely manner; (3) continue to monitor the States of Louisiana and Texas to ensure they meet statutory requirements; and (4) work with its stakeholders to make improvements for current and future grantees in areas such as deadlines, program guidance, information system technology acquisitions, procurement, and homeowners’ insurance.