INFORMATION RELATING TO THE FEDERAL APPROPRIATIONS FOR KATRINA RECOVERY
Prepared by the Office of the Governor GCN
Soon after Katrina, the Congress and the President approved appropriations
of $60 billion to fund the federal Disaster Relief Fund, the account which
FEMA uses to fund Stafford Act activities required by federal law (e.g.
debris removal, rebuilding schools and other public buildings). The
Fiscal Year 2006 Department of Defense Appropriations Act (H.R. 2863)
includes $29 billion for specific needs arising from Hurricane Katrina
that are not covered by the Stafford Act. This $29 billion includes
funding for activities in Mississippi, Louisiana, and Alabama ranging from
homeowner assistance to social services; rebuilding of federal facilities
in the affected areas (e.g. levees, VA hospitals); helping states which
are housing evacuees; and replenishing the accounts of federal agencies
which have been involved in the recovery (e.g. the Department of Defense).
Therefore, not all of the $29 billion will be spent in Mississippi,
Louisiana, and Alabama. Additional assistance is provided through other
pieces of federal legislation, as noted.
More information on funding specific to Mississippi:
Community Development Block Grant Program
- $11.5 billion is made available for "disaster relief, long-term
recovery, and restoration of infrastructure in the most impacted and
distressed areas related to the consequences of hurricanes in the Gulf of
Mexico in 2005."
- These funds will be administered by an entity or entities designated by
- The Secretary of Housing and Urban Development will allocate the $11.5
billion to the affected states, but no state can receive more than 54% of
the total amount.
- Prior to the funds being obligated, the state will submit a plan to the
Secretary of Housing and Urban Development detailing how the funds will be
used. The Secretary is also required to establish procedures to prevent
fraud and abuse, including duplication of benefits.
- The state can use up to 5% of its allocation for administrative
The Mississippi Development Authority, which already administers CDBG
funds provided by the federal government each year, will administer
Mississippi's share of the Katrina CDBG funds.
1) Assistance to Homeowners
In 1968, Congress created the National Flood Insurance Program (NFIP) in
response to the rising cost of taxpayer funded disaster relief for flood
victims and lack of private insurance options for flood insurance. The
NFIP is a federally-guaranteed insurance program which is marketed by
private insurance agents. In conjunction with this program, the federal
government, through the Federal Emergency Management Agency (FEMA),
establishes Special Flood Hazard Areas (commonly known as the flood plain
or the flood zone).
When a potential homeowner secures financing to buy, build, or improve
structures, it is routine for the insurance agent who markets the NFIP,
who therefore is an agent of the federal government, to inform the
homeowner that he or she does not need flood insurance because he or she
lives outside of the flood plain. Therefore, most homeowners do not buy
flood insurance; rather they buy homeowners' property and casualty
An estimated 35,000 homes outside of the flood plain without flood
insurance were destroyed by Hurricane Katrina's storm surge on the
Mississippi Gulf Coast. These homeowners relied to their detriment on the
federal government with regard to flood insurance. The majority of the
CDBG funds will be used to help these homeowners.
Under the initial plan, the CDBG funds will compensate a homeowner for the
value of a home up to a maximum grant of the insured value or $150,000,
whichever is less, for homeowners which meet the following criteria:
1) Home must be outside the flood zone established by the federal
2) Home must have been owner-occupied.
3) Home must have had homeowner or similar insurance coverage at the time
of Katrina's landfall.
These criteria are designed to eliminate the possibility of assistance to
homeowners who lived within a known flood area and yet did not maintain
flood insurance, or homeowners who did not maintain standard home
insurance. To prevent duplicate compensation, FEMA assistance and
insurance settlements will be deducted from the grant amount.
In return for this financial assistance, a homeowner must:
1) Rebuild to the new requirements set by the FEMA flood advisory maps
(e.g. higher elevation) to mitigate against future risks.
2) Rebuild to the International Building Code Standard or higher.
3) Maintain flood insurance on the rebuilt property.
2) Improvements for Water and Wastewater systems
A by-product of Hurricane Katrina will be that many people will move north
off the coast into areas which do not have sufficient water and sewer
systems. Under the Stafford Act, FEMA will pay to repair and replace
previously existing systems, but the Stafford Act does not authorize
payment for capacity building. Under the guidance of the Mississippi
Department of Environmental Quality, these CDBG funds will be used for
water and wastewater system improvements.
3) Implementation of local economic development plans
Working with the Mississippi Development Authority, cities and counties
most affected by Katrina will have access to funds to help rebuild and
renew their areas.
4) Implementation of regional economic development plans
The Mississippi Development Authority will use CDBG funds for projects
which have a positive impact on multiple localities.
5) Financial relief for the ratepayers of investor-owned-utilities
CDBG funds will partially offset the large rate increases required to pay
for the restoration of utilities in the affected areas. Absent
assistance, these rate increases would impede economic development
efforts. This is modeled on the September 11th assistance to the
for-profit utilities in New York and would treat for-profit customers the
same as the customers of non-profit utilities.
A total of $2.75 billion is made available for the Federal Highway
Administration's "Emergency Relief Program." Although Mississippi's share
is not specified in law, FHW and MDOT agree that Mississippi's share is
approximately $740 million. These funds will pay for the reconstruction
of federal highways in Mississippi such as Highway 90, I-10, etc. These
funds are 100% federal (no state match required) with no time limit on
when MDOT must complete the project.
Social Services Block Grant
A total of $550 million is available for the states affected by the 2005
hurricanes. These funds flow from the U.S. Department of Health and Human
Services through the Governor to the Mississippi Department of Human
Services. The Governor's office anticipates approximately $200-$220
million of SSBG funds will be directed to Mississippi. By comparison,
Mississippi's SSBG allotment for FY 06 is $16.7 million.
SSBG funds are used for:
A) Self-Sufficiency: Social support services which directly relate to
decreased government or non-government assistance in daily living.
B) Protection: Social support services which are essential to the
protection or well-being of an individual or family.
C) Maintenance: Social support services which are necessary to allow an
eligible individual to maintain an existing standard of living.
D) Other: Social support services which are related to the overall
well-being of an individual and relate to one or more of the categories
above but do not fit under the specific category because of definition.
DHS currently uses some of its SSBG allocation and transfers the remainder
to the Departments of Mental Health and Health.
$750 million is provided for the areas affected by Hurricanes Katrina and
Rita to assist in the "restart" of schools. These funds are for operating
the schools; not for reconstruction (reconstruction is paid for by FEMA
under the Stafford Act). The U.S. Secretary of Education will allocate
the $750 million to the various State Departments of Education, and each
State Superintendent of Education will accept applications from school
districts. The State Superintendent will make the decisions regarding the
award of funds.
$650 million is provided for temporary impact aid for displaced
students. These funds flow from the Secretary of Education to the State
Superintendent to the schools. A displaced student is defined as a
student "who enrolled in an elementary or secondary school (other than the
school that the student was enrolled in, or was eligible to be enrolled
in, on August 22, 2005) because such student resides or resided on August
22, 2005," in a declared disaster area. The State Department of Education
estimates there may be as many as 25,000 displaced students in Mississippi
schools. Each school may receive up to $6000 per student and $7500 per
special education student. However, if $650 million is not enough to fund
all the displaced students, the U.S. Department of Education will reduce
the amount of impact aid per student.
The $95 million funding earmarked for higher education is to be
appropriated directly to the IHL Board for both community colleges and
universities. This will be a direct federal government appropriation
utilizing the pre-exisiting LEAP Scholarship Program. IHL has agreed to
make an interagency transfer of some funds to the State Board of Community
and Junior Colleges.
The Deficit Reduction Act of 2005, S. 1932, includes provisions affecting
health care in Mississippi, including fiscal relief for the state Medicaid
program. The U.S. House of Representatives and the U.S. Senate have both
approved the conference report for this bill, but three points of order in
the Senate caused changes which will require the House to vote again when
they return January 31st or soon thereafter.
$2 billion is provided for the eligible states affected by Hurricane
Katrina for a variety of purposes. The Governor's office is working with
the U.S. Department of Health and Human Services to determine how the
funds will be allocated among the allowable categories and among the
The funding provided is primarily for allowable expenses as outlined
- For the state share of Medicaid services from August 24, 2005, through
June 30, 2006, for evacuees from other states and for individuals that
resided in one of the lower 47 counties of Mississippi receiving benefits
under an approved multi-state 1115 demonstration project (Katrina
Waiver). (Preliminary estimate: $20 million in total dollars. This is
based on an estimate of 10,000 enrollees in the waiver as of the end of
January 2006. Currently, Mississippi has approximately 3,000 enrollees.)
- For the total uncompensated care costs incurred for medically necessary
services from August 24, 2005, through January 31, 2006, for evacuees from
other states and for individuals that resided in one of the lower 47
counties of Mississippi who do not have other coverage for such assistance
through insurance, including (but not limited to) private insurance,
Medicaid or SCHIP, or state-funded health insurance programs. (Preliminary
estimate: $75 million - $100 million)
- For the state share until June 30, 2006, of services for individuals
that reside in one of the lower 47 counties of Mississippi who are
eligible for benefits under the regular Medicaid or SCHIP program. (The
Division of Medicaid estimates the state share for individuals that reside
in one of the lower 47 counties of Mississippi who are eligible for
benefits under the regular Medicaid or SCHIP program from September 1,
2005, to June 30, 2006, to be $345 million. However, it is important to
note that not all of these funds are General Fund-equivalent appropriated
- For costs associated with restoring access to health care in the
impacted communities per the Secretary's approval and within his
authority. (No cost estimate at this time.)
$125 million is provided to assist governments in hiring additional police
officers in the affected areas and in areas will significantly increased
populations due to evacuees. These funds may be used to provide
personnel, equipment, training, technical assistance, and information
systems for more widespread apprehension, prosecution, adjudication,
detention, and rehabilitation of offenders who violate such state and
The United States Attorney General will develop the plan of how the funds
will be allocated among the states and local jurisdictions.
$125 million is provided for National Emergency Grants from the U.S.
Department of Labor to affected states. Uses for these funds include
providing training capacity and direct training in skills needed in the
rebuilding effort, temporary employment for affected individuals, and
workforce training for new and expanding businesses.
Mississippi has already received a commitment of $50 million in NEG
funding. With the new funds, the Department of Labor has committed to the
Governor's office that an additional $45 million will be available after
July 1, 2006.
The Corps of Engineers is provided $10 million to conduct an analysis and
design for "comprehensive improvements or modifications to existing
improvements in the coastal area of Misssissippi in the interest of
hurricane and storm damage reduction, prevention of saltwater intrusion,
preservation of fish and wildlife, prevention of erosion, and other
related water resource purposes at full Federal expense." It is expected
that this study will provide detailed recommendations on how to proceed
with barrier island reconstruction, as proposed by the Governor on
December 5, 2005.
The Corps of Engineers is provided $75 million for enhancing estuarine
habitats in Mississippi. This follows the Governor's proposal regarding
oyster reef and coastal marsh restoration. The Mississippi Department of
Marine Resources will assist the Corps as these projects develop.
The Corps of Engineers is provided $75 million to accelerate completion of
authorized projects in the State of Mississippi along the Mississippi Gulf
Other Items of Interest
- The Katrina appropriations package includes $1.987 billion, as requested
by the President, for Navy Shipbuilding and Conversion. These funds will
assist Northrop Grumman to "replace destroyed or damaged equipment,
prepare and recover naval vessels under contract; and provide for cost
- The Katrina package includes increased funding for USDA housing programs
which provide subsidized loans and housing repair funding.
- The Katrina package includes funding to repair vital federal facilities
in Mississippi, including:
o $292.5 million for the repair and renovation of the VA hospital in
o $45 million for the Armed Forces Retirement Home in Gulfport.
o $277.2 million for the Naby to help rebuild the Seabee base in Gulfport
and the Stennis Space
o $43.4 million to help rebuild Keesler Air Force Base.
o $45 million for the Keesler Medical Center.
o $82.8 million for new Navy housing in the Gulfport/Stennis region.
o $324.8 million for housing at Keesler Air Force Base.
o $48.9 million for Navy housing at the Naval Air Station Meridian and at
the Seabee base in