The United States Government Accountability Office (GAO) released a report on February 13 detailing the progress of Puerto Rico’s recovery efforts, finding successes and challenges in the path forward.
The islands experienced severe damage in 2017 due to hurricanes Irma and Maria, impacting infrastructure and worsening the economic crisis. At the time, the Puerto Rican government estimated that its recovery efforts would take 10 years, requiring $132 billion by 2028. The territory saw more damage during earthquakes in late 2019 and early 2020, along with a drought later that year and Hurricane Fiona in 2022. Recovery efforts, such as construction, were also slowed down by the COVID-19 pandemic that started in 2020.
To fund the recovery work, the Federal Emergency Management Agency (FEMA) awarded $23.4 billion in public assistance to support 9,304 projects. Of the funds, $13.2 billion is dedicated to public utilities, and $7 billion is dedicated to public buildings and equipment. According to the GAO, Puerto Rico only spent $1.8 billion, or 8%, of the total funding by July 2023. The Puerto Rican government has taken steps to access another $11.3 billion, which is available through FEMA’s Accelerated Award Strategy that allows for a quicker disbursement of funding. $15.7 billion of the total funding was awarded through the accelerated program, which acts as a fixed budget for all infrastructure projects of specific companies or organizations, also known as subrecipients. Still, FEMA only approved and disbursed $4.4 billion to these subrecipients. Three main subrecipients, the Puerto Rico Aqueduct and Sewer Authority, the Puerto Rico Department of Education, and the Puerto Rico Electric Power Authority, do not have access to a majority of their funds and will likely apply for projects that will last beyond 2030.
To address the delays, FEMA and Puerto Rico are working to release funds at a faster rate. Several subrecipients reported challenges in starting construction with limited funding and rising costs. Global supply chain disruptions have also delayed delivery times for construction materials and made it harder to find contractors and architects. Inflation and labor shortages are contributing to the delays and increases in costs as well. FEMA is testing a program that provides funds in advance to begin construction and plans to disburse funds for projects before their final approval.
Since the accelerated fixed budgets apply to all projects of a subrecipient, subrecipients could see higher costs affect future projects and could impede full recovery. The Aqueduct and Sewer Authority anticipates it will only complete half of the planned projects due to cost increases. FEMA is currently developing a plan to identify and manage cost increases and risks. FEMA has also monitored misuse of funding, finding that 0.13% of Puerto Rico’s grant funding was potentially used in improper payments in 2020, significantly lower than 15% of reviewed funding in 2018.
FEMA is continuing to approve public assistance and recovery projects, but GAO urges the agency to establish a comprehensive plan to identify, assess, and address challenges to recovery projects. The report recommended that FEMA work with Puerto Rico and other federal agencies to identify potential solutions, which FEMA plans to implement in February 2024.
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