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Federalism after Hurricane KatrinaHow Can Social Programs Respond to a Major Disaster?
After KATRINA
Pamela WinstonOlivia Golden
Kenneth FinegoldKim Rueben
Margery Austin TurnerStephen Zuckerman
An Urban InstituteProgram to Assess Changing Social Policies
Federalism after Hurricane KatrinaHow Can Social Programs Respond to a Major Disaster?
After KATRINA
Pamela WinstonOlivia Golden
Kenneth FinegoldKim Rueben
Margery Austin TurnerStephen Zuckerman
An Urban InstituteProgram to Assess Changing Social Policies
Copyright © June 2006. The Urban Institute. All rights reserved. Except for short quotes, no part ofthis paper may be reproduced in any form or used in any form by any means, electronic or mechan-ical, including photocopying, recording, or by information storage or retrieval system, withoutwritten permission from the Urban Institute.
Assessing the New Federalism is a multiyear Urban Institute project designed to analyze the devolutionof responsibility for social programs from the federal government to the states, focusing primarilyon health care, income security, employment and training programs, and social services. Researchersmonitor program changes and fiscal developments. Olivia Golden is the project director. In collab-oration with Child Trends, the project studies changes in family well-being. The project aims to pro-vide timely, nonpartisan information to inform public debate and to help state and localdecisionmakers carry out their new responsibilities more effectively.
The Assessing the New Federalism project is currently supported by The Annie E. Casey Foundation,The Robert Wood Johnson Foundation, the W. K. Kellogg Foundation, The John D. and CatherineT. MacArthur Foundation, and The Ford Foundation.
The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy ofpublic consideration. The views expressed are those of the authors and should not be attributed tothe Urban Institute, its trustees, its funders, or other authors in the series.
This paper was jointly supported by the Urban Institute’s After Katrina project and the Assessing theNew Federalism project, a multiyear effort to monitor and assess the devolution of social programsfrom the federal to the state and local levels. We would like to express our appreciation to the AnnieE. Casey Foundation for their support of Assessing the New Federalism and of this paper.
The authors thank Mark Greenberg, Susan Popkin, Elaine Ryan, and Wayne Vroman for theirthoughtful contributions and comments; Susan Kellam for her very helpful revisions of an earlierversion of this paper; and Rosa Maria Castañeda, Mindy Cohen, and Sonya Hoo for their invaluableresearch assistance. All errors are the responsibility of the authors.
About the Photographer
In addition to being an amateur photographer, Christian Kuffner works for WWOZ 90.7 FM, NewOrleans’ Jazz and Heritage Station, and plays accordion for a local band called the Zydepunks.
Christian is a native of Cuenca, Ecuador.
Programs that provide housing assistance, unemployment benefits, health care, andwelfare to low-income people and others in the United States have a complex struc-ture. Each program has a different mix of federal, state, and local roles in financing, indetermining who is eligible for benefits, and in deciding what those benefits will be.Even if this complexity can be juggled reasonably well for families, individuals, localgovernments, and states during normal times, however, Hurricane Katrina posed asevere test. This paper explores how these programs fared under the extreme condi-tions of the storm and its aftermath.
Hurricane Katrina dealt a severe blow to over a million people in Louisiana and thecoastal regions of Mississippi and had repercussions throughout the Gulf region.1
Low-income families and individuals in particular bore the brunt of the storm andflooding, losing their homes, jobs, and resources for recovery. Public programs hadserved many of these people before the hurricane hit, and many others became newlyeligible as a result of it. But the impact of Katrina strained the essential components ofthese programs, including their funding arrangements and eligibility and benefit stan-dards. It raised critical questions about the programs’ ability to respond swiftly andfairly to families and individuals affected by the storm, and about state and local gov-ernments’ incentives to respond effectively to victims’ needs.
In fundamental ways, social programs were not designed to respond readily to acrisis of Katrina’s dimensions. Emergency response mechanisms had to be developedand/or enacted immediately after the storm and flooding. For many months, greatuncertainty existed about states’ financial obligations, risks, and policy choices, andabout what programs would serve which evacuees, in what ways, and for how long.Over the past seven months, a number of program changes and emergency expansionshave been enacted through legislation or implemented through the executive branch.But on the whole, programs have provided limited and temporary aid to families andindividuals whose lives have been fundamentally disrupted by the storm. In addition,some federal response policies have not been communicated clearly to state and localgovernments and were not acted upon for many months, even as the 2006 hurricaneseason approached.
This paper examines four key programs that help individuals and families meet basicneeds and cope with crises: housing assistance provided through the U.S. Department
1
Federalism after Hurricane KatrinaHow Can Social Programs Respond to a Major Disaster?
of Housing and Urban Development (HUD) and throughthe Federal Emergency Management Agency (FEMA);income replacement through Unemployment Insurance(UI) and Disaster Unemployment Assistance (DUA);health care through Medicaid; and cash assistancethrough Temporary Assistance for Needy Families(TANF). These are not the only important programs forlow-income people, but do represent essential nationalprograms with responsibility shared among federal, state,and local governments. (UI, Medicaid, and TANF areshared federal-state programs; housing assistance is feder-ally funded but administered by localities.)2
This paper first summarizes key findings from the pro-grams’ responses to Hurricane Katrina. It then describesthe central features of “normal” program structures priorto the disaster, identifies particular challenges Katrinaposed to these programs, explores the key policy responsesto the crisis within each program, and finally offers a rec-ommendation to enable more effective disaster responsesin the future.3
Key Findings on Housing Assistance,Income Replacement, Health Care, and Cash Assistance Programs● Cross-jurisdictional complexity. Hurricane Katrina
moved program recipients across state lines on a largeand sudden scale, but the programs’ varying eligibilityrules, funding structures, and fiscal incentives were notdesigned to accommodate such movement easily. Themassive involuntary population migration proved chal-lenging for many of these complex federal-state andfederal-local program arrangements, hindering rapid,effective, and planned response.
● Short-term solutions to a long-term problem. Pro-gram responses to Hurricane Katrina were better suitedto a short-term emergency than to the long-term dis-placement and requirements for rebuilding that Katrinacreated. For instance, the decision to use FEMA ratherthan HUD as the main housing agency for Katrina evac-uees suggests that the problem was defined largely asshort-term emergency assistance, rather than as meet-ing long-term needs created by the storm. Similarly,waivers and legislation that enable full federal fundingfor storm victims’ Medicaid coverage limit it to fivemonths, even though existing health conditions wors-ened for some people and others developed serious newhealth problems as a result of Katrina.
● Strained fiscal capacity. Prior to the storm, the Gulfstates’ fiscal capacity was among the lowest in the
nation, making them especially vulnerable. Particularlyfor Louisiana, the hurricane hit hard in multiple ways—it damaged or destroyed major sources of revenue,created huge new costs for recovery and reconstruction,and produced significant new needs for assistance. Formany programs, federal-state funding obligations meanthat these needs must be funded at least in part by thestates most severely hit. Exacerbating this fiscal stress isthe fact that states cannot operate at a budget deficit,although the federal government can.
● Lack of clarity. Uncertainty about the federal responseto the crisis—such as the availability and duration of fed-eral funding or the federal or state standards that applyto assistance programs—contributed to significant insta-bility and uncertainty for both hard-hit “home” statesand “host” states, such as Texas, that received significantnumbers of evacuees. It has also exacerbated the uncer-tainty individuals and families face.
● Need for an appropriate federal role. FEMA’s widelycriticized response to Hurricane Katrina certainly sug-gests that federal administration alone does not ensurethat individual, family, state, or local needs will be met.Still, federal involvement appears critical to ensuring aneffective response. For instance, the guarantee of federaldollars can allow host states to provide evacuees necessaryservices with less risk to their own financial position, andcan alleviate the enormous fiscal strain on hard-hit homestates. A speedier, more consistent federal response acrossprograms, with clearer and more timely federal guidanceto states and localities, would also go far in easing theburden on jurisdictions, individuals, and families.
Key Program Features During Normal OperationsThe housing assistance, income replacement, health care,and cash assistance programs described in this paper pro-vide basic support to people who meet their eligibilitycriteria. Tables 1, 2, and 3 detail program provisions—required state vs. federal financial contributions, benefitlevels, provisions (if any) for sudden changes in stateresources or program demand, and the populations theprogram served—and didn’t serve—prior to HurricaneKatrina. This section of the paper reviews the centralprogram features as they operate in noncrisis situations.
● Eligibility and benefit levels. Three of the four programsvary considerably by state in both eligibility criteria andlevel of benefits offered. States exercise significant dis-cretion in defining eligibility criteria for Unemployment
2 After Katrina
Fund
ing
stru
ctur
e
Fede
ral
Stat
e
Loca
l
Hou
sing
:FEM
Aan
dH
UD
Fully
fede
ral:
HU
Dpr
ovid
esfu
nds
prim
arily
byfo
rmul
afo
rpub
lican
das
sist
edre
ntal
hous
ing
proj
ects
and
hous
ing
vouc
hers
.FE
MA
hous
ing
aid
isal
sofu
llyfe
dera
llyfu
nded
.
Non
e.
Non
e ,bu
tloc
alho
usin
gag
enci
esad
min
iste
rfed
eral
publ
icho
usin
gan
dvo
uche
rpro
gram
s.
Une
mpl
oym
entI
nsur
ance
Fede
ralp
ayro
llta
x:(0
.8pe
rcen
ton
first
$7,0
00of
annu
alea
rnin
gs).
This
fund
sU
Ipro
gram
adm
inis
tra-
tion,
Empl
oym
entS
ervi
ce,a
ndfe
dera
lloa
nsto
stat
esw
ithtr
ust
fund
defic
its.D
isas
terU
nem
ploy
-m
entA
ssis
tanc
eis
fund
edth
roug
hFE
MA
.
Stat
epa
yrol
ltax
eson
empl
oyer
s:Th
ese
fund
bene
fitpa
ymen
tsto
clai
man
ts(s
o-ca
lled
regu
larU
I).
Non
e.
Med
icai
d
Fede
rale
ntitl
emen
tpro
gram
:The
fede
ralm
atch
tost
ate
fund
ing
rang
edfr
om50
%to
abou
t77%
inFY
2005
;the
Fede
ralM
edic
alA
ssis
tanc
ePe
rcen
tage
ishi
gher
for
poor
erst
ates
.
Stat
esm
ustm
eetf
eder
alm
atch
requ
irem
ent.
The
FY20
05fe
dera
lm
atch
forL
Aw
as71
.04%
;for
MS,
77.0
8%.
Som
est
ates
requ
ire
loca
lcon
tri-
butio
nto
stat
em
atch
,but
the
fed-
eral
gove
rnm
entd
oes
not.
Tem
pora
ryA
ssis
tanc
efo
rN
eedy
Fam
ilies
Fede
ralb
lock
gran
t:G
rant
sar
eba
sed
onst
ates
’pri
orA
FDC
spen
ding
and
spen
ding
forr
elat
edpr
ogra
ms,
with
mod
ests
uppl
e-m
ents
forh
igh
pove
rty
orhi
ghgr
owth
stat
es.G
rant
sto
tale
d$1
6.6
billi
onpe
ryea
r;in
FY20
03;
$181
mill
ion
wen
tto
LAan
d$9
6m
illio
nto
MS.
TAN
Fal
soin
clud
eslim
ited
cont
inge
ncy
and
loan
fund
s.
MO
Ere
quir
emen
ts,7
5%to
80%
ofm
id-1
990s
spen
ding
leve
ls.
Stat
es’t
otal
cont
ribu
tion
isab
out
$10.
5bi
llion
pery
ear.
LAan
dM
SM
OE
fund
ing
forF
Y20
03w
as75
%fo
rbot
h.
Som
est
ates
requ
ire
loca
lcon
tri-
butio
n,bu
tthe
fede
ralg
over
n-m
entd
oes
not.
LAan
dM
Spr
ogra
ms
are
stat
ead
min
iste
red
buti
nM
S,co
untie
ssh
are
adm
inis
trat
ive
cost
s.
Tabl
e1
Fund
ing
Stru
ctur
eof
Sele
cted
Soci
alSe
rvic
es,P
rior
toH
urri
cane
Katr
ina
Sour
ces:
Gai
nsbo
roug
h(2
003)
,Gre
enbe
rgan
dR
ahm
anou
(200
5),K
aise
rFam
ilyFo
unda
tion
(200
5a,2
005b
),U
.S.D
epar
tmen
tofL
abor
(200
4),V
rom
an(2
005)
.
HU
D=
Dep
artm
ento
fHou
sing
and
Urb
anD
evel
opm
ent
FEM
A=
Fede
ralE
mer
genc
yM
anag
emen
tAge
ncy
UI=
Une
mpl
oym
entI
nsur
ance
AFD
C=
Aid
toFa
mili
esw
ithD
epen
dent
Chi
ldre
n
MO
E=
mai
nten
ance
ofef
fort
Maj
orpr
ovis
ions
Stat
era
nges
LA,M
Sra
nkin
g
Hou
sing
No
fede
rale
ntitl
emen
t.
Hou
seho
lds
with
inco
mes
belo
w50
–80%
ofar
eam
edia
nin
com
ear
eel
igib
lefo
raid
thro
ugh
Sec-
tion
8vo
uche
rs(th
ough
75%
ofne
wvo
uche
rsm
ustg
oto
hous
e-ho
lds
unde
r30%
ofth
elo
cal
area
med
ian
inco
me)
.
Sect
ion
8vo
uche
rsin
clud
ete
nant
-bas
edvo
uche
rsfo
rho
useh
olds
rent
ing
inth
epr
i-va
tem
arke
tand
proj
ect-
base
dvo
uche
rsth
atsu
bsid
ize
spec
ific
hous
ing
units
.
Elig
ibili
tyis
veri
fied
annu
ally
.
Spec
ific
elig
ibili
tyle
vels
are
setb
ylo
calp
ublic
hous
ing
auth
oriti
es.
Not
appl
icab
le.
Une
mpl
oym
ent
Insu
ranc
e
Stat
esde
term
ine
elig
ibili
tyth
roug
hpa
stea
rnin
gsof
suffi
cien
tam
ount
and
aqu
alify
ing
job
sepa
ratio
n(s
uch
asa
layo
ff).
Det
ails
vary
wid
ely
acro
ssst
ates
.
Mon
etar
yqu
alify
ing
and
othe
rreq
uire
men
tsva
ry.
Mon
etar
yqu
alify
ing
requ
ire-
men
tsar
eso
mew
hate
asie
rth
anav
erag
e.LA
rank
ed37
thof
51in
2004
(with
51be
ing
easi
est).
MS
rank
ed32
nd.
This
mea
sure
uses
the
base
perio
dm
inim
umea
rnin
gsex
pres
sed
asa
num
bero
fw
eeks
atth
est
ate’
sav
erag
ew
eekl
yea
rnin
gs.
Med
icai
d
Fede
rale
ntitl
emen
tto
cate
goric
ally
elig
i-bl
elo
w-in
com
epe
ople
, inc
ludi
ngch
il-dr
en,p
regn
antw
omen
,cer
tain
adul
tsw
ithde
pend
entc
hild
ren,
peop
lew
ithdi
sabi
litie
s,an
dpe
ople
over
65.
Oth
erw
ise
stat
esex
erci
sesu
bsta
ntia
ldi
scre
tion
over
elig
ibili
tyre
quir
emen
ts,
bene
fits,
and
serv
ice
leve
ls.
Fede
rally
requ
ired
cove
rage
Pare
nts:
Stat
eA
FDC
leve
las
of19
96Pr
egna
ntw
omen
:≤13
3%FP
LC
hild
ren
unde
r6:≤
133%
FPL
Chi
ldre
n6–
18:≤
100%
FPL
Stat
em
axim
aPa
rent
s:≤
275%
FPL
Preg
nant
wom
en:≤
275%
FPL
Chi
ldre
nun
der1
8:≤
300%
FPLa
LA Pare
nts:
≤20%
FPL
(wor
king
)and
≤13
%FP
L(n
onw
orki
ng)
Preg
nant
wom
en:≤
200%
FPL
Chi
ldre
n:≤
200%
FPL
MS
Pare
nts:
≤34
%FP
L(w
orki
ng)a
nd27
%FP
L(n
onw
orki
ng)
Preg
nant
wom
en:≤
185%
FPL
Chi
ldre
n:≤
185%
FPL
(infa
nts)
,≤13
3%FP
L(a
ges
1–5)
,and
≤18
5%FP
L(a
ges
6–19
)
Tem
pora
ryA
ssis
tanc
efo
rN
eedy
Fam
ilies
No
fede
rale
ntitl
emen
t.
TAN
Ffu
nds
may
only
beus
edfo
rfa
mili
esw
itha
preg
nant
wom
anor
ach
ildun
der1
8,th
ough
they
are
not
entit
led
toas
sist
ance
.
Oth
erre
quir
emen
tsar
ese
tby
stat
es,
with
som
efe
dera
lreq
uire
men
tsan
dex
clus
ions
:par
ticip
ants
mus
tmee
tw
ork
requ
irem
ents
and
fede
rala
ssis
-ta
nce
islim
ited
to5
year
s,w
ithso
me
exce
ptio
ns.
Som
egr
oups
,inc
ludi
ngm
any
lega
lim
-m
igra
ntsa
ndce
rtain
drug
felo
nsar
eex
-cl
uded
from
fede
rally
fund
edas
sist
ance
.
Var
ies
byst
ate.
The
max
imum
mon
thly
inco
me
atw
hich
afa
mily
of3
was
elig
ible
inFY
2003
rang
edfr
om$2
05in
AL
to$1
,641
inH
I.
LAan
dM
Sha
ve,r
espe
ctiv
ely,
the
3rd
and
8th
low
estm
axim
umin
com
elim
itsfo
rfam
ilies
tobe
elig
i-bl
efo
rass
ista
nce
($36
0pe
rmon
than
d$4
58pe
rmon
th).
Tabl
e2
Elig
ibili
tyfo
rSe
lect
edSo
cial
Serv
ices
,Pri
orto
Hur
rica
neKa
trin
a
Sour
ces:
Ense
llem
(200
5);K
aise
rFam
ilyFo
unda
tion
(200
5a,2
005b
);R
owe
and
Ver
stee
g(2
005)
;U.S
.Dep
artm
ento
fLab
or(2
004)
;Vro
man
(200
5).
a.In
stat
esw
ithhi
ghle
vels
ofco
vera
gefo
rchi
ldre
n,pr
ogra
ms
may
beSC
HIP
-onl
ypr
ogra
ms,
Med
icai
dex
pans
ion
prog
ram
s,or
aco
mbi
natio
n.
Insurance, Medicaid, and TANF. Wealthier states tendto offer more generous benefits. Program recipientsgenerally receive benefits from their state of residence,or—in the case of UI—the state where they work.4 Wellbefore Hurricane Katrina, Louisiana and Mississippiranked low in the expansiveness of their eligibility stan-dards and benefits levels. Housing assistance eligibilityand benefits are, as a rule, more nationally standardized.
● Required state financial contributions. All states arerequired to contribute financially to federal-state pro-grams. Of the four programs described, only housingassistance provided through HUD or FEMA and dis-aster unemployment assistance (DUA) do not requirestate funds. This funding responsibility affects states’policy choices on eligibility and benefit levels and—forthe programs where they have discretion—how manyeligible people to serve.
Even a small change in eligibility or benefit policiescan have a major effect on program costs, with a signifi-cant impact on poor states. Compared to other states, theGulf states historically have had weak revenue bases com-bined with high poverty. This significantly affects theirability to fund social programs. Even before Katrina,Louisiana and Mississippi ranked low in fiscal capacity.In 2002, Mississippi ranked last in revenue capacity5 andLouisiana ranked 44th of 50 states. When the states’ abil-ity to raise revenue was compared to the need for expen-ditures,6 Louisiana ranked even lower—47th of 50—andMississippi was again last. This indicates that theirrestrictive eligibility and benefit policies may be drivensignificantly by their constrained fiscal capacities.
● Limited provisions for sudden changes in need. Asexplained in the program descriptions below, these fourprograms have limited provisions at the national level toadjust for sudden changes in state financial situations,or for such expanded demand as that created by Katrina.In most cases, increases or major reallocations in fund-ing require federal legislation.
● Relevant populations not served prior to Katrina. Rea-sonable estimates of demand for each program beforeKatrina hit suggest that, for many years, benefits havenot reached all people with potential needs. In somecases, state policies and practices excluded certaingroups from eligibility. Funding limitations can alsopreclude eligible people from receiving assistance.
Housing Assistance
Standards for housing assistance through HUD are gener-ally national—households with incomes less than 80 per-
cent of the area median income are eligible, but waitinglists for vouchers and subsidized housing units are ex-tremely long. Vouchers can be taken across state bound-aries, but public housing residents lose their assistance ifthey move. With the federal funding base and eligibilitystandards for housing, about a quarter to a third of eligi-ble residents get assistance nationwide, a proportion mir-rored in Louisiana and Mississippi.
Neither HUD nor FEMA housing assistance requiresany state matching funds. HUD has no provisions torespond to a sudden increased need for housing, thoughFEMA’s housing assistance is, by definition, activated bysudden emergencies and can generally be mobilizedquickly. Finally, available housing assistance does not meetdemand across the country. With only a quarter to a thirdof eligible households receiving assistance in every com-munity nationwide (and few additional resources forexpanded needs), eligible applicants join long waiting listsand may wait for several years.
Unemployment Insurance
Low-wage earners who lose their jobs in Louisiana andMississippi are somewhat more likely to qualify for UIthan in other states that set higher monetary eligibilityrequirements. Yet, both states rank close to the bottom inbenefit levels and replacement rates (the proportion ofweekly wages replaced by weekly benefits). In 2004,Louisiana ranked 47th of 51 states in weekly benefits, andMississippi ranked last. Other eligibility policies—such asallowing an alternative base period determination (whichcan result in more low-wage workers qualifying for bene-fits) or good personal reasons for leaving a job—also varyamong states.7 Louisiana allows neither of these moreexpansive eligibility provisions. Mississippi allows “quits”for good personal reasons but does not have an alternativebase period (Vroman 2005).
The DUA program was created to provide benefits toworkers who are unemployed as a direct result of a disasterdeclared by the president and who do not qualify for reg-ular UI, often because they are self-employed or do nothave sufficient earnings. DUA benefit levels are generallyeven lower than those of UI. By federal regulation, DUAlevels fall between 50 and 100 percent of state UI benefitlevels. They are $85 and $97 per week in Mississippi andLouisiana (Ensellem 2005).
A state payroll tax on employers funds UI benefit pay-ments through a self-financing trust fund.8 In addition, a0.8 percent federal payroll tax on the first $7,000 of annualearnings funds UI program administration and other
Federalism and Hurricane Katrina 5
Stat
era
nges
LA,M
Sra
nkin
g
Hou
sing
Part
icip
atin
gho
useh
olds
pay
30%
ofin
com
eto
war
dre
nt;a
fede
ral
subs
idy
fills
the
gap.
The
bene
fitfo
rmul
ais
esse
ntia
llyth
esa
me
natio
nwid
e;LA
and
MS
resi
dent
spr
obab
lyre
ceiv
ele
sson
aver
age
than
thos
ein
othe
rsta
tes
beca
use
thei
rhou
sing
pric
este
ndto
belo
wer
.
Une
mpl
oym
entI
nsur
ance
Stat
esge
nera
llyre
plac
e50
–55%
ofpa
stea
rnin
gs,s
ubje
ctto
aw
eekl
ym
axim
um.M
axim
ara
nge
from
40–6
5%of
aver
age
wee
kly
wag
es.
Dis
aste
rUne
mpl
oym
entA
ssis
-ta
nce
bene
fits
are
50–1
00%
ofst
ate
regu
larU
Iben
efits
.
Low
onbe
nefit
leve
lsan
dre
plac
e-m
entr
ates
.
LA’s
wee
kly
bene
fitin
2004
,$1
94.7
8,ra
nked
47th
of51
(nat
iona
lave
rage
=$2
62.5
0).L
A’s
repl
acem
entr
ate,
0.32
2,ra
nked
39th
of51
(nat
iona
lave
rage
=0.
352)
.a
MS’
sw
eekl
ybe
nefit
in20
04,
$171
.87,
rank
ed51
stof
51.M
S’s
repl
acem
entr
ate,
0.31
9,ra
nked
40th
of51
.
Med
icai
d
Man
dato
ryse
rvic
esin
clud
em
ost
acut
eca
rean
dnu
rsin
gfa
cilit
yse
rvic
es.
Maj
orop
tiona
lser
vice
sar
edr
ugs,
mos
tper
sona
lcar
e,an
din
stitu
-tio
nalp
sych
iatr
icse
rvic
es.
Man
dato
ryan
dop
tiona
lser
vice
sar
esi
mila
rto
othe
rsta
tes,
with
som
eex
cept
ions
.b
Tem
pora
ryA
ssis
tanc
efo
rN
eedy
Fam
ilies
Stat
esse
tcas
hbe
nefit
leve
ls,
whi
chva
ryby
stat
e(i.
e.,m
axi-
mum
mon
thly
bene
fits
fora
fam
ilyof
3in
2004
rang
edfr
oma
low
of$1
70in
MS
toa
high
of$9
23in
AK
).
Oth
eras
pect
sof
bene
fitpo
licie
san
dno
ncas
hse
rvic
esan
dbe
nefit
sal
sova
ryw
idel
y(i.
e.,t
ime
limits
onca
shas
sist
ance
rang
efr
oma
low
of24
mon
ths
in3
stat
esto
nolim
itfo
ratl
east
som
efa
mili
esin
5st
ates
).
The
max
imum
mon
thly
bene
fitfo
ra
fam
ilyof
3in
2004
was
$240
inLA
and
$170
inM
S.LA
rank
ed7t
han
dM
Sra
nked
51st
of51
.
The
lifet
ime
limit
onas
sist
ance
isse
tatt
hefe
dera
lmax
imum
of60
mon
ths
inbo
thst
ates
;how
-ev
er,i
nLA
mos
tfam
ilies
cann
otre
ceiv
em
ore
than
24m
onth
sof
bene
fits
inan
y60
-mon
thpe
riod
.
Tabl
e3
Bene
fits
from
Sele
cted
Soci
alSe
rvic
es,P
rior
toH
urri
cane
Katr
ina
Prov
isio
nsfo
rm
ovin
gam
ong
stat
es
Uns
erve
dpo
pula
-tio
ns
Res
iden
tsof
publ
ican
das
sist
edho
usin
glo
seth
eirs
ubsi
dies
,but
vouc
hers
are
port
able
toan
yst
ate.
2/3
to3/
4of
thos
eel
igib
lear
eno
tse
rved
thro
ugh
eith
ervo
uche
rsor
publ
ic/a
ssis
ted
hous
ing
units
.
Vou
cher
appl
ican
tsw
aite
dan
aver
age
of28
mon
ths
ina
2003
stud
y.
Inte
rsta
tecl
aim
sar
eha
ndle
dby
host
stat
esfo
rtho
sew
hom
ove
out
ofst
ate.
Rec
ipie
ncy
istr
aditi
onal
lylo
win
both
stat
es—
19%
inLA
and
23%
inM
S,co
mpa
red
with
32%
fort
heU
.S.c
Rec
ipie
nts
mus
trea
pply
inth
ene
wst
ate,
unle
ssth
em
ove
iste
m-
pora
ry.T
hen
they
are
cove
red
byth
eirh
ome
stat
e’s
prog
ram
ifth
eyca
nfin
da
prov
ider
will
ing
toac
cept
the
hom
est
ate’
spa
ymen
ts.
All
stat
esha
vere
lativ
ely
high
pro-
port
ions
oflo
w-i
ncom
epa
rent
sw
hose
inco
mes
fall
abov
eel
igib
il-ity
thre
shol
dsan
dar
eth
eref
ore
inel
igib
lefo
rMed
icai
d.C
hild
less
adul
tsar
ety
pica
llyno
tcov
ered
byM
edic
aid.
No
prov
isio
ns,t
houg
hsu
pple
-m
enta
lgra
nts
(whi
chbo
thLA
and
MS
rece
ived
)gav
eex
tra
help
tost
ates
with
incr
easi
ngpo
pula
tions
.Th
eSu
prem
eC
ourt
stru
ckdo
wn
aPe
rson
alR
espo
nsib
ility
Wor
kO
ppor
tuni
ties
Rec
onci
liatio
nA
ctpr
ovis
ion
allo
win
gst
ates
tolim
itne
wco
mer
sto
thei
rfor
mer
stat
e’s
bene
fits
(thou
ghne
ither
LAor
MS
had
such
apo
licy)
.
Uns
erve
dar
eth
ose
who
don’
tm
eetf
eder
alca
tego
rica
lreq
uire
-m
ents
orst
ate
elig
ibili
tygr
oups
;fo
rmer
reci
pien
tfam
ilies
who
have
been
sanc
tione
dor
hitt
ime
limits
;elig
ible
nonp
artic
ipan
ts;
and
peop
lew
hoar
ebe
low
the
fede
ralp
over
tyle
vel,
buta
bove
stat
es’T
AN
Fm
axim
umin
com
ele
vels
orot
herw
ise
inel
igib
le.
Abo
ut85
%of
poor
fam
ilies
inLA
and
82%
inM
Sdi
dno
trec
eive
TAN
F.d
Sour
ces:
Adm
inis
trat
ion
forC
hild
ren
and
Fam
ilies
(200
4);B
urea
uof
the
Cen
sus
(200
3);C
ente
ron
Bud
geta
ndPo
licy
Prio
ritie
s(2
003)
;Con
gres
sion
alR
esea
rch
Serv
ice
(200
5);
Row
ean
dV
erst
eeg
(200
5);V
rom
an(2
005)
.
a.Th
ere
plac
emen
trat
eis
calc
ulat
edas
wee
kly
bene
fits
divi
ded
byw
eekl
yw
ages
(Vro
man
2005
).
b.Fo
rexa
mpl
e,Lo
uisi
ana
does
notc
over
phys
ical
,occ
upat
iona
l,or
spee
ch/la
ngua
geth
erap
y,an
dM
issi
ssip
pido
esno
tcov
erpe
rson
alca
rese
rvic
es(i.
e.,p
erso
nala
ttend
ants
orpe
rson
alas
sist
ance
serv
ices
).
c.R
ecip
ienc
yis
mea
sure
das
perc
enta
gera
tioof
wee
kly
bene
ficia
ries
tow
eekl
yun
empl
oym
ent.
d.U
rban
Inst
itute
calc
ulat
ions
,div
idin
gth
enu
mbe
roff
amili
esre
ceiv
ing
TAN
Fca
shas
sist
ance
inea
chst
ate
inFY
2002
(from
Adm
inis
trat
ion
forC
hild
ren
and
Fam
ilies
2004
)by
the
num
bero
ffam
ilies
with
child
ren
unde
r18
that
are
unde
rthe
fede
ralp
over
tyle
veli
nea
chst
ate
(from
Bur
eau
ofth
eC
ensu
s20
03).
8 After Katrina
program purposes, including federal loans to states withtrust fund deficits. In past years, Louisiana and Mississippihave taxed covered employers at rates lower than the U.S.average; the low level of taxation reflects low benefit pay-outs in these states. DUA benefits are fully federally fundedthrough FEMA (though the program is administeredthrough the U.S. Department of Labor).
The unemployment compensation system can respondfairly quickly to an increase in need among those who sat-isfy a state’s rules and processes. When people who havelost jobs worked in one state but reside in or move toanother, the trust fund of the state in which they worked isresponsible for funding their benefits, and they are coveredaccording to that state’s eligibility and benefit levels. Dur-ing disasters, DUA provides temporary, modest financialassistance to people who do not qualify for the regular UIprogram. But many people who have lost jobs never gethelp from UI, even in typical times, and this was particu-larly true for people living in Louisiana and Mississippi inthe years before Katrina. Recipiency has long been low inboth states; the Louisiana rate was about 19 percent be-tween 1994 and 2003, and the rate in Mississippi was 23 percent, compared with a national rate of 32 percent(Vroman 2005).9 The relatively low rates reflect state eligi-bility rules and how they are administered.10 In addition,people claiming DUA may be denied benefits if they havelost their jobs for reasons resulting indirectly from a dis-aster (such as a local business slowdown) rather than thedirect destruction of a business.
Medicaid
Low-income people who meet state eligibility require-ments are entitled to Medicaid coverage. Federal lawrequires states to cover certain low-income groups, in-cluding children under 19, pregnant women, certain pooradults with dependent children,11 disabled people, andpeople over 65. But states have considerable discretionabout covering groups at slightly higher income levels.
Louisiana has covered children up to a higher incomethreshold than set by other Gulf states or than is federallyrequired: up to twice the federal poverty level (the federalrequirement is 100 to 133 percent of the poverty level,depending on the children’s age). However, the state ranksnear the bottom nationally in eligibility of both workingand nonworking low-income parents, though its packageof benefits is similar to many other states’.12 In FY 2005,nonworking parents in Louisiana were eligible only up to
13 percent of the poverty level (compared with 42 percentfor the country as a whole); working parents were eligibleonly up to the point where their incomes were 20 percentof the poverty level (compared with 69 percent nation-ally).13 Mississippi covered nonworking parents withincomes up to 27 percent of the poverty level and workingparents with incomes up to 34 percent of the poverty level(Kaiser Family Foundation 2005a). Medicaid recipientswho change state residency generally must reapply forMedicaid coverage to be eligible for coverage there. But astate’s temporary residents can be covered by their homestates if they can find a provider willing to accept the homestate’s payments.
The federal government pays a higher proportion ofMedicaid costs in lower-income states such as Louisianaand Mississippi. The 2005 Federal Medical Assistance Per-centage (FMAP) ranged from 50 percent to 77 percentaround the country. In Louisiana, the federal share was 71 percent; in Mississippi, 77 percent. Despite the relativegenerosity of the federal Medicaid contribution, poorstates must still juggle their low revenue capacity, highpoverty, and high levels of uninsurance among both theunemployed and workers lacking health coverage, to meettheir contribution and cover low-income families. Evenwith the federal funding, Medicaid cost a total of $4.45 bil-lion in Louisiana in FY 2003, of which $789 million wascontributed from the state’s general fund. This constitutesabout 12 percent of the state’s general fund expenditures(Kaiser Family Foundation 2005a; National Association ofState Budget Officers 2005).
Medicaid has no provisions for an automatic govern-ment response to sudden changes in a state’s financialsituation. However, the federal matching formula isrevised annually, based on changes in per capita income.In addition, the federal government has responded toextreme state needs in the past by writing legislation thattemporarily increases the match. For example, the 2003Jobs and Growth Tax Relief and Reconciliation Actincreased FMAP rates for 18 months to help states offsetrevenue reductions caused by the recession.
States often have chosen to not serve low-incomeparents whose incomes are above certain eligibility thresh-olds; federal law blocks states from serving adults withoutchildren unless the states have a waiver that allows this. To serve uninsured people who fall above state incomethresholds, Louisiana has typically relied on dispropor-tionate share hospital payments to finance hospitals caringfor uninsured patients.
Temporary Assistance for Needy Families
States have always set widely differing cash benefit levelsand, to some extent eligibility rules. Federal welfare reformin 1996 significantly widened the degree of state variationin eligibility and other policies, and though overall therange of state benefit levels has compressed somewhat,they have also by and large declined in real terms.14 Again,the Gulf states’ TANF eligibility policies and cash benefitsranked low nationwide. For 2004, Louisiana’s maximummonthly benefit for a family of three, at $240 per month,was ranked 7th from the bottom; Mississippi’s maximumbenefit, $170, ranked last.
TANF funding is allocated to the states in the form offederal block grants. The federal allocation to each state isbased largely on its federal entitlement funding under Aidto Families with Dependent Children (AFDC), whichrequired an approximately 20 to 50 percent state matchwith lower match requirements for poorer states. UnderTANF, some additional adjustment for high-growth andhigh-poverty states is now made in the form of supple-mental grants (both Louisiana and Mississippi havereceived these). TANF also requires maintenance of effort(MOE) spending by all states at a rate of 75 to 80 per-cent of their mid-1990s AFDC-related spending. SinceLouisiana, Mississippi, and the other Gulf states typicallyprovide among the lowest benefits in the nation, currentblock grants reflect the states’ historically low benefitlevels. In FY 2003, Louisiana received a block grant of $181 million, and Mississippi received $96 million. Bothstates were required to provide 75 percent in MOE spend-ing (Greenberg and Rahmanou 2005).
As a rule, if demand on TANF programs increasesrapidly, states have limited ability to expand coverage. Theblock grant allotments are essentially frozen in time, unlesschanged legislatively.15 The program has provisionsintended to accommodate changes in state resources orservice demands through a contingency fund and a loanfund. In the past, however, the requirements for gainingaccess to these funds have been difficult for states to meet.Prior to Hurricane Katrina, the contingency fund was usedrarely and the loan fund was never used.
Many poor families do not receive TANF benefits. Fed-eral rules stipulate that funds only be used to assist fami-lies with children or pregnant women. If states providecash assistance to families or individuals beyond this, theydo so without federal TANF aid. Although a few statesmaintain a state entitlement to assistance for those eligible,
none of the Gulf states have. Prior to Katrina, about 85 percent of poor Louisiana families and 82 percent of poor Mississippi families did not receive TANF cashbenefits.16
Challenges Katrina Posed to NormalProgram Structures and Operations
In addition to intensifying existing challenges for the fund-ing and administration of these programs, Hurricane Kat-rina created major new hurdles to serving the low-incomepeople most severely affected by the hurricane and itsaftermath. The storm and evacuation swelled the ranks ofapplicants for many programs and challenged state resi-dency rules by displacing so many people so quickly. Theurgency and magnitude of this large-scale migrationacross state and local borders may be unparalleled in theUnited States in the past century. In particular, Katrina
● increased the need for assistance;● moved this need across jurisdictional lines;● caused sudden and severe damage to state fiscal capac-
ity, particularly in Louisiana; and● created an unusually long time frame for an emergency,
with a high degree of uncertainty for both individualsand states and localities.
Housing Assistance
The Louisiana Recovery Authority estimated that 275,000 homes were destroyed and 650,000 people dis-placed by Hurricane Katrina, adding to the already-highdemand for limited housing assistance. The largest num-ber of Katrina evacuees moved from storm-affected areasto other locations within Louisiana, while Texas receivedthe second largest number of evacuees. Both the Atlantaand Chicago areas also received a large number. Overall,the Census Bureau’s Current Population Survey estimatesthat, as of January 2006, about 1.2 million people age 16and over evacuated as a result of Katrina. Over half had notyet returned to their homes six months later (Bureau ofLabor Statistics 2006a).
Unemployment Insurance
Hurricane Katrina destroyed about 18,750 businesses,according to the Louisiana Recovery Authority, pushing
Federalism and Hurricane Katrina 9
over 500,000 people to file new claims for unemploymentinsurance (Holzer and Lerman 2006). The UI system gen-erally requires the state in which the applicant worked topay unemployment benefits for claimants who havemoved. This is typically handled by an interstate claimsprocess, a standard feature of UI program administration.The scale of movement necessitated by Hurricane Katrinaappears to be much greater, however, than has occurredwithin the UI system in the past. Several states haveassisted Louisiana and Mississippi with their administra-tive responsibilities, with Texas taking a lead role in theinterstate claims administration. It is also unclear if thehome states—in particular, Louisiana—have the financialcapacity to meet their requirements under the system.
Medicaid
The hurricane, flooding, and evacuation triggered a rangeof new physical and mental health care needs. In addition,they exacerbated existing medical problems as patientswith chronic conditions lost regular access to their main-tenance medications, medical supplies, and providers(Schneider and Rousseau 2005). Residents lost employer-based health coverage when their jobs disappeared. Manyuninsured or underinsured people who received medicalassistance through Louisiana’s system of charity hospitalshave been unable to continue care; the storm closed 10 hos-pitals, eliminating 2,600 hospital beds. In addition,Katrina damaged about 100 community health centers,further diminishing the state’s ability to care for low-income people (Louisiana Recovery Authority 2005,Schneider and Rousseau 2005).
Without a Medicaid policy response, evacuees from outof state would have had to locate providers willing to servethem through their home state’s Medicaid program, orhost states would have borne the financial burden of pro-viding services to thousands of new residents.
Temporary Assistance for Needy Families
With the widespread loss of jobs and housing, demand forcash assistance and services through TANF would beexpected to increase both among evacuees in host statesand for those who remained in badly affected areas, espe-cially over the long run when aid from FEMA, unemploy-ment compensation, and other sources ends.17 A state thatserves a significant number of new TANF recipients wouldhave to determine how to fund this demand, typically with
few new resources, since each state’s TANF block grantallocation is largely fixed.
Katrina Slashed State Fiscal CapacityThe fiscal capacity of the Gulf states was already near or atthe bottom of the national range prior to HurricaneKatrina, due to both low revenue-raising ability andhigher-than-average expenditure needs (based on thestates’ underlying economic and demographic character-istics). The expectation that the hard-hit states contributesignificant amounts of their own revenues for these sharedfederal-state programs only exacerbates the problem.While overall capacity estimates are not available follow-ing Katrina, the federal Bureau of Economic Analysis(BEA) estimates that personal income in Louisiana in 2005fell by 9 percent from 2004 levels. In contrast, personalincome during that time grew by 4 percent in Mississippiand 6 percent in Alabama, probably because fewer areas inthese states were affected. Overall personal income grew by5.6 percent for the country as a whole, while Louisiana wasthe only state that experienced a decline in aggregate per-sonal income or per capita personal income.18
In 2002, Louisiana ranked 44 in revenue capacity; pre-liminary estimates in Yesim, Hoo, and Nagowski (2006)found that Louisiana would have been able to raise $3,850per capita had the average tax system been in place (thenational average was calculated as $4,661). Mississippiranked last and would have been able to raise $3,354 percapita. Given their relatively low revenue-raising ability,Louisiana and Mississippi exerted slightly higher effortthan might be expected, actually raising $4,398 and $3,768per capita, respectively. However, their effort was dwarfedby their expenditure needs even before Katrina, calculatedat $7,221 and $7,352 per capita respectively.
In the aftermath of Katrina, at the same time Louisi-ana’s revenue base was severely damaged, the state facedmajor new demands for rebuilding its infrastructure.FEMA estimates that the costs of Katrina’s (and Rita’s)effects in Louisiana are over $37 billion, or $8,244 percapita.19 In per capita terms, this is over three times theamount of money raised by state and local governments inLouisiana in 2002.
In contrast, the costs of other disasters have beensmaller in both absolute and per capita terms. The 2001World Trade Center attack was estimated to have causedover $8 billion in damages (in 2005 dollars), and becausethe disaster affected a smaller area in a state with a largerpopulation, this translated into a much lower cost of about
10 After Katrina
$428 per capita for the state. Similarly, the 1994 North-ridge earthquake in California was estimated to havecaused over $9 billion dollars in damages; this translatedinto a per capita cost of about $300 for the state. And bothNew York and California had greater fiscal capacity tobegin with. The 2002 fiscal capacity data also indicated thatNew York exerted additional tax effort after September 11,exceeding its estimated fiscal capacity in the aftermath.Other disasters have also affected a much smaller geo-graphic portion of their states, as reflected in the smallerper capita statewide costs (Louisiana Recovery Authority2005). These states, therefore, had a greater undamagedeconomic area to draw from in responding to the disasters.
Program Responses to Katrina
Congress and the Bush administration have enacted anumber of provisions to ease the burdens for hurricanevictims, for the jurisdictions from which they fled, and forthose areas to which they evacuated. Still, even with theseresponses, a high level of uncertainty remains about whatwill happen along the Gulf Coast, what program resourceswill be available and for how long, and what families willchoose to do. The federal responses so far have been par-tial when compared with the scale of dislocation andupheaval among evacuees and others directly affected byKatrina. There has also been a lack of clarity about manyfederal policies and how they should be implemented, cre-ating an additional burden for states, localities, and indi-viduals. It is also unclear how much the emergency willresolve itself over time, with evacuees returning home orchoosing to relocate permanently.
The program responses described in this paper haveattempted to address some of the challenges posed by Hur-ricane Katrina. As outlined in table 4 and highlighted inthis section, these efforts to meet the vast need have anumber of strengths and limitations. Some programresponses appear to recognize the Gulf states’ diminishedfiscal capacity while others do not. The responses so fargenerally underscore the emergency nature of this crisis,providing limited and short-term assistance rather than acoordinated long-term response.
Housing Assistance
FEMA’s existing Individuals and Households Program(IHP) and HUD’s new Katrina Disaster Housing AssistanceProgram (KDHAP), which was implemented through
executive action, began serving evacuees shortly after thehurricane. Both programs provide assistance for up to 18 months. The Katrina disaster program was imple-mented in late September, and serves only displacedpeople who were already tenants of HUD-assisted hous-ing. HUD also announced in late January 2006 the dis-tribution of $11.5 billion through the CommunityDevelopment Block Grant program for disaster fundingfor long-term rebuilding in five states (Louisiana, Missis-sippi, Alabama, Florida, and Texas) affected by HurricanesKatrina, Rita, and Wilma. State officials will determinehow to spend these funds (U.S. Department of Housingand Urban Development 2006).
Despite continued criticism that FEMA’s response tothe massive loss of housing has been slow and disorga-nized, the agency’s IHP is ultimately expected to serveabout 400,000 evacuees. However, IHP assistance is lim-ited by statute to either 18 months or a cap of $26,200.KDHAP is expected to serve about 50,000 prior HUD res-idents; these vouchers are also limited to 18 months. WhileFEMA has begun implementing a program to provide overa hundred thousand trailers, waiting lists are extremelylong and suitable locations appear to be scarce. In addi-tion, with arrival of the 2006 hurricane season, the safetyof these trailers in storm conditions is a concern (Lipton2006).
FEMA and HUD responded by providing aid to fam-ilies where they relocated, though with some constraints.For instance, people who hold Katrina disaster vouchersmust remain in their new jurisdiction. FEMA’s require-ment that the agency inspect damaged or destroyed homesto provide assistance outside of New Orleans or the threedesignated Mississippi disaster counties also appears toplace a burden on people who have evacuated long dis-tances from their home jurisdictions. In addition, thedemand created by Katrina is competing with existingunmet housing need—with Katrina evacuees bumpingprior applicants down waiting lists—and raising questionsabout the equity of who gets assistance and who doesn’t.Finally, the trailer program was intended largely to assistpeople in their original communities.
So far, FEMA has responded to evacuees’ need for shel-ter in part with vouchers for housing on the private mar-ket. In addition, under FEMA’s related IHP TransitionalRental Assistance program, Katrina evacuees can receivebenefits without prior home inspections. Recipients get athree-month benefit of $2,358, which is renewable for upto 18 months and cannot exceed $26,200 altogether. Thesepayments cannot be used for security deposits or utilities,
Federalism and Hurricane Katrina 11
Fund
ing
Elig
ibili
ty
Hou
sing
:FEM
Aan
dH
UD
(impl
e-m
ente
dSe
ptem
ber–
Oct
ober
2005
)
Fully
fede
ral.
Two
shor
t-te
rmpr
o-gr
ams
wer
ees
tabl
ishe
d:sh
elte
rth
roug
hFE
MA
IHP,
whi
chca
npr
ovid
eca
shpa
ymen
ts,l
odgi
ngre
imbu
rsem
ent,
ordi
rect
shel
ter;
and
vouc
hers
thro
ugh
HU
DK
DH
AP,
ford
ispl
aced
tena
nts
ofH
UD
-ass
iste
dho
usin
g.
IHP:
All
who
lost
hous
ing
toK
atri
naan
dde
clin
edtr
aile
rs;
peop
lefr
omN
ewO
rlea
nsor
3di
sast
erco
untie
sin
MS.
FEM
Am
usti
nspe
ctda
mag
eddw
ellin
gin
hom
eju
risd
ictio
nfo
roth
ers
tobe
elig
ible
(exp
ecte
dto
serv
eab
out
400,
000;
sign
ifica
ntw
aitin
glis
tsre
mai
n).
KD
HA
P:Te
nant
sal
read
yliv
ing
inH
UD
-ass
iste
dho
usin
g(e
xpec
ted
tose
rve
abou
t50,
000)
.
Une
mpl
oym
entI
nsur
ance
(ena
cted
Oct
ober
2005
and
Mar
ch20
06)
PL10
9-91
allo
cate
d$4
00m
illio
nto
LA,$
85m
illio
nto
MS,
and
$15
mill
ion
toA
L.
LAbe
gan
taxi
ngem
ploy
ers
in20
06as
ifth
etr
ustf
und
bala
nce
exce
eded
$900
mill
ion,
whi
chpr
even
tsem
ploy
erta
xes
from
incr
easi
ng.
Reg
ular
prog
ram
elig
ibili
tyis
unch
ange
d.
Thos
ew
hodo
notq
ualif
yfo
rUI,
gene
rally
the
self-
empl
oyed
and
pers
ons
with
very
low
/irre
gula
rea
rnin
gs,q
ualif
yfo
rDU
A.D
UA
typi
cally
last
s26
wee
ksbu
tis
cons
ider
edfo
rext
ensi
onat
the
fede
rall
evel
.On
Mar
ch6,
2006
,D
UA
was
exte
nded
13w
eeks
.
Med
icai
d(e
nact
edSe
ptem
ber
2005
–Feb
ruar
y20
06)
Wai
vers
and
MO
Us
allo
who
stst
ates
tose
rve
evac
uees
for
5m
onth
sw
ithas
sura
nce
that
the
fede
ralg
over
nmen
twill
com
pen-
sate
them
fort
hest
ate
mat
chre
quir
emen
t.Th
eFY
2006
budg
etre
conc
iliat
ion
legi
slat
ion
enac
ted
inFe
brua
ry20
06in
clud
edup
to$2
billi
onto
pay
the
stat
esh
are
forM
edic
aid
serv
ices
prov
ided
byw
aive
r(ho
st)s
tate
sth
roug
hJu
ne30
,200
6;to
fund
unco
mpe
nsat
edca
refo
rthe
unin
sure
dth
roug
hJa
nuar
y31
,200
6;an
dto
fund
the
hom
est
ates
’res
pons
ibili
ties
unde
rM
OU
s.
Pare
nts:
100%
FPL
Preg
nant
wom
en:1
85%
FPL
Chi
ldre
n(a
ll):2
00%
FPL
Alte
rnat
ivel
y,a
host
stat
ew
itha
wai
verm
aych
oose
tout
ilize
thei
row
nin
com
eel
igib
ility
rule
s,bu
tno
neha
vedo
neso
.
Tem
pora
ryA
ssis
tanc
efo
rN
eedy
Fam
ilies
(ena
cted
Sept
embe
r20
05)
PL10
9-68
(TA
NF
Emer
genc
yRe
spon
sean
dRe
cove
ryA
ctof
2005
)did
nota
utho
rize
anin
crea
sein
the
amou
ntof
fixed
bloc
kgr
ants
,bu
tallo
ws
host
stat
esto
befu
llyre
imbu
rsed
bya
$1.9
billi
onfe
dera
lco
ntin
genc
yfu
ndto
prov
ide
non-
recu
rrin
gca
shai
dto
evac
uees
,an
dex
empt
sev
acue
esfro
mw
ork
requ
irem
ents
and
time
limits
ifno
tre
ceiv
ing
othe
rsta
teca
shai
d.Th
ela
wal
sow
aive
sth
eus
ual1
00%
MO
Ere
quire
men
tfor
acce
ssto
the
cont
inge
ncy
fund
;mak
esa
fede
ral
loan
fund
allo
catio
nof
20%
ofth
est
ate
bloc
kgr
anta
vaila
ble
toLA
($32
.8m
illio
n),M
S($
17.4
mill
ion)
,an
dA
L($
18.7
mill
ion)
;wai
ves
inte
rest
orpe
nalti
esfo
rnon
pay-
men
t;m
akes
Qua
rter1
FY20
06an
dpr
iory
ears
’uns
pent
TAN
Ffu
nds
mor
eea
sily
avai
labl
e(a
ndth
ese
may
beus
edfo
rpur
pose
sot
hert
han
cash
aid)
;and
wai
ves
certa
inre
quire
men
tsan
dpe
nalti
esif
anin
abili
tyto
mee
tthe
mis
due
toth
ehu
rric
ane,
thou
ghLA
,MS,
and
AL
mus
tmai
ntai
npr
iors
tate
spen
d-in
gle
vels
.
Fora
idin
host
stat
esus
ing
cont
in-
genc
yfu
nds:
evac
uees
nota
lrea
dyre
ceiv
ing
cash
aid
from
any
stat
e,be
twee
nSe
ptem
ber2
005
and
Oct
ober
2006
(end
ofFY
2006
).R
ecip
ient
sar
eex
empt
from
wor
kre
quir
emen
tsan
dtim
elim
itsfo
rth
istim
e.
Fora
ssis
tanc
ein
3ho
me
stat
esus
ing
loan
fund
s:th
ese
reci
pien
tsar
eal
soex
empt
from
wor
kre
quir
emen
tsan
dtim
elim
its.
Tabl
e4
Key
Prog
ram
Prov
isio
nsEn
acte
dor
Impl
emen
ted
inRe
spon
seto
Hur
rica
neKa
trin
a
Bene
fits
Prov
isio
nsfo
rm
ovin
gam
ong
stat
es
IHP:
Shor
t-te
rmsh
elte
r(tr
aile
r,ho
telr
oom
,orc
ash)
,orv
ouch
ers.
Initi
alpa
ymen
tof$
786/
mon
thfo
r3
mon
ths
(nat
iona
lfai
r-m
arke
tre
ntfo
ra2
bedr
oom
apar
tmen
t).R
ecip
ient
sm
ayre
ques
tmor
em
oney
ifth
eyca
npr
ove
need
.M
axim
umof
18m
onth
sor
$26,
200
perh
ouse
hold
.
KD
HA
P:V
ouch
ers
forr
enta
lass
is-
tanc
ein
ane
wlo
catio
n(s
etat
the
low
erof
appl
icab
lelo
calf
air-
mar
ketr
ento
ract
ualu
nitr
ent);
secu
rity
depo
sita
ndut
ilitie
sde
-po
situ
pto
$325
;rel
ocat
ion
coun
-se
ling.
Vou
cher
sfo
ram
axim
umof
18m
onth
s.
IHP:
Ass
ista
nce
can
beus
edin
any
stat
e.
KD
HA
P:V
ouch
ers
are
inte
nded
fort
enan
tsth
atcr
oss
juri
sdic
tion
boun
dari
es,b
uton
cegr
ante
d,th
ete
nant
mus
tsta
yin
the
adm
inis
ter-
ing
publ
icho
usin
gau
thor
ity.
Reg
ular
UIi
spa
idac
cord
ing
tous
ualf
orm
ulas
.In
LAan
dM
S,D
UA
was
seta
thal
fthe
stat
ewid
ew
eekl
ybe
nefit
fort
hose
inel
igib
lefo
rUI.
MS
rais
edal
lUIc
laim
ants
’ben
efit
leve
lsto
the
stat
ewid
em
axim
umof
$210
perw
eek.
The
max
imum
paym
entw
as$5
,460
fora
llw
hoin
itiat
edne
wcl
aim
sbe
twee
nSe
ptem
ber1
1an
dD
ecem
ber3
,20
05.(
The
one-
wee
kw
aitin
gpe
riod
was
wai
ved
duri
ngth
ispe
riod
.)LA
surp
asse
dth
eun
em-
ploy
men
tlev
elre
quir
edby
fede
ral
law
asof
Oct
ober
30,2
005;
bene
-fit
sw
ere
exte
nded
for1
3w
eeks
fort
hose
who
sere
gula
rUIw
asex
haus
ted.
The
inte
rsta
tecl
aim
spr
oces
sad
dres
ses
thes
ecl
aim
ants
.Oth
erst
ates
adm
inis
terp
aym
ents
,but
LAan
dM
Sar
elia
ble
fort
heco
sts
ofre
gula
rUIb
enefi
ts.
Ben
efitl
evel
sfo
rrec
ipie
nts
inm
osts
tate
sar
eat
leas
tthe
min
i-m
umbe
nefit
pack
age
offe
red
aspa
rtof
the
host
stat
e’s
Med
icai
dor
SCH
IPpr
ogra
m.T
heex
cept
ions
are
forc
hild
ren—
due
todi
ffer-
ence
sbe
twee
nst
ates
’SC
HIP
pro-
gram
s,a
child
who
isen
rolle
din
Med
icai
din
his/
herh
ome
stat
em
ayqu
alify
only
forS
CH
IPin
aho
stst
ate
and
may
ther
efor
eha
vea
mor
elim
ited
bene
fits
pack
age.
Med
icai
dco
vera
geca
nbe
used
inan
yst
ate
inw
hich
apr
ovid
eris
will
ing
toac
cept
the
patie
nt.
Fund
edby
the
fede
ralc
ontin
-ge
ncy
fund
.
Non
recu
rrin
gca
shai
don
ly.
No
fede
rals
peci
ficat
ions
rega
rd-
ing
aid
from
the
loan
fund
.
Con
tinge
ncy
fund
toas
sist
host
stat
es,l
oan
fund
toas
sist
3m
ost
affe
cted
hom
est
ates
.
Sour
ces:
Kai
serF
amily
Foun
datio
n(2
005a
,200
5b);
Loui
sian
aW
OR
KS
(und
ated
);N
atio
nalE
mpl
oym
entL
awPr
ojec
t(20
05);
Soci
alSe
curi
tyA
dmin
istr
atio
n(2
005)
;U
.S.D
epar
tmen
tofL
abor
(200
4);V
rom
an(2
005)
.
FEM
A=
Fede
ralE
mer
genc
yM
anag
emen
tAge
ncy
IHP
=In
divi
dual
san
dH
ouse
hold
sPr
ogra
m
HU
D=
Dep
artm
ento
fHou
sing
and
Urb
anD
evel
opm
ent
KD
HA
P=
Kat
rina
Dis
aste
rHou
sing
Ass
ista
nce
Prog
ram
UI=
Une
mpl
oym
entI
nsur
ance
MO
U=
Mem
oran
dum
ofU
nder
stan
ding
TAN
F=
Tem
pora
ryA
ssis
tanc
efo
rNee
dyFa
mili
es
MO
E=
Mai
nten
ance
ofEf
fort
DU
A=
Dis
aste
rUne
mpl
oym
entA
ssis
tanc
e
FPL
=Fe
dera
lPov
erty
Leve
l
SCH
IP=
Stat
eC
hild
ren’
sH
ealth
Insu
ranc
ePr
ogra
m
but recipients can apply for additional funds for othertypes of expenses. Any assistance received under this pro-gram, however, counts against the $26,200 cap.
However, it may be years before families are resettled,and by mid-February, families in FEMA-funded hotelrooms were facing uncertain prospects as the agency beganstopping payments and relocating them. HUD’s 18-monthKatrina disaster vouchers offer somewhat greater stabilityto the limited number of Katrina victims eligible, thoughthey lack the portability of prior Section 8 vouchers. Incontrast, after the Northridge earthquake, when manylow-income people lost housing for an extended time,Congress allowed HUD to successfully administer emer-gency vouchers for 18 months, at the cost of $3.5 billionfor 350,000 families. About 10,000 of these vouchers weremade permanent.
The Katrina program responses have also been markedby cumbersome implementation requirements, potentialadministrative duplication of existing assistance pro-grams, and inefficiencies, due to their short-term nature.FEMA’s decision to respond with an array of temporaryhousing options, rather than build on existing channelssuch as the HUD Section 8 voucher system, appears tohave created a less efficient or effective means of servinglow-income families’ needs (Katz et al. 2005).
Unemployment Insurance
Public Law 109-91, signed on October 20, 2005, trans-ferred a total of $500 million from the federal unem-ployment account to the three most affected states: $400 million to Louisiana, $85 million to Mississippi, and$15 million to Alabama. This allows the states either toreduce unemployment insurance tax rates or to postponeincreases in those tax rates (Congressional Budget Office2005b). PL 109-91 also provided additional flexibility tostates hosting evacuees, allowing them to use UI funds toassist the affected home states with their program admin-istration responsibilities. After Louisiana passed the setlevel of unemployment required by law, the federal-stateextended benefit program went into effect October 30;those whose regular UI benefits were exhausted couldapply for an additional 13 weeks of benefits (LouisianaWORKS, undated). In addition, DUA was implementedfor a 26-week period with the presidential declaration ofdisaster, and on March 6, 2006, President George W. Bushsigned a 13-week DUA extension.
It is unclear whether the new federal funds transferredto UI trust funds for the three most affected states havebeen sufficient to meet demand. To respond to the wide-spread need, Mississippi raised all UI claimants’ benefit
levels to the statewide maximum ($210 per week, or a total of $5,460) and waived the usual one-week waitingperiod for all who initiated new claims between Septem-ber 11 and December 3, 2005. As of January 2006, about140,000 unemployed workers from Louisiana, Mississippi,and Alabama were receiving regular UI benefits (about93,000) and DUA benefits (about 47,000) due to Hurri-cane Katrina. The majority of workers receiving benefits,about 99,000, were from Louisiana (National Employ-ment Law Project 2006b).
While Louisiana and Mississippi have somewhat easier-to-satisfy monetary qualifying requirements comparedwith all states, their very low benefits and replacementrates indicate that evacuees relocating in areas with ahigher cost of living are at a significant financial disad-vantage.20 About half of the Louisiana workers receivingregular UI and DUA benefits had moved out of state,according to the National Employment Law Project(2006a).21
The state where the worker was employed is required bythe regular UI system to fund evacuees’ benefits; thispotentially imposes considerable costs on Louisiana. Thisrequirement is especially difficult following Katrina, sincethe state’s ability to fund these costs is diminished, evenwith the additional federal funds. DUA, in contrast, is fullyfederally funded under FEMA.
Both regular UI and DUA provided some assistance for26 weeks after the hurricane. In addition, Louisiana imple-mented extended benefits starting in late October 2005,and DUA’s 13-week extension began in March 2006. Butwith the apparent destruction of an estimated 18,750 busi-nesses in Louisiana alone, and Louisiana’s relatively highunemployment rate even prior to Katrina (5.8 percent),the need is likely to extend well past this time period.22
While rebuilding has created some new jobs and is likelyto continue to do so, many of these jobs appear to requiredifferent skills than the displaced possess, and may noteven be accessible to them.
Medicaid
In mid-September 2005, the federal Centers for Medicareand Medicaid Services (CMS) initiated Medicaid waiversthat allowed host states, among other things, to serve evac-uees for five months with the assurance that they wouldnot be responsible for the state match requirement.23 Theeffect of the waivers, related MOUs between the federalgovernment and home states, and subsequent FY 2006federal budget allocations was that the federal governmentwould compensate host states serving evacuees for theusual state financial match requirement. The host states
14 After Katrina
could claim reimbursement from CMS for these servicesuntil the end of June 2006. The MOUs implied a potentialfinancial obligation for the Gulf states, until the federalbudget legislation was passed (Kaiser Commission onMedicaid and the Uninsured 2006a).
The FY 2006 budget reconciliation legislation, enactedin early February 2006, basically formalized the terms ofthe waivers and superceded aspects of the MOUs, provid-ing federal money to fund home states’ responsibility forthe host state’s match. The budget bill included up to anadditional $2 billion for the federal government to pay thehost and home states’ match through June 30, 2006. Thelimit on the funds makes this commitment more akin to ablock grant than Medicaid’s usual open-ended match.Whether the federal funding will be sufficient to cover thecosts incurred under the waivers, or for the home states’state match responsibilities, is unclear (Kaiser Commis-sion on Medicaid and the Uninsured 2006b).
Some evacuees may receive a more—or less—generousbenefit package than before Hurricane Katrina, becausethe Medicaid waivers stipulated that it must be at least asgenerous as the host state’s Medicaid or SCHIP programs.Home state services not covered by the host state may bepaid out of an uncompensated care pool, if the state hasone in their waiver. These waivers allowed host states toexpand their eligibility consistent with federal waiverguidelines, which in some cases were broader than exist-ing home state policies. To date, all host states have donethis. Even with the waivers, though, people with serioushealth conditions could remain ineligible for Medicaidbecause they do not qualify based on the eligibility guide-lines for evacuees. Those not qualifying for servicesinclude all adults without children (unless states have afederal waiver specifically to allow this), some parents, andcertain groups of immigrants.
Program changes enacted after Katrina provided someincentives for states to respond rapidly to the sudden andlarge movement of people. Because the Medicaid waiversspecified that the federal government would compensatethe host states for 100 percent of the cost of serving evac-uees, they eliminated the possible financial incentive forhost states to avoid or delay serving people. This couldpotentially have had very negative effects if treatment hadbeen delayed for physical or mental health conditionsrelated to the flood and evacuation.
Home states faced a far greater level of uncertaintyfollowing Katrina, however. For over five months, theexecuted MOUs between the federal government and thestates implied that Louisiana and the other states wouldeventually be financially responsible for the state match forservices provided to their evacuees, though they were likely
ill-equipped to do so. Congress’s passage in February ofthe FY 2006 budget bill, with its $2 billion in additionalMedicaid funding, appears to have freed the home statesof this obligation, assuming that the funding is sufficientover the long term. The budget bill left a number of fiscalproblems unaddressed, however. While the states are pro-tected for Medicaid for a period, there is still uncertaintyabout the size of the uncompensated care pools availableto cover uninsured people not eligible for Medicaid andMedicaid services covered in the home state but not in thehost state.
Although the federal legislation finally providedgreater certainty in February, the home states had tograpple for months with a lack of clarity about their fis-cal responsibilities. In addition, the period of federallyfunded coverage is still fairly limited—five months. Thisstands in contrast to the 7 to 11 months of assistance pro-vided under the New York State Disaster Relief Medicaidinitiative after September 11 (Robert Wood JohnsonFoundation 2003). Both home and host states must dealwith evacuees whose access to Medicaid services underthe Katrina waivers is running out. Finally, even theincrease in federal funding may not be sufficient toaddress the range of new and exacerbated physical andmental health needs resulting from Katrina, which couldpotentially take several years.
Temporary Assistance for Needy Families
The TANF Emergency Response and Recovery Act of2005, enacted September 21, made already-authorizedfunds available to affected jurisdictions. It made the exist-ing TANF contingency fund available to host states—including Louisiana, Mississippi, and Alabama, forevacuees who remained within their borders—and pro-vided money from the TANF loan fund to these threehardest-hit states without requiring loan repayment orinterest.24 These states are also exempt from most otherTANF penalties until the end of FY 2006 if their failure tomeet federal requirements is due to the hurricane’s effects.
Given that each state’s TANF block grant allocation islargely fixed, a host state that served a significant numberof new residents would have to determine how to fund thisdemand with limited new resources. The TANF recoverylegislation provided some additional money through thecontingency and loan funds until the end of FY 2006. The contingency fund totals $1.9 billion; the loan fundprovided $32.8 million to Louisiana, $17.4 million to Mis-sissippi, and $18.7 million to Alabama. However, thecontingency fund allocations to host states are based on aset percentage of their block grants and not on the num-
Federalism and Hurricane Katrina 15
ber of evacuees they have, so funding is likely excessive tosome states and inadequate to others. In addition, howthese funds are being used, or if they will be sufficient tomeet the demand for assistance over the long run, isunclear.
The TANF recovery legislation also attempted toaddress some of the financial and other risks for host statesserving evacuees. It made the already-existing TANF con-tingency fund far more accessible to host states than in thepast, and made available some additional federal resources(for example, moving up the disbursement of first quarterFY 2006 funds). These funds, however, may only be usedto provide short-term nonrecurring cash assistance tofamilies with children who are not otherwise receivingcash aid from any state. Work requirements and timelimits are also waived for these families until the end of FY 2006. The law technically authorizes no new money,however.25
While the changes to the loan fund exempt Louisiana,Mississippi, and Alabama from interest payments or non-payment penalties, the TANF recovery legislation doesrequire that they maintain prior levels of state spending togain access. The contingency fund waives the customary100 percent MOE requirement that states match federalfunds to gain access to the contingency fund (one of thereasons the fund was so rarely used). The scale of the states’short-term and long-term need to provide TANF cashassistance to Katrina victims is still unclear, however, leav-ing open the possibility that the fixed block grant structuremay pose problems in the future, especially with Louisi-ana’s deteriorated fiscal condition.26
ConclusionsA number of efforts have been made to address the crisisthat Katrina created. HUD’s Katrina disaster housingvoucher program was implemented September 26, 2005.FEMA’s emergency shelter efforts began shortly after thestorm and the Individuals and Households Program wasin operation by the end of September. These housinginitiatives were altered intermittently between September2005 and February 2006, when FEMA’s payment for hotelrooms came to an end. Congress approved emergencyallocations to the UI trust funds of the three directlyaffected states on October 20, and a 13-week extension toregular UI benefits triggered by the state’s high unem-ployment rate began in Louisiana at the end of October.The 13-week extension to Disaster Unemployment Assis-tance, first introduced in September, was signed by Presi-
dent Bush on March 6. CMS announced the availability ofits Medicaid waivers on September 16, and by mid-December, 17 had been approved. Federal budget legisla-tion signed in early February 2006 provided additionalfunds for home and host states’ Medicaid costs. TANFrelief and recovery legislation was introduced on Septem-ber 7 and signed into law on September 21.27
But many of the problems Katrina has created remainwith the arrival of the 2006 hurricane season, and criticalsteps should be taken now to ensure that future programresponses to large-scale disasters are significantly faster,more comprehensive, and more effective. This paperoffers one such proposal.
The shared federal-state-local government responsibil-ity for the programs described in this paper can make themcomplex even under normal circumstances. The massiveand sudden cross-jurisdictional migration of people inneed of services and the sheer increase in the demand forassistance, the sharp loss of state fiscal capacity, and theconsiderable length of time likely needed to resolve the enormous upheaval Katrina caused all further strainthe usual structures of these programs and challenge theirability to respond effectively to the disaster. While theresponses to Katrina by these four critical programs werecertainly important and welcome, they met only part ofthe need, were in many cases halting and unclear, and con-tributed to significant uncertainty for individuals and fam-ilies, and the jurisdictions trying to help them.
HUD’s Katrina housing voucher program was imple-mented shortly after the hurricane, but its vouchers wereavailable only to prior recipients of HUD housing assis-tance and are not portable to new jurisdictions. FEMA’semergency housing policies have been fragmented andconfusing for individuals, families, and jurisdictions alike.Regular UI provides unemployed workers who qualify thevery modest benefits of the home states in which theyworked, even when they have moved to far more costlyareas. Those who lost jobs as a direct result of Katrina anddid not qualify for regular UI could apply for DUA, but itspayments were even lower—about half those of the regu-lar program. Both programs provided assistance for a lim-ited period, given the scale of job loss Katrina created.While legislation passed within a couple months to addfederal funds to the hardest-hit states’ UI trust funds, itwas unclear if this would be enough to offset new demandfor assistance. The extension to DUA was enacted in earlyMarch, days after benefits had expired.
In the case of Medicaid, the federal government quicklyprovided waivers to clarify what the host states wereexpected to do for Gulf state evacuees over the near term.
16 After Katrina
But these waivers offered host states federal funding fortheir state match for only five months, and many evacueeswere not eligible for any Medicaid assistance. As the fivemonths’ coverage comes to an end, the host states face thequestion of how to provide services to evacuees over thelong term. In addition, the home states’ fiscal responsibil-ity for the state share of Medicaid costs was not resolveduntil the federal budget was passed in February. Moreover,the federal budget allocations possibly will not be sufficientto cover all of the costs incurred under the waivers, atwhich point the Gulf states could face costs if the MOUsare enforced.
TANF recovery legislation was also limited—for exam-ple, states can only use contingency funds for short-termnonrecurring aid to families with children who are nototherwise receiving state cash assistance. But the legisla-tion was enacted relatively quickly and addressed many ofthe major problems and uncertainties, including thefinancial burden on the home states and host states’ poten-tial financial incentives to avoid the costs of serving evac-uees. In this way, it stood in contrast to the efforts in theother programs, where administrative accommodationsleft significant insecurity for months after Katrina.
Thus, the development of these disaster responseslacked a clear and timely discussion of how to help evac-uees stabilize and resume their lives over the long run, andof the incentives, policy choices, and constraints facinghost and home states. To provide more effective assistanceto both people and jurisdictions, and to avoid thisextended paralysis in future major disasters, Congressshould take responsibility for debating and enacting emer-gency response provisions in each major federal-state-local program that assists needy people. This shouldinclude but not necessarily be limited to housing assis-tance, unemployment compensation, Medicaid, and TANF.The debate should include discussions of the appropriatelevel and type of response due to people deprived of theiremployment, housing, health care, assets, or otherresources as a result of a major disaster.
These emergency response provisions should explicitlystate
● how assistance would be triggered in the event of adisaster;
● what assistance individuals and families should receive;● how funding and service responsibilities would be allo-
cated among states, localities, and the federal gov-ernment, given the possibility of major populationmovements and the fiscal devastation of state and localgovernments; and
● how long program support for individuals and familieswould be continued, appropriate to the scale of thedisaster.
These disaster response mechanisms should be fully feder-ally funded, thus avoiding potential incentives among fis-cally responsible host states or localities to avoid servingpeople in need and lessening the financial burden on homestates or localities that may suffer the dilemma of dimin-ished fiscal capacity combined with increased need. Pro-gram administration, however, may best be shared amongthe national and state, and in some cases, local governments.
Congress must consider a number of other importantquestions as well.
● What criteria would trigger the determination that adisaster is of sufficient scale and impact to warrant useof these provisions?
● How exactly would the mechanisms be administered?● What funding would enable them to operate effectively?● How can Congress guide the determination of affected
regions, states, and localities, and the allocation of fundsamong them?
● What executive branch and Congressional actions wouldbe required at the time of the disaster to activate the emer-gency response provisions and to appropriate the funds?
Congress should also consider whether the eligibility stan-dards used and the services and benefits offered should besubstantively more expensive in the aftermath of a disasterthan during “normal” times. The Katrina experience sug-gests that these policy choices should recognize in someway the severity and long-term nature of the hardship andlong-term economic disruption caused by a major disaster.
In considering how best to approach the design of effec-tive emergency response mechanisms, Congress has anumber of useful sources of evidence from which to draw.TANF’s relative responsiveness in addressing the needs ofboth host and home states for an extended period (a yearor more) is worth exploring, as is the comparative lack of responsiveness within other programs. One reason for TANF’s response appears to be that administrativeframeworks—the contingency and loan funds—alreadyexisted within the program. Although they were limitedand had to be modified for Hurricane Katrina, they pro-vided administrative vehicles for a comparatively rapidresponse. Other lessons learned so far from the troubledresponse to Katrina, and the many studies currentlyreviewing that response and opportunities for improve-ment, can also offer insights.
Federalism and Hurricane Katrina 17
In addition, lawmakers can learn from past disasters,including the Northridge earthquake and the aftermath ofthe World Trade Center attack. For example, to assist inhousing the displaced, Congress could authorize a pro-gram modeled on the response to the Northridge earth-quake that would provide wide-scale emergency vouchersfor up to 18 months and assist in locating appropriateaffordable housing. The New York State Disaster ReliefMedicaid program enacted after September 11 is anotherpossible model of a more coherent and enduring emer-gency response. Almost 350,000 people were providedwith a simplified and expedited enrollment process andMedicaid assistance for 7 to 11 months after the terroristattack, significantly longer than under the Katrina waivers.
The extensive difficulty that Katrina created also raisesquestions about whether the current complex mix of fed-eral, state, and local program responsibilities is the mosteffective way to serve families and individuals under nor-mal times. Some of the tensions that Katrina intensified—such as existence of widely different state UI benefits andeligibility policies at the same time the workforce is highlymobile—exist to a lesser extent at all times. While this isnot this paper’s focus, the period following Katrina offerspolicymakers and others the opportunity to address thesecritical questions, seeking more workable and equitableways to fund, set standards, and administer programsserving low-income people at all times.
The issues this paper outlines are unlikely to be resolvedsimply. But the widely recognized inadequacy of theresponse to Katrina—and its particularly harsh impact onlow-income families and individuals—creates a window ofopportunity for a basic “good governance” response.Without a fundamental remedy that can allow muchspeedier and more effective responses, possible futurecatastrophes such as an earthquake on the West Coast or alarge-scale terrorist attack on another major city could wellresult in a repeat of the fragmented and partial responseseen after Katrina.
Notes1. As of January 2006, the Census Bureau’s Current Population Survey
had identified about 1.2 million Hurricane Katrina evacuees age 16and older.
2. Programs for elderly and disabled people—such as Social Security,Medicare, and Supplemental Security Income—are generally fullyfunded and are not included here. In addition, while the paperfocuses on a selection of essential programs with a mix of intergov-ernmental arrangements, it does not include several other impor-tant programs for low-income people, such as Food Stamps andservices funded through the Social Services Block Grant.
3. The paper examines federal and state policies as of April 2006 but doesnot attempt to explore fully the implementation of these policies.
4. For Medicaid, patients may receive services from an out-of-stateprovider if they can find one that accepts payments from their homestate.
5. Revenue capacity measures the ability of a jurisdiction to raiserevenues, given its underlying demographic and economic char-acteristics (Yesim, Hoo, and Nagowski 2006).
6. This is based again on the average amount spent nationally given astandard set of demographic characteristics.
7. An alternative base period entails allowing applicants who areinitially deemed ineligible for UI benefits to have a second monetaryeligibility determination under an alternative period; in the alterna-tive period, more recent earnings can be taken into considerationthan would otherwise be the case. For job resignations, most stateswill compensate someone who quits only if it is for a work-relatedcause. Quits for personal reasons, such as to care for a sick relative,are generally not compensated (Vroman 2005).
8. The tax rate is based in part on employers’ unemployment experi-ence and therefore may be higher for those with higher rates of layoffand other job separation.
9. Recipiency is measured as the percentage ratio of weekly beneficia-ries to weekly unemployment.
10. In general, unemployed people may not receive benefits because ofinsufficient previous earnings, nonqualified reasons for job loss, andthe failure to maintain eligibility while receiving benefits (Vroman2005)
11. Parents who would have qualified for a state’s Aid to Families withDependent Children program in 1996 when the program was abol-ished continue to be covered by Medicaid. These generally areparents with incomes below 50 percent of the federal poverty level.
12. Due to the large share of low-income people in the Gulf states, thepercentage of their population covered by Medicaid is actuallyabove the national average.
13. The difference in eligibility levels for working and nonworkingparents results from states’ income disregards for working parents.
14. It is worth noting that Alabama, Louisiana, and Mississippi areamong only eight states that increased benefit levels in real termsbetween 1996 and 2004, but their benefits nonetheless remain verylow (Congressional Research Service 2005).
15. The TANF reauthorization contained in the FY 2006 budget billpassed by Congress in February 2006 did not change the prior basicallotments.
16. These numbers are derived from Urban Institute calculations, divid-ing the number of families receiving TANF cash assistance in eachstate in FY 2002 (Administration for Children and Families 2004)by the number of families with children under 18 under the FPL ineach state (Bureau of the Census 2003).
17. Estimating the need for TANF is complex because eligibilityrequirements vary widely among states and there is no entitlementto TANF assistance. TANF caseloads declined in Louisiana in themonths following Katrina and remained roughly steady in Texas,the other state that received the greatest number of evacuees. Thereceipt of assistance from FEMA and other sources would beexpected to affect a family’s TANF eligibility, at least for the imme-diate term.
18. According to estimates from the BEA, per capita personal incomedeclined by over 9 percent in Louisiana while growing by 4.6 per-cent in the country as a whole. However, these numbers reflect statepopulations as of July of each year. If we use end-of-year populationfigures for Louisiana (reflecting the hundreds of thousands who left
18 After Katrina
the state), per capita personal income still declined by about 3 per-cent from 2004 levels.
19. While Rita’s costs were much lower, the emergency conditionsalready in place following Katrina make differentiating betweencosts attributable to each hurricane difficult.
20. The UI system assumes that the home state will pay for benefitsthrough its trust fund for regular UI benefits, and requires that therecipient be served consistent with the home state’s policies.
21. In addition, initially the governor of Louisiana issued an executiveorder waiving the usual requirement that claimants report to the UIoffice every week as a condition of benefit receipt. This requirementwas reinstated at the end of November, but according to an inter-view with staff at the National Employment Law Project it was dif-ficult to notify claimants, many of whom had moved several times,and many fell off the rolls. It was also difficult for some claimants toreach the overloaded UI system by telephone.
22. In October and November, unemployment in Louisiana reachedover 12 percent, according to the Bureau of Labor Statistics (2006b).
23. CMS developed a waiver template and approved waivers on anexpedited basis. Between September and December, CMS granted17 host states waivers, and executed memoranda of understandingwith home states.
24. Federal guidance on the TANF legislation also allowed these loanfunds to be used for victims of Hurricane Rita (Office of FamilyAssistance 2005).
25. See Congressional Budget Office (2005a) and Social Security Ad-ministration (2005).
26. It is also possible, however, that if in the long run the state ends upwealthier, with its poor residents dispersed, block grant funding willbe sufficient or even greater than necessary to meet need.
27. Additional proposals have been made, though none appeared to beunder serious consideration as of mid-March. For instance, larger-scale short-term and long-term housing voucher programs wereproposed to meet the immediate needs of Katrina evacuees moreeffectively than the approaches taken so far by FEMA and HUD, andto tackle longer-term shortages in affordable housing (see Popkin,Turner, and Burt 2006). The unsuccessful Grassley-Baucus legisla-tion of September (S. 1716) proposed significantly more consistentand comprehensive responses in Medicaid, unemployment com-pensation, and TANF.
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———. 2005b. “Cost Estimate: H.R. 3971, QI, TMA, and AbstinencePrograms Extension and Hurricane Katrina Unemployment ReliefAct of 2005.” Washington, DC: Congressional Budget Office, Octo-ber 25.
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National Employment Law Project, February 9. http://www.nelp.org/docUploads/KatrinaExtension.pdf.
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Yesim, Yilmaz, Sonya Hoo, and Matthew Nagowski. 2006. “Measur-ing the Fiscal Capacity of States: A Representative Tax System/Representative Expenditure System Approach, Fiscal Year 2002,Draft.” Tax Policy Center and the New England Public Policy CenterReport. Boston, MA: Federal Reserve Bank of Boston, April.
20 After Katrina
Pamela Winston is a research associate in The Urban Institute’s Center on Labor,Human Services, and Population.
Olivia Golden is a senior research fellow and director of the Assessing the NewFederalism Policy Center at the Urban Institute.
Kenneth Finegold is a senior research associate in the Income and Benefits PolicyCenter at the Urban Institute.
Kim Rueben is a senior research associate at the Urban Institute–Brookings Institu-tion Tax Policy Center.
Margery Austin Turner is director of the Urban Institute’s Metropolitan Housing andCommunities Policy Center.
Stephen Zuckerman is a principal research associate in the Health Policy Center at the Urban Institute.
21
About the Authors
The UrbanInstitute2100 M Street, N.W.Washington, D.C. 20037
Phone: 202.833.7200Fax: 202.429.0687http://www.urban.org