State Financial Resiliency for Disaster Preparedness “TEAM EMT” Matthew Baker, Mike Kahle, Brandon Key, Kelly McCoy, Adriana Valenciano Trachtenberg School of Public Policy and Public Administration Fall 2012 CAPSTONE

Project Background Client: FEMA Office of External Affairs Research Questions: What policy options best increase state financial resiliency to prepare for and respond to disasters? What policy options should the federal government consider that would encourage states to increase their financial resiliency to prepare for and respond to disasters? Key Definitions: Resilience: the ability to recover system capacity while maintaining essential capabilities of community services. Financial resiliency: the ability to fund essential state and local level responses and recovery efforts brought on by natural or man-made disasters. Deliverables: State capacity building toolkit Long term strategic planning recommendations for FEMA

The Problem Quantity and cost of disaster declarations are increasing. Current response mechanism is unsustainable – Peak Year for Post Disaster Aid 2011 – Peak Year for Disaster Declarations President Reagan is only President to Reverse the Growth Trend

The Problem Underlying causes Climate Change Increased Development in Vulnerable Areas Political Influence Moral Hazard Unsustainable Resource Requirement Growth

Understanding Federal Financial Options for Post-Disaster Environments Disaster Strikes! Governor Requests Declaration FEMA Recommendation Presidential Disaster Declaration Supplemental vs. Substitute Cost Share Grant Focus Financial Considerations THE STATUS QUO

Methodology – Policy Analysis Literature Review Interviews with Emergency Management Professionals, Private Industry, and Academia Distilled Policy Options and Relevant Criteria Analysis and Assigning Values to Options Based on Criteria State and Federal Recommendations

Policy Options 11 options analyzed – 6 State / Near Term (1-2 Years) – 5 Federal / Long Term (10-20 Years) Criteria (rated -3 to 3): – State Financial Resiliency – Administrative Feasibility – Legal Feasibility – Political Feasibility

Defining the Criteria Change in State Financial Resilience represents the extent to which an option increases or decreases state financial resilience for disaster response, planning, preparedness, mitigation, and recovery. Administrative Feasibility represents the extent to which a policy option would increase or decrease the number and/or scope of responsibilities currently assigned to state or federal agencies.

Defining the Criteria Legal Feasibility represents the scope of any change to state or federal laws that would be needed to implement the policy option. A “3”indicates no legislative changes and easy to implement in current legal framework, while a “-3” indicates extensive and systematic legislative efforts. Political Feasibility represents odds that the option would be adopted given the political climate where the option would take effect. This takes into account cost, admin burden, & complexity of the policy (since each may impact electoral outcomes) for the policymakers.

State Policy Options Policy Options (State) State Financial Resilience Administrative Feasibility Legal Feasibility Political Feasibility Unweighted Score Weighted Score* General Obligation Bonds Phased Increase in Residual Market Rates Risk-Based Special Assessments System Development Charges Implementation and Stronger Enforcement of Building Codes Reduce Basic Coverage Available Through Residual Market May be viable option in right political climate * *

Federal Policy Options Policy Options (Federal) State Financial Resiliency Administrative Feasibility Legal Feasibility Political Feasibility Unweighted Score Weighted Score* Change per Capita Damage Indicator More Accurate Capacity Indicators like Total Taxable Resources Increasing State Cost-Share Under the Stafford Act Clark/Mahul World Bank Model Pure Savings out of State Budget

Final Recommendations State Options: – General Obligation Bonds – Increased State Insurance Rates – Risk Based Special Assessments – System Development Charges – Improved Building Codes Federal Options: – Improved State Capacity Indicator – Adjusted Per Capita Indicator

Challenges Low Initial Response Rate Changing Methodology Political Sensitivity Time Constraints HURRICANE SANDY!

QUESTIONS?

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