Hurricane Katrina Relief: $700 Million In Aid Went Missing

A total of $700 million in Hurricane Katrina aid reportedly went missing after the devastating storm. Department of Housing and Urban Development (HUD) Inspector General David Montoya said the taxpayer funds were supposed to help property owners elevate their homes.

A HUD report on the Hurricane Katrina grants states that more than 24,000 property owners received the funds. The grants of up to $30,000 each were reportedly either pocketed or misspent by some storm victims, according other to the government report.

The HUD inspector general had this to say about the $700 million in unaccounted for Katrina funds:

The fact of the matter is that the money they received was for a specific purpose and the specific purpose was to elevate these homes to avoid future catastrophes. Considering there was just under $1 billion earmarked for this particular program and there’s $700 million that wasn’t used for that, I’d give [grade] it [the grant program] a very low D.”

The Hurricane Katrina home elevation program problems are reportedly being used as a guide for Congress during Hurricane Sandy recovery funds discussions. The HUD official now feels that handing out money after a disaster to people who just lost everything is counterproductive to specific program goals. Montoya also noted that handing over money to disaster victims who promise to “do something” at a later date was not a good idea in hindsight.

While the government office may think the grant funds were handed out too soon after Hurricane Katrina, some disaster victims feels they had to wait far too long and jump through too many hurdles to garner any type of recovery assistance. The seemingly simple task of presenting a property deed when applying for aid was an impossible task for some New Orleans residents. When both homes and the local courthouse were flooded during Katrina, access to such documents was simply not possible for some residents.

The HUD official is now recommending that disaster relief funds not be distributed until after the specified projects are completed. While such a process would make sure the stated tasks were accomplished, some disaster victims would likely not be able to afford undertaking such tasks themselves.


The Department of Housing and Urban Development officials also believes that the government will never be able to get the reportedly misspent money back from recipients.

What do you think about the way the Hurricane Katrina recovery effort was handled?

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