Long, Unpredictable Delays Found in Louisiana ‘The Road Home’ Grants to Homeowners

FOR RELEASE

Tuesday
May 27, 2008

Louisiana homeowners who sought federally-funded grants through “The Road Home” program for homes damaged by Hurricanes Katrina and Rita have had to wait more than eight months on average to receive grants, according to a study issued today by the RAND Corporation.

Only about half of eligible applicants who applied for compensation in December 2006 had received grants one year later.

The study suggests the Louisiana Recovery Authority, which administers the program, take three steps to expedite grant-making for the remaining eligible applications: focus on applications that have been “stuck,” in some cases for hundreds of days; establish time goals for applications remaining in the later segments of the grant-making process; and, encourage coordinated efforts by companies and agencies participating in the program to remove sources of delay.

“The grant-making process was slow, in large part, because it was not designed to be fast,” said Rick Eden, lead author of the study and a senior research analyst at RAND, a nonprofit research organization. “The process could handle a large number of applications, but it was complex, with many potential sources of long delays. It was not designed to ensure that each application would be handled in a timely manner.”

One example of a bottleneck occurs late in The Road Home program when funds are requested from the U.S. Department of Housing and Urban Development, Eden said. The Road Home program waits to accumulate a certain number of closed applications before it asks the federal agency for the actual grant money. A faster method would be to have HUD pre-deposit funds so that the grants could be distributed immediately after applications are completely processed.

The Louisiana Recovery Authority created The Road Home program to disburse about $8.1 billion in federal block grant funds to Louisiana residents whose homes were damaged or destroyed by Hurricanes Katrina and Rita in August and September 2005.

The study, sponsored by the Louisiana Recovery Authority, was conducted by the RAND Gulf States Policy Institute. The study’s main objective was to assess whether the program met the two goals of processing all applications in a timely manner and making sure that all applicants had access to a fair and swift resolution any errors, disputes and appeals.

The study did not examine the performance of The Road Home program in terms of cost or quality of grant outcomes. To assess the timeliness of the grant making process, RAND used data provided by ICF International, the company operating The Road Home program. Individual homeowners were not identified in the data.

The program began in July 2006 and quit accepting new applications on July 31, 2007. More than 186,000 homeowners applied for grants through the program. Researchers found that by Dec. 18, 2007, 27 percent of the applications were classified as inactive or ineligible. Grants had been made to 31 percent of the applicants, and 42 percent remained in the system.

Despite initial expectations that grant applications would be processed promptly, no goals for timeliness were established. The program goals and metrics focused on quantity of activities performed in a time period, not speed, according to the RAND study.

Many applications were sent back through individual segments of the process numerous times. The program sent entire batches of applications back for more work based on errors found in samples, despite the fact that most of the applications sent back for rework had no errors. The study also found evidence of “cherry picking” applications that could be moved through the grant-making process most quickly. This resulted in aging backlogs of slower-moving applications.

Although a few homeowners received grants in as little as two months, the median time was 243 days and more than 25 percent of funded applicants waited more than 296 days.

Other findings included:

  • Homeowners with condominiums and mobile homes waited about 50 days longer to receive grants than did those with houses.
  • Homeowners who chose to relocate elsewhere in Louisiana or sell their homes waited about 100 days longer than those who opted to stay and repair their homes.
  • Homeowners with flood or wind insurance waited longer for grants than those who had no insurance.
  • The three title companies used by the program to handle closings and payment of the grants differed in the types of homes they processed and in their performance.

The RAND Gulf States Policy Institute helps improve policy and decision making through research and analysis in Louisiana, Mississippi and Alabama. Established in the wake of Hurricanes Katrina and Rita, the Institute’s long-term mission is to speed the region’s reconstruction and improve the effectiveness of public resources applied to human, social, and economic development needs.

The Institute is a collaboration between RAND, including the Pardee RAND Graduate School, and seven universities in the region: Jackson State University, Tulane University, Tuskegee University, University of New Orleans, University of South Alabama, University of Southern Mississippi, and Xavier University of Louisiana.

The study, “Timely Assistance: Evaluating the Speed of Road Home Grantmaking,” is available at www.rand.org.

About the RAND Corporation

The RAND Corporation is a research organization that develops solutions to public policy challenges to help make communities throughout the world safer and more secure, healthier and more prosperous.