FEMA Director Sees Housing as Top Challenge in Katrina Recovery

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A lack of housing is the Gulf Coast's top challenge on Hurricane Katrina's anniversary, the head of the Federal Emergency Management Agency said Wednesday during a tour of the region.

FEMA Director R. David Paulison met with some of the youngest victims of the Aug. 29 storm, telling students at D'Iberville Elementary School that his job is to help them.

"Things will get better," Paulison assured the children. "I know you'll get back in your homes soon."

Check out FOXNews.com's Natural Disaster Center for more coverage of Hurricane Katrina's aftermath

Paulison asked 9-year-old Christopher Moreau, a fourth-grader, how he likes living in a FEMA trailer.

"Kind of not that roomy," Moreau said. "I'm used to a three-bed house."

Paulison told reporters later that his agency is eyeing alternatives to the trailers and mobile homes that have housed tens of thousands of Mississippi and Louisiana residents for a year.

Congress earmarked $400 million for a pilot program to replace trailers with so-called "Katrina cottages," which are billed as more comfortable, affordable alternatives to trailers.

Paulison also said that states in hurricane-prone areas are competing for shares of that money.

"I'm excited about it. I think it's the right thing to do," he said. "If there's another alternative (to trailers), we'll surely want to look at that."

Paulison also defended the agency's response to Katrina, which led his predecessor, Michael Brown, to resign under intense pressure last September.

On Wednesday, House Minority Leader Nancy Pelosi, D-Calif., and her Senate counterpart, Harry Reid, D-Nev., released a report asserting that "thousands of families are still waiting" for FEMA trailers and that a significant proportion of money that FEMA has spent there "has been waste, fraud and abuse."

Paulison, who said he had not yet seen the report, defended FEMA's response to Katrina and said the agency is better prepared to respond to another disaster.

"We've had some fraud. There's no question about it," he said. "But we've put things in place to fix that. I've had FEMA for nine months now. As issues come up, I'm making sure we fix those and address them."

FEMA also has improved its communications network and its systems for registering storm victims and finding them emergency housing, Paulison added.

"FEMA took 30 years to get where it is today. You're not going to fix it all in a couple months," he said. "However, I think we've fixed big pieces of it."