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But we're not ready for a health crisis, the CDC says.

In the first report of its kind, U.S. health officials said the nation's states and cities made a strong effort to prepare for a flu pandemic, bioterrorism or other emergency health crises, but big challenges remain.

"I think in terms of effort and progress, an A," said Dr. Richard Besser of the Centers for Disease Control and Prevention. "In terms of amount of work to be done, I would say that's absolutely enormous."

It was the government's first assessment of the payoff from its investment of more than $5-billion since the Sept. 11, 2001, attacks to make the country better prepared for a variety of public health emergencies.

The number of state and local health departments able to detect biological agents grew to 110 in 2007, up from 83 in 2002. Labs able to detect chemical agents increased to 47 from zero in 2001.

All states are doing year-round flu surveillance - an important measure if the bird flu virus in Asia mutates into a more dangerous form easily spread among people, unleashing a worldwide epidemic.

Some of the bad news: Many states still do not have enough epidemiologists, and 31 states said they're having trouble attracting qualified lab scientists.

Other public health experts said federal funding is also a problem. The CDC's funding to state and local health departments for emergency preparedness dropped from $991-million in fiscal year 2006 to $897-million in fiscal 2007.