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Thursday, April 11, 2013

FEMA Disaster Cost-Shares: Evolution and Analysis

Francis X. McCarthy
Analyst in Emergency Management Policy

The Robert T. Stafford Disaster Relief and Emergency Assistance Act (The Stafford Act, P.L. 93- 288) includes the Public Assistance (PA) program, Sections 406 and 407 of the act. These sections provide assistance to states, local governments and non-profit organizations for debris removal and rebuilding of the public and non-profit infrastructure. The Stafford Act is a partnership between the federal and state governments and part of the partnership is the notion that state and local governments should have some “skin in the game.” That is, they should contribute toward some of the costs incurred by the disaster response and recovery programs. The division of costs between federal and state governments is known as a “cost-share.” The language of the Stafford Act defining cost-shares for the repair, restoration, and replacement of damaged facilities provides that the federal share “shall be not less than 75 percent.” These provisions have been in effect for over 20 years. The Stafford Act also gives the President the authority to adjust some of the cost-shares. While this authority is long standing, the history of FEMA’s administrative adjustments and Congress’ legislative actions in this area, are of a more recent vintage.

In all, there have been 245 cost-share adjustments of varying sizes and lengths of time dating back to 1986. In 1998 FEMA promulgated regulations that provide a more consistent and open approach to cost-share adjustments. The overwhelming majority of these cost-share adjustments have been based on that regulatory authority and carried out by the executive branch through administrative actions. However, since 1997, and particularly in the wake of the difficult issues caused by the Gulf Coast storms of 2005, Congress has begun to exercise its authority to adjust cost-shares. The recent trend toward legislative cost-share waivers suggests that Congress may have an interest in continuing to influence the federal/state relationship in providing resources to respond to disaster situations.

The cost-share regulation establishes eligible per capita disaster damage amounts that could qualify a state for cost-share reductions. The per capita amounts are updated on an annual basis. With the adjustment process formalized in regulation, and with larger disasters more frequent in succeeding years, the cost-share waivers have also become more common. Certainly the interest in achieving such a reduction for the state and local share has grown with the awareness of the cost-share adjustments during large disaster events such as Hurricane Katrina. Beyond actions by the executive branch, Congress has adjusted cost-shares through legislation when a state or states may not, or have yet to meet, the per capita threshold. FEMA and the Clinton administration adjusted the cost-shares for some states affected by the 1993 Mississippi River flooding that had not met the per capita policy amount.

In 2007, Congress adjusted the cost-shares following the Gulf Coast hurricanes of 2005 for states that did not meet the identified threshold and also waived cost-shares for programs other than the PA program. Most recently, in P.L. 111-32, Congress again adjusted the state cost-shares for the two states most impacted by Hurricane Ike in 2008. The legislation also waived the cost-share for two other states, separate from the hurricane area, with major disaster declarations that did not meet the qualifying threshold. There have been multiple cost-share adjustments for the Hurricane Sandy major disaster declarations. Broader administrative cost-share adjustments for the major disaster declarations for Hurricane Sandy will depend on whether the eligible per capita disaster damage totals mandated by regulation are reached. While the expenditures for Sandy are large, so too are the populations in the affected states.

Date of Report: April 4, 2013
Number of Pages: 35
Order Number: R41101
Price: $29.95

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