FEMA’s New Interim Policy – Missing A Chance to Ease Administrative Burden for the PA Program?
On November 14, 2018, the Federal Emergency Management Agency (FEMA) released an Interim Policy to supply guidance on how the Agency would cover the costs of administering the Public Assistance (PA) program and the Hazard Mitigation Grant Program (HMGP). The interim guidance was released in the wake of the Disaster Recovery Reform Act (DRRA) being signed into law. For more information on the DRRA, see our previous post on the Act. The Interim Policy specifically addresses Sec. 1215 of that Act.
Section 1215 of the DRRA is a radical change to the mechanism by which State, Local, Tribal, and Territorial (SLTT) governments are reimbursed for the costs of managing the PA program. The DRRA authorizes FEMA to reimburse SLTT governments for the direct and indirect costs of administering the PA program up to 12 percent of the total PA award amount – up to 7 percent for Recipients and 5 percent for Subrecipients. That said, it is up to FEMA to craft policies and provide guidance to its staff on how to actually implement these authorities granted by the DRRA.
Enter the PA Management Costs (Interim) Policy issued on November 14, 2018.
Here are some of our Team’s key highlights and findings to consider:
1. The Interim Policy can be retroactively applied to disasters declared on or after August 1, 2017.
Recipients and Subrecipients of disasters declared on or after October 5, 2018 will use the Interim Policy. Recipients and Subrecipients of disasters declared from August 1, 2017 to October 4, 2018 must choose how they want to be reimbursed for management costs and provide written notification to FEMA within 90 days of the issuance of the Interim Policy (by Tuesday, February 12, 2019).
If you have questions or would like more information about these options, feel free to contact me at email@example.com.
2. Recipients/Grantees should seriously consider requesting an initial obligation for 7 percent of their state minimum per capita indicator (fiscal year per capita amount multiplied by the state’s population).
Previously, the Section 324 management cost reimbursement policy for a Major Disaster declaration authorized an initial obligation to Recipients 30 days after the declaration. That initial obligation would equal 25 percent of the projected eligible program costs at 3.34 percent of projected eligible PA program costs. Depending on the magnitude of the disaster, previous policy would provide much more up-front funding than the Interim Policy’s method of initial obligation of funds to cover management costs.
Additionally, although the Interim Policy’s per capita indicator method will advance funding to Recipients that desperately need resources, it could increase the administrative burden by requiring additional obligations for large disasters.
3. The 5 percent management cost reimbursement authorized for Subrecipients is awarded directly via a Category Z (management cost) Project Worksheet (PW) only after FEMA has obligated project costs to the Subrecipient.
Meaning, the Interim Policy does not allow for initial obligation of management costs to Subrecipients like it does for Recipients. FEMA is missing an opportunity to front-load funding to potentially cash-strapped Subrecipients. This could also increase the administrative burden on the federal and SLTT governments by requiring multiple versions for each Subrecipient’s Cat Z PW as additional projects are awarded.
4. While the Interim Policy briefly mentions indirect costs, it focuses too much of its guidance on direct costs.
The Policy does not necessarily require Recipients and Subrecipients to attribute management costs to actual projects like previous DAC policies. The Interim Policy only requires an explanation of the activities performed. This ambiguous language in the Interim Policy might create confusion as to how much documentation and support is required to claim these costs — despite clear direction from the Administrator of FEMA to reduce the complexity of the provision of disaster assistance.
5. The timeline in the Interim Policy for claiming Recipient and Subrecipient management costs might be realistic for small disasters, but the Interim Policy’s timeline might not always work for large disasters.
The longest period for claiming management costs is two years for an Emergency declaration (EM) and eight years for a Major Disaster declaration (DR). Previous policy allowed extensions to these deadlines. No extensions to these deadlines are discussed in this Interim Policy.
The DRRA authorizes FEMA to drastically change how the Agency operates and provides assistance – both before, during, and after a disaster. FEMA needs to take this opportunity to modify its policies and practices. However, if FEMA continues down the path laid out by the Interim Policy, it seems the Agency will have turned away from its own Strategic Plan to reduce administrative burden. Unless the Interim Policy is amended, or the “additional policy” mentioned in the Interim Policy falls more in line with the intent of the DRRA, FEMA might have squandered a golden opportunity given to the Agency by Congress.
Chris Thomas is a Recovery Manager with Hagerty Consulting’s Recovery Division. Chris grew up in Tampa, Florida. When he wasn’t preparing for hurricanes and tropical storms, he was surfing the few waves those storms would bring. After traveling the world with the Air Force, he settled down in California before finding his current home in New York. Hagerty is always looking for intellectually curious people with a commitment to the public sector to join our Team. We want to learn more about you. Please visit our career site here to view open opportunities and apply.