State and local governments already play a major role in disaster response and recovery, but anticipated federal shifts mean they will soon need to absorb much of the responsibility the federal government currently carries—particularly on the financial and operational fronts. As federal assistance may narrow to only addressing events that generate catastrophic damage and loss, states and locals must strengthen their capabilities, funding strategies, and operational frameworks to cover the widening gap in support. Although the final federal posture remains uncertain, current policy discussions point to a significant shift: federal aid may focus exclusively on these high-impact events, leaving states fully responsible for small and mid-scale disasters. As a result, states face increasing pressure to assess and reinforce their operational, logistical, and financial readiness.
Empirically, the increasingly widespread impact and cost of disasters continue to exceed the ability of federal and state resources to adequately respond. Between 2011 and 2024, 99.5 percent of congressional districts experienced at least one federally declared major disaster, and in 2024 alone, 27 weather-related events caused more than $1 billion in damage each, nearly triple the early-2000s annual average.
Federal support will still matter; however, the future of emergency management will depend on states that invest wisely and build capacity now. The coming year offers a critical opportunity to evaluate readiness and prepare for potential shifts in federal disaster aid.
How Federal Changes Are Reshaping Emergency Management
Recent federal guidance, policy discussions, and legislative proposals all point toward a more state-centered disaster management model. This shift will likely prioritize larger, higher-impact events while placing increased responsibility on the states. Anticipated federal changes include:
- Higher thresholds for federal declarations: The federal government is actively considering increasing statewide thresholds up to four times higher than existing levels under the Stafford Act. Under this model, events such as moderate flooding, severe storms, or localized wildfire impacts may no longer qualify for federal declarations. States would fully manage these disasters with their own capabilities and financial resources.
- Challenges increasing federal cost shares: While the federal cost share for permanent repairs under FEMA Public Assistance (PA) may remain at 75 percent, states should expect fewer approvals for increases in the federal share. This reflects a growing federal emphasis on prioritizing the most severe and complex disasters, while incentivizing states to build and document strong state-led capabilities—positioning themselves for higher cost-share considerations when they can demonstrate proactive investment.
- Minimum expenditure requirements: Federal agencies continue to explore requirements for states to document early response activities or spending before federal reimbursement becomes available. Previously, a similar concept was discussed, referred to as a “disaster deductible” paid by states before federal assistance is available.
- Shifts in program administration: Federal preparedness, recovery, and mitigation programs may begin operating more like block grants, where states receive a set amount of funding and have more control over how to use it. However, this type of change would likely require updates to the Stafford Act to give states the authority to set eligibility rules, decide how funds can be used, and manage compliance. For example, the Fixing Emergency Management for Americans (FEMA) Act of 2025 (H.R. 4669) introduces a block-grant model for “small disasters,” defined as events with eligible damage totaling no more than 125 percent of the state’s per-capita indicator. Under this model, states would have more flexibility in deciding how to allocate funds but would also take on more responsibility for tasks such as applicant intake, eligibility reviews, and project oversight.
- A reduced federal operational footprint: Streamlined federal field operations will place more responsibility on states for initial assessments, stabilization, survivor assistance, and short-term recovery. This may result in higher-resourced states being capable of taking over direct delivery, while lesser-resourced states struggle to fill the gap.
- Legislative reform: As highlighted in our launch post, H.R. 4669 remains the most comprehensive, bipartisan reform package under consideration by Congress. While the final form may evolve, the legislation signals a clear direction: states will face broader expectations for early response, administrative responsibilities, and long-term recovery activities. States with established structures, staffing, and sustained funding will be better positioned to adapt as these expectations take shape.
States with established structures, staffing, and dedicated funding will be better positioned to adapt as federal expectations evolve.
From Reaction to Readiness: How States Can Redefine Emergency Management
States should be proactive now rather than waiting for federal policy changes to take effect. This is an ideal time to review organizational structures, improve internal processes, and prepare for the greater responsibilities that may shift to states. With a calmer hurricane season providing breathing room, states have a timely opportunity to assess and fortify disaster readiness and reimagine what long-term recovery could look like.
Additionally, state budget cycles and legislative calendars operate on limited, pre-set schedules; emergency managers must begin planning early. Acting now ensures that any requests for additional state funding for disaster response and recovery can be placed on the agenda for upcoming legislative sessions.
Above all, states should define what success looks like for their communities across response, recovery, and resilience. Success does not mean recreating every federal role; instead, states should focus on the capabilities that most directly improve outcomes.
Below are several practical steps states can take now:
- Consider all capabilities, staffing, and coordination. Many states operate emergency management functions across multiple agencies, and as disasters grow in complexity, these structures often strain existing capacity. The National Emergency Management Association (NEMA) reports that insufficient staffing remains one of the most significant challenges facing emergency management agencies. States can address these gaps by assessing capabilities across agencies, removing duplicative or outdated processes, streamlining coordination and communication, and identifying opportunities to strengthen or repurpose existing resources. In many cases, states can improve efficiency by strategically leveraging current structures rather than increasing headcounts. Additionally, states can explore standby contracts with private-sector partners to augment operational capacity without adding permanent overhead—ensuring critical capabilities are available and paid only when activated.
- Use state-funded recovery and mitigation programs and budget reserves to stabilize early activities. Many states already operate their own recovery or mitigation programs and maintain federal recovery funding, which helps close gaps created by higher federal thresholds, unchanged cost shares, or delayed federal decisions. These state-funded resources support critical early actions such as debris removal, sheltering, and critical infrastructure stabilization. However, states must reassess these programs in light of fewer Stafford Act declarations and the prospect of reduced federal assistance, ensuring they remain sustainable and aligned with future needs.
- Assess options for administering future recovery and mitigation programs. Mapping responsibilities across emergency management, housing, community development, and finance departments helps states understand where their roles may expand. Many states already administer federal programs that use block-grant models like those being discussed for future FEMA programs. This includes long-standing initiatives like the Community Development Block Grant (CDBG), established in 1974, as well as newer programs such as the State and Local Fiscal Recovery Fund (SLFRF) created during the pandemic. When used strategically, this existing experience provides a strong foundation for assuming the additional responsibilities that may accompany FEMA’s re-envisioned approach to disaster programs.
- Explore every available funding option. States are increasingly going beyond traditional rainy-day and general funds to pilot innovative funding strategies that blend solutions like revolving loan funds, dedicated disaster accounts, and catastrophic bonds. Municipal bonds remain a cornerstone of state financing, and at least 10 states have established green banks to help local lenders invest in longer-term resilience and mitigation. When the public understands the human and economic toll of disasters, they often rally to fund protection measures.
- Strengthen state oversight to stabilize insurance markets. Rising premiums and insurer withdrawals place State Insurance Commissioners at the center of mitigation and oversight. Responsibilities such as facilitating access to high-risk insurance, reviewing and approving allowable coverage and rate changes, investigating consumer complaints, and enforcing fair claims practices can provide meaningful support to communities facing increasing hazard impacts.
- Lean into interstate collaboration as a powerful tool. The Emergency Management Assistance Council (EMAC) and regional coordination bodies allow states to share personnel, equipment, and technical support. Mutual aid is widely regarded as one of emergency management’s most effective tools, and many of those involved in FEMA’s re-evaluation are exploring where this model could be expanded. In an era of constrained federal support, strengthening these partnerships can help states manage greater operational responsibilities when federal assistance is limited or delayed. Now is an ideal moment for states to reinforce these networks and broaden their reach and impact.
- Leverage federal resources that align with state priorities. States can assess how their existing initiatives align with federal priorities related to economic, social, health, and environmental outcomes—and use that alignment to strengthen the case for future investment. While federal funding remains available for areas such as fire management, flood mitigation, infrastructure resilience, cybersecurity, and electric grid hardening, the long-term outlook for many of these programs is uncertain.
Positioning States for the Future: Understanding Capacity and Readiness
Understanding overall capacity and capabilities becomes an essential part of readiness and recovery. Conducting a strategic capabilities assessment that evaluates your state’s emergency management governance, programs, and organizational capacity can provide a clear understanding of current conditions. Identifying which existing structures need support and where additional capacity is needed can help states prepare for the future and changes to federal recovery funding.
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