[Senate Report 118-218]
[From the U.S. Government Publishing Office]
Calendar No. 497
118th Congress } { Report
SENATE
2d Session } { 118-218
_______________________________________________________________________
DISASTER MANAGEMENT COSTS MODERNIZATION ACT
__________
R E P O R T
of the
COMMITTEE ON HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
to accompany
S. 3071
TO AMEND SECTION 324 OF THE ROBERT T. STAFFORD
DISASTER RELIEF AND EMERGENCY ASSISTANCE ACT TO
INCENTIVIZE STATES, INDIAN TRIBES, AND TERRITORIES
TO CLOSE DISASTER RECOVERY PROJECTS BY AUTHORIZING
THE USE OF EXCESS FUNDS FOR MANAGEMENT COSTS FOR
OTHER DISASTER RECOVERY PROJECTS
September 10, 2024.--Ordered to be printed
______
U.S. GOVERNMENT PUBLISHING OFFICE
49-010 WASHINGTON : 2024
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
GARY C. PETERS, Michigan, Chairman
THOMAS R. CARPER, Delaware RAND PAUL, Kentucky
MAGGIE HASSAN, New Hampshire RON JOHNSON, Wisconsin
KYRSTEN SINEMA, Arizona JAMES LANKFORD, Oklahoma
JACKY ROSEN, Nevada MITT ROMNEY, Utah
JON OSSOFF, Georgia RICK SCOTT, Florida
RICHARD BLUMENTHAL, Connecticut JOSH HAWLEY, Missouri
LAPHONZA R. BUTLER, California ROGER MARSHALL, Kansas
David M. Weinberg, Staff Director
Alan S. Kahn, Chief Counsel
Christopher J. Mulkins, Director of Homeland Security
Naveed Jazayeri, Senior Professional Staff Member
William E. Henderson III, Minority Staff Director
Christina N. Salazar, Minority Chief Counsel
Andrew J. Hopkins, Minority Counsel
Laura W. Kilbride, Chief Clerk
Calendar No. 497
118th Congress } { Report
SENATE
2d Session } {118-218
======================================================================
DISASTER MANAGEMENT COSTS MODERNIZATION ACT
_______
September 10, 2024.--Ordered to be printed
_______
Mr. Peters, from the Committee on Homeland Security and Governmental
Affairs, submitted the following
R E P O R T
[To accompany S. 3071]
[Including cost estimate of the Congressional Budget Office]
The Committee on Homeland Security and Governmental
Affairs, to which was referred the bill (S. 3071) to amend
section 324 of the Robert T. Stafford Disaster Relief and
Emergency Assistance Act to incentivize States, Indian Tribes,
and Territories to close disaster recovery projects by
authorizing the use of excess funds for management costs for
other disaster recovery projects, having considered the same,
reports favorably thereon with amendments and recommends that
the bill, as amended, do pass.
CONTENTS
Page
I. Purpose and Summary..............................................1
II. Background and Need for the Legislation..........................2
III. Legislative History..............................................3
IV. Section-by-Section Analysis of the Bill, as Reported.............4
V. Evaluation of Regulatory Impact..................................4
VI. Congressional Budget Office Cost Estimate........................5
VII. Changes in Existing Law Made by the Bill, as Reported............6
I. Purpose and Summary
S. 3071, the Disaster Management Costs Modernization Act,
would allow excess management funds authorized by the Federal
Emergency Management Agency (FEMA) after a disaster or
emergency to remain available after the close out of an
incident. The excess funds can then be used for disaster
response and recovery capacity building or for management costs
of other open disasters. Any excess management funds are still
subject to the caps set in law and only available for a period
of 5 years. Under this bill, excess costs are defined as the
difference between management costs authorized by law and the
actual amount expended by the recipient. If a recipient uses
their entire management costs allocation for an incident, there
would be no roll over. This legislation would use existing
funds appropriated to the Disaster Relief Fund in
implementation. The bill would require the Government
Accountability Office (GAO) to study and report on the actual
management costs authorized under law to determine whether the
amount set aside for those costs after the date of enactment is
appropriate. In the preceding 5-year period, GAO would look at
the amount set aside for management costs, the use of those
costs, the length of each disaster, and the reason for the
length of each disaster.\1\
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\1\On August 3, 2022, the Committee approved S. 4654, the Disaster
Management Costs Modernization Act. That bill is substantially similar
to S. 3071. Accordingly, this committee report is, in many respects,
similar to the committee report for S. 4654. See S. Rept. 117-258.
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II. Background and Need for the Legislation
Financial management is a crucial component of successful
disaster response and recovery. When faced with a disaster,
state and local governments are tasked with managing billions
of dollars in federal grants through FEMA. Currently, grant
recipients may utilize a percentage of funding to help offset
the administrative costs of grant management, however, this
funding is limited to the specific disaster or project and
cannot be utilized for across other open disasters.\2\ Under
the Stafford Act, management costs are defined to include any
indirect cost, any direct administrative cost, and any other
administrative expense associated with a specific project under
a major disaster, emergency, or disaster preparedness or
mitigation activity or measure.\3\ Eligible expenses for
management costs can include the review and processing of sub-
applications and subgrant awards, delivering technical
assistance to support the implementation of mitigation
activities, managing grant funding, and staff salary costs
related to administrative activities, and more.\4\
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\2\Pub. L. No. 118-44, Sec 324(a)(2024).
\3\42 U.S.C. Sec. 5165(b).
\4\Federal Emergency Management Agency, Public Assistance
Management Costs (Interim): FEMA Recovery Policy (FP 104-11-2) (Nov.
12, 2018).
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Signed in 2018, as part of the FAA Reauthorization Act of
2018, the Disaster Recovery Reform Act authorized an increase
in management costs for disasters and emergencies across the
country.\5\ According to the National Emergency Management
Association (NEMA), despite an increase in emergency management
funding, a major shortcoming is ``the inability for grantees to
utilize this allowance across all open disasters.''\6\
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\5\Pub. L. No. 115-254 (2018).
\6\National Emergency Management Association, NEMA 2021 Policy
Priorities (2019) (www.nemaweb.org/index.php/files/113/2021-Meeting-of-
the-States/295/NEMA--2021-Policy-
Priorities.pdf).
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Currently, if a state or local government does not spend up
to the caps set in law for management costs, it will forfeit
any excess administrative cost funding that is not utilized by
the time a disaster is closed. The specific percentage caps are
15 percent for hazard mitigation and 12 percent for response
and recovery projects.\7\ NEMA recommends that FEMA allow
grantees to utilize management funds across different open
disasters and for capacity building which will, in turn,
strengthen recovery and mitigation efforts.\8\ Allowing this
flexibility was also proposed in a recent Government
Accountability Office report as an option for FEMA to simplify
federal disaster recovery program requirements.\9\
Additionally, a new report issued by the Wildland Fire
Mitigation and Management Commission recommended that FEMA
allow state management costs to cover general program
management functions, instead of being tied to specific
events.\10\
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\7\Pub. L. No. 118-44, Sec. 324(b)(2) (2024).
\8\National Emergency Management Association, NEMA 2021 Policy
Priorities (2019) (www.nemaweb.org/index.php/files/113/2021-Meeting-of-
the-States/295/NEMA--2021-Policy-
Priorities.pdf).
\9\Government Accountability Office, Disaster Recovery: Actions
Needed to Improve the Federal Approach (GAO-23-104956) (Nov. 2022).
\10\United States Department of Agriculture, Wildland Fire
Mitigation and Management Commission, ON FIRE: The Report of the
Wildland Fire Mitigation and Management Commission (Sept. 2023).
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This legislation would allow for the excess management
funds authorized by FEMA to a grantee after a disaster or
emergency to remain available after the close out of an
incident. The bill specifies that the excess funds may be used
in other open disasters and for activities associated with
disaster recovery and preparedness. By allowing this
flexibility, recipients of management costs will be able to
help ensure that they have the necessary resources to manage
future disasters and sustain response and recovery capabilities
between disasters.
III. Legislative History
Senator Margaret Hassan (D-NH) introduced S. 3071, the
Disaster Management Costs Modernization Act, on October 18,
2023, with original cosponsor Senator James Lankford (R-OK).
The bill was referred to the Committee on Homeland Security and
Governmental Affairs.
The Committee considered S. 3071 at a business meeting on
October 25, 2023. At the business meeting, Senator Paul offered
an amendment that prohibits additional funds from being
authorized to be appropriated to carry out the bill. The
Committee adopted the Paul amendment by voice vote with
Senators Peters, Hassan, Sinema, Rosen, Ossoff, Blumenthal,
Butler, Paul, Lankford, Romney, and Scott present.
Senator Paul offered an amendment to require a GAO study to
report on the actual management costs authorized under law to
determine whether the amount set aside for those costs after
the date of enactment is appropriate and, for the 5-year period
preceding the report, the amount set aside for management
costs, the use of those costs, the length of each disaster, and
the reason for the length of each disaster. The Committee
adopted the Paul amendment by voice vote with Senators Peters,
Hassan, Sinema, Rosen, Ossoff, Blumenthal, Butler, Paul,
Lankford, Romney, and Scott present.
The bill, as amended, was ordered reported favorably by
roll call vote of 10 yeas to 0 nays, with Senators Peters,
Hassan, Sinema, Rosen, Ossoff, Blumenthal, Butler, Lankford,
Romney, and Scott voting in the affirmative, and Senator Paul
recorded ``present.'' Senators Carper, Johnson, Hawley, and
Marshall voted yea by proxy, for the record only. Consistent
with Committee Rule 3(G), the Committee reports the bill with a
technical amendment by mutual agreement of the Chairman and
Ranking Member.
IV. Section-by-Section Analysis of the Bill, as Reported
Section 1. Short title
This section designates the short title of the bill as the
``Disaster Management Costs Modernization Act.''
Section 2. Use of Excess Funds for Management Costs
Subsection (a) amends section 324 of the Robert T. Stafford
Disaster Relief and Emergency Assistance Act by making
technical edits and creating a new subsection (c) within
section 324 titled ``Use of Excess Funds for Management
Costs.'' This subsection defines the term ``excess funds for
management costs'' as the difference between management costs
authorized by law and the actual amount expended by the
recipient. The subsection also states that the rolled-over
excess funds can be used for disaster response and recovery
capacity building or for management costs of other open
disasters. Additionally, this subsection provides that any
excess management funds are still subject to the caps set in
law and are only available for a period of 5 years.
Subsection (b) clarifies that this legislation applies to
grants rewarded in relation to a declared major disaster or
emergency made on or after enactment of this bill and funded
with amounts appropriated on or after the enactment of this
bill.
Subsection (c) requires GAO, within 180 days after
enactment, to submit a report to Congress on the actual
management costs during the period of a major disaster
declaration to determine whether the set aside amount for those
management costs established by this bill are appropriate. The
report must also include the management costs for each disaster
declared during the 5-year period preceding the date of the
report, the amount set aside for management costs, the use of
those costs, the length of each disaster, and the reason for
the length of each disaster.
Subsection (d) provides that no additional funds are
authorized to be appropriated to carry out the bill.
V. Evaluation of Regulatory Impact
Pursuant to the requirements of paragraph 11(b) of rule
XXVI of the Standing Rules of the Senate, the Committee has
considered the regulatory impact of this bill and determined
that the bill will have no regulatory impact within the meaning
of the rules. The Committee agrees with the Congressional
Budget Office's statement that the bill contains no
intergovernmental or private sector mandates as defined in the
Unfunded Mandates Reform Act (UMRA) and would impose no costs
on state, local, or tribal governments.
VI. Congressional Budget Office Cost Estimate
S. 3071 would allow state and local governments that
receive disaster assistance from the Federal Emergency
Management Agency (FEMA) to repurpose unused funds that were
originally allocated for management costs to increase their
administrative capacity to prepare for, recover from, or
mitigate the effects of future disasters. Under current law,
unused funds generally are returned to the Disaster Relief Fund
and used for disaster recovery. Those governments could retain
unused funds from amounts appropriated after enactment for
disasters that are declared on or after enactment of S. 3071.
Those funds would not be available for repurposing until a
grant has reached its closeout date, which occurs at the
completion of all projects funded by the grant, and would then
remain available for five years from that point.
The bill also would require the Government Accountability
Office (GAO), within six months of enactment, to report to the
Congress on the amount of management costs incurred over the
past five years, how those amounts were used by state and local
governments, and whether the amounts set aside to cover
management costs are appropriate.
Using information from FEMA and state and local officials
in the disaster response field, CBO expects that smaller
states--particularly those with smaller budgets for disaster
recovery--would be most likely to repurpose unused funds to
hire permanent staff. Based on an analysis of historic
obligations for disaster recovery, CBO expects that the amount
of funds available to repurpose in 2025 would be small, because
most grants are available for several years after a disaster
has occurred. The amount of funding available for repurposing
would grow steadily over time, as more grants are closed out.
In total, CBO expects that over time between 10 and 20 smaller
states would each hire or retain an additional one to four
employees to perform work related to disaster response and
preparedness, at an average cost of about $100,000 per
employee. CBO expects that those governments also would
repurpose funds for other activities that would build
administrative capacity, such as training, outreach, and
creating disaster response plans. In total, CBO estimates that
implementing this provision would cost $10 million over the
2024-2029 period. Estimated costs would continue to increase
after 2029, as more funds become available for repurposing.
CBO estimates that the GAO report would cost less than
$500,000 in 2025.
Any related spending would be subject to the availability
of appropriated funds.
The costs of the legislation, detailed in Table 1, fall
within budget function 450 (community and regional
development).
TABLE 1.--ESTIMATED INCREASES IN SPENDING SUBJECT TO APPROPRIATION UNDER S. 3071
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By fiscal year, millions of dollars--
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2024 2025 2026 2027 2028 2029 2024-2029
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Estimated Authorization........................ 0 * 1 2 3 5 11
Estimated Outlays.............................. 0 * 1 2 2 5 10
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* = between zero and $500,000.
The CBO staff for this estimate is Jon Sperl. The estimate
was reviewed by H. Samuel Papenfuss, Deputy Director of Budget
Analysis.
Phillip L. Swagel,
Director, Congressional Budget Office.
VII. Changes in Existing Law Made by the Bill, as Reported
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in brackets, new matter is
printed in italic, and existing law in which no change is
proposed is shown in roman):
ROBERT T. STAFFORD DISASTER RELIEF AND EMERGENCY ASSISTANCE ACT
* * * * * * *
TITLE III--MAJOR DISASTER AND EMERGENCY ASSISTANCE ADMINISTRATION
* * * * * * *
SEC. 324. MANAGEMENT COSTS.
(a) * * *
(b) * * *
(1) * * *
(2) Specific management costs.--The Administrator of
the Federal Emergency Management Agency shall [provide
the following percentage rates] provide--
(A) excess funds for management costs as
described in subsection (c); and
(B) the following percentage rates, in
addition to the eligible project costs, to
cover direct and indirect costs of
administering the following programs:
[(A)] (i) Hazard mitigation.--A
grantee under section 404 may be
reimbursed not more than 15 percent of
the total amount of the grant award
under such section of which not more
than 10 percent may be used by the
grantee and 5 percent by the subgrantee
for such costs.
[(B)] (ii) Public assistance.--A
grantee under sections 403, 406, 407,
and 502 may be reimbursed not more than
12 percent of the total award amount
under such sections, of which not more
than 7 percent may be used by the
grantee and 5 percent by the subgrantee
for such costs.
(c) Use of Excess Funds for Management Costs.--
(1) Definition.--In this subsection, the term `excess
funds for management costs' means the difference
between--
(A) the amount of the applicable specific
management costs authorized under subsection
(b)(1) and subsection (b)(2)(B); and
(B) as of the date on which the grant award
is closed, the amount of funding for management
costs activities expended by the grantee or
subgrantee receiving the financial assistance
for costs described in subparagraph (A).
(2) Availability of excess funds for management
costs.--The President may make available to a grantee
or subgrantee receiving financial assistance under
section 403, 404, 406, 407, or 502 any excess funds for
management costs.
(3) Use of funds.--Excess funds for management costs
made available to a grantee or subgrantee under
paragraph (2) may be used for--
(A) activities associated with building
capacity to prepare for, recover from, or
mitigate the impacts of a major disaster or
emergency declared under section 401 or 501,
respectively; and
(B) management costs associated with any--
(i) major disaster;
(ii) emergency;
(iii) disaster preparedness measure;
or
(iv) mitigation activity or measure
authorized under section 203, 204, 205,
or 404.
(4) Availability.--Excess funds for management costs
made available to a grantee or subgrantee under
paragraph (2) shall remain available to the grantee or
subgrantee until the date that is 5 years after the
date on which the excess funds for management costs are
made available under paragraph (2).
[(c)] (d) Review.--The President shall review the
management cost rates established under subsection (b) not
later than 3 years after the date of establishment of the rates
and periodically thereafter.
* * * * * * *