H.R. 744 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 H.R. 744. 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 $15 million over the 2025-2030 period. Estimated costs would continue to increase after 2030, 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).

The CBO staff contact 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