By Bryan Koon, President & CEO, IEM | May 18, 2026
On May 7, 2026, the President’s Council to Assess FEMA released its long-awaited final report. After more than a year of stakeholder engagement and thousands of public comments, the Council produced 10 recommendations that — if implemented — would represent the largest shift in how the U.S. funds disaster response in decades.
The bottom line for state, local, tribal, and territorial (SLTT) governments: you would be expected to pay significantly more, far sooner, with less federal support to fall back on.
Here are the fiscal implications every budget leader needs to understand.
The Declaration Threshold Goes Up — Meaning Fewer Federal Disasters
The Council proposes raising the per-capita threshold states must hit to qualify for a presidential disaster declaration from $1.94 to $2.99 — a 54% increase. Apply that proportionally to counties, and the bar rises from $4.86 to roughly $7.48 per capita.
The impact is concrete: 29% of all disasters declared between 2012 and 2025 would not have qualified. That’s roughly 16 fewer federal declarations per year and about $113 million annually in federal funding that would instead fall on state and local governments to cover alone.
States Would Pay a Disaster Deductible Before Federal Help Arrives
Think of it like homeowners’ insurance — before the federal government pays a dollar, states would be required to spend a defined amount out of pocket first. The report calls it an “annual calendar year minimum expenditure.” Most people know it as a deductible.
The exact amounts aren’t specified, but the 2017 version of this proposal (which was never enacted) offers a useful benchmark. Under that framework, using Florida, where I’m from, the deductible would have been approximately $26 million. On a $100 million disaster, the state would absorb the first $26 million entirely before federal assistance kicked in.
Every SLTT government needs to start thinking now about where that money comes from.
The Federal Cost Share Drops From 75% to 50% — Across the Board
This is the single biggest financial shift in the report, and it appears in multiple recommendations. Under the Stafford Act today, the federal government covers at least 75% of eligible disaster costs — for mitigation, public assistance, and individual assistance. The Council proposes lowering that floor to 50%.
The math is straightforward: state costs double at a minimum. On a $100 million disaster, a state currently pays $25 million. Under the new floor, they pay $50 million. For catastrophic events where the president currently authorizes 90–100% federal cost share, the swing could be four to five times what states pay today.
States can earn back toward the 75% mark by meeting specific preparedness benchmarks — but doing so requires upfront investment, including maintaining a minimum 5% cash reserve (for Florida, that’s $5 billion; nationally, roughly $145 billion across all states) and insuring at least 50% of public buildings with private hazard insurance.
HMGP Is Out. The R3P Is In — With a Faster Timeline and Lower Federal Share
The Hazard Mitigation Grant Program is replaced by the Refined Risk Reduction Program (R3P): 5% of federal disaster costs within 30 days, and an additional 10% within 6–12 months. Faster funding is a genuine improvement.
But the 50% cost-share floor applies here, too. The 16 states currently receiving enhanced mitigation funding (an extra 20% post-disaster) should note the new framework makes no mention of that program, and its continuation should not be assumed.
Public Assistance Gets a Full Redesign: The RAPID Program
The reimbursement model that drives so much frustration with FEMA’s Public Assistance program would be replaced by the Reformed and Partnered Initiative for Disasters (RAPID) — a direct block grant triggered by pre-set impact thresholds rather than a drawn-out damage assessment process.
Money flows faster. But again, the 50% cost-share floor applies, administrative funding is eliminated from the grant (meaning those costs come out of recovery dollars), and states must be able to assess and report damage rapidly — since RAPID is structured as a one-time payout with limited opportunity to capture costs that emerge later.
Approximately $54 billion in open disasters and $7 billion in unspent mitigation funds could migrate to this new model, potentially accelerating stalled recoveries nationwide.
Individual Assistance Becomes Simpler — But Reaches Fewer People
The IA program is streamlined to a single, clear rule: if your home is uninhabitable after a disaster, you qualify. Assistance is set at 15% of assessed home value, capped at $150,000. The current average payout is roughly $6,200 combined — so the ceiling rises, but fewer people will walk through the door.
Those with disaster-related needs who don’t meet the habitability threshold — medical costs, lost property, transportation — will need to turn to state programs, nonprofits, or faith-based organizations. That’s a new obligation SLTT governments will need to plan for.
States also shift from paying 25% of “other needs” only to paying 25% of the entire IA payout, a meaningful increase in cost exposure across large-scale events.
What You Should Do Right Now
These proposals are not yet law, but budget cycles are long, and reserves take years to build. Don’t wait for a disaster to find out you’re unprepared for the new financial reality.
- Read the full report — all 75 pages. It’s dense but consequential.
- Watch Bryan Koon’s video — breaking down the changes on YouTube or linked below.
- Use IEM’s free impact calculator at IEM.com — to model what past disasters would cost your jurisdiction under the proposed rules.
- Start the budget conversation today — with your governor’s office, legislature, county commission, or city council. Reserve requirements, cost-share obligations, and insurance mandates won’t materialize overnight.
- Assess your incentive readiness — review the preparedness benchmarks that allow states to earn back toward 75% federal cost share and identify the gaps.
- Make your voice heard — as legislative and regulatory processes unfold.
The direction of this report is clear: more responsibility, more cost, and more risk shifting to SLTT governments. The time to plan is now — before the next disaster tests whether you’re ready.
Bryan Koon is President and CEO of IEM. A former Director of the Florida Division of Emergency Management, he has more than two decades of experience in federal, state, and local disaster policy. IEM’s free disaster funding impact calculator is available here.