IEM Insights: Addressing the Financial Needs of Communities

IEM Insight: Addressing the Financial Needs of CommunitiesThe famous line “show me the money,” from the 1996 movie Jerry McGuire, is appropriate for 2020 as every state, locality, territory, and tribe (SLTT) in the United States is seeking financial assistance in combatting the COVID-19 pandemic and its ramifications.

With flu season coming, and already 253 declared Disasters in 2020 (as of 9/9/20) on top of the thousands of open disasters from prior years that require “promised” recovery and mitigation funding, SLTT officials are looking to the Federal Government for support.

Thus, a key question is… are there sufficient financial resources available to meet the needs of SLTTs?

Through four COVID-19 supplementals, including the CARES Act, Congress appropriated $2.6 trillion to support COVID-19 response and SLTT needs. These funds provide a wide arrange of resources for SLTTs and our Nation’s medical infrastructure. The Federal Emergency Management Agency’s (FEMA) Disaster Relief Fund (DRF) received $45 billion from the CARES Act for COVID-19, along with a Congressional appropriation of $17.9 billion and carryover balance of $29.4 billion to fund eligible Stafford Act disaster expenses.

Despite using approximately $38 billion though the end of August, the DRF has about $55 billion remaining to be used for:

  • COVID-19 response, recovery, and mitigation including supplemental unemployment payments (“lost wages”);
  • Response and recovery efforts for other current disasters, such as Hurricane Laura that already has resulted in Emergency or Major Declarations for multiple states and Puerto Rico;
  • Supporting recovery and mitigation for past declared Stafford Act disasters (e.g., California Wildfires, Hurricanes Harvey, Maria and Irma); and
  • A projected $130 million for future 2020 non-Catastrophic Disasters (i.e., less than $500 million per disaster).

When the new fiscal year begins on October 1, FEMA’s DRF will receive billions more either from a Continuing Resolution or annual appropriations. However, the question remains, will there be enough funding overall?

While it appears the DRF will be sufficient this fiscal year (ending 9/30/20) and into the new fiscal year to cover FEMA’s Stafford Act financial responsibilities, FEMA dollars alone are not sufficient to meet the country’s financial needs and shortfalls.

As an example, for COVID-19, FEMA has already used $38.3 billion (thru  9/8/20):  $200 million for Emergency Food and Shelter; $2.3 billion for Temporary Medical Facilities including medical personnel, mortuary and ambulance; $2.8 billion for personal protective equipment (PPE) including medical supplies and pharmaceuticals; $1.7 billion for National Guard; $1.6 billion for Public Assistance Emergency Protective Measures (Non-PPE Cat B): $27.3 million for Commodities; $59.7 million for Crisis Counseling; and $31.8 billion for “Lost Wages” Assistance for 49 states to date.

Disaster preparedness, response, recovery, and mitigation require a “Whole Community” effort encompassing SLTTs financial needs.  FEMA is only one part of the Federal funding community. Hence, “Show us the money” is a complex and wide-ranging, federal responsibility, as highlighted below, and additional Congressional financial support will be essential.

  1. Nearly every FEMA DRF dollar requires a cost-share of currently 25% from recipient States (and thus all SLTTs). While the CARES Act, through the Coronavirus Relief Fund (CRF), and HUD Community Development Block Grant – Coronavirus Relief (CDBG-CV) appropriations provide some relief, the overall financial needs of SLLTs are historic and ever growing.  SLTTs enacted budgets, most starting their new fiscal year as of July 1st,are hamstrung due to revenue loss across-the-board from COVID-19, significant operating expenses from the pandemic, and uneven federal policies.
  2. COVID-19 is not going away. Schools are opening (and closing again) without sufficient resources or safety protocols.  PPE and other key supplies need to be continually replenished.  Hospital and care-giving personnel are fighting the pandemic every day and “burn-out” is inevitable (and already occurring), while hospital resources and finances have been greatly impacted.
  3. The U.S. Economy, despite record Stock Market indices, is struggling, meaning even more people have unmet needs. The additional “lost wages” support is uneven and short-lived.  Evictions are growing without rental assistance.  Small businesses have, and continue to, close by the thousands with possibly 1 out of 4 never reopening again.
  4. Funding actions to date assumed that COVID-19 would be “managed” by June/early July, which is not the case. Previously provided Congressional funds will not last, and in many cases will expire by December 2020 if not used.  And at the same time, SLTTs are facing the increasing number and severity of  other disasters.

So while we are not concerned about FEMA’s DRF running out of money, there is concern about the state of our “Whole Community” and the  ability of communities and localities to financially cover their needs without additional Congressional support.  Needs that encompass COVID-19 and non-COVID-19 impacts, like Hurricane Laura the Iowa derecho, and the wildfires out West.

Simply, from a Whole-Community perspective, there are funding gaps across all levels of government.  Moreover, decisions about not extending deadlines for the use of CRF funds, FEMA discontinuing eligible costs for PPE, disinfecting, and other COVID-19 required needs, coupled with other conflicting Federal guidance, only makes the situation that much worse.  Action must be taken to address the increasing gaps in budgets around the nation.

Insights By:

Elizabeth Zimmerman, IEM’s Senior Executive Advisor; former FEMA Associate Administrator for Response and Recovery and Director of Disaster Operations

Edward Johnson, IEM’s Senior Advisor for Homeland Security and Emergency Management; former FEMA Chief Financial Officer (CFO) and Senior Advisor to the Chief of Staff