Understanding and Maximizing Federal Resources: Insights on FEMA’s Guidance on “Coordinating Public Assistance and Other Federal Funding Sources”

Understanding and Maximizing Federal Resources: Insights on FEMA’s Guidance on Coordinating Public Assistance and Other Federal Funding Sources

On July 2, 2020, the Federal Emergency Management Agency (FEMA) released an advisory to state, local, tribal, territorial and other partners – “The COVID-19 Public Health Emergency: Coordinating Public Assistance and Other Federal Funding Sources” – issuing their guidance on federal cost share for the FEMA Public Assistance (PA) Program via a FEMA Fact Sheet[1].  In this piece, IEM examines the background and importance of this federal guidance.

COVID-19 Declarations and Funding

A National Public Health Emergency for COVID-19 was declared by the Secretary of Health and Human Services (HHS) on January 31, 2020, retroactive to January 27, 2020, which currently extends through October 23, 2020.  On March 13, 2020, the President approved a Robert T. Stafford Disaster Relief Act (Stafford Act) COVID-19 Emergency declaration for all 50 states, the District of Columbia, the five (5) U.S. territories, and federally-recognized tribes. Subsequently, all states and territories (and one tribe to date) requested and were granted a Stafford Act Major Disaster Declaration, primarily for Crisis Counseling under the Individual Assistance (IA) Program and Emergency Protective Measures under the PA Program.

As a result of these Stafford Act Declarations, funding from the FEMA’s Disaster Relief Fund (DRF) was immediately available for COVID-19 response efforts.

In addition, Congress, through four supplemental appropriations, provided trillions in federal funding to combat COVID-19, through various  federal agencies including U.S. Department of Health and Human Services (HHS), U.S. Department of Housing and Urban Development (HUD), FEMA and others in grants to states, local, tribal and territorial (SLLT) governments or by direct funding, including via the Coronavirus Aid, Relief and Economic Security (CARES) “Coronavirus Relief Fund” managed by the Department of the Treasury.

Challenges and Questions

Given the scope, amount, and unique COVID-19 funding made available, the actual guidance needed to determine eligibility for the types of work/projects, eligible applicants, and which federal funding source to use was unclear.  Not only has this guidance been evolving and updated over time, it has been difficult and challenging for SLTT governments to discern and apply, and sometimes after CARES Act funding had been obligated or expended.

For FEMA and other federal agencies, COVID-19 required new policies and rules, while also stretching the existing rules for Major Disaster Declarations.  In other words, agencies have had to write or amend the rules as the COVID-19 pandemic unfolds and impacts the country.  Moreover, FEMA is typically viewed as the funding source of last resort for disaster events. In a “normal” disaster, insurance, other federal, and non-federal funding options are required to be used first, before FEMA can fund projects from the DRF.   This is not the case with COVID-19 funding.  FEMA PA is an available resource and should be used as applicants review all available federal funds with the goal to maximize their limited resources and achieve a more successful recovery.

Why is this guidance so important?

First, over the past few months, FEMA and the federal government made verbal statements that the Treasury’s CARES Act Coronavirus Relief Fund  and HUD’s Community Disaster Block Grants  may be used to cover the 25% non-federal cost share for FEMA’s Public Assistance Program, they had not documented it in writing until the end of June 2020 with the release of this Fact Sheet.

This important document formalizes, in writing, the past verbal statements made to Stafford Act declaration applicants at all levels of government. These applicants now have in writing guidance to support their actions, efforts, programmatic files, and any future audits.

The DHS Office of the Inspector General (OIG) has three years from the close of a recipient or sub-recipient’s project to audit and potentially request de-obligation of funds if they believe they were ineligible expenses or federal rules were not followed. This is a constant fear of applicants even when they have done everything within the law. FEMA’s Fact Sheet is a key document for any potential future federal audits.

Second, and equally important, this specific Fact Sheet guidance allows applicants to use the FEMA PA grants for disaster-related items that may be eligible from another federal or other funding source. Applicants have the flexibility to determine the funding source that best meets their COVID-19 response and recovery need subject to the purpose and eligibility requirements.  Unlike a typical disaster, for COVID-19 expenses, FEMA’s DRF is not the funding source of last resort.  Applicants should decide how best to request federal funds from the variety of available sources to maximize their federal reimbursement[2]. The applicants need only to certify that they will submit their reimbursement claims to only one source.

What Facts Matter the Most?

Currently, Stafford Act COVID-19 declarations include the standard minimum 75% federal cost share by law, with the remaining 25% of costs are the responsibility of the SLTT. States, tribes or territories, as the recipients of the federal funds, may provide a percentage of the non-federal cost share to their sub-recipient, or pay the whole amount, or pass along the full non-federal cost share to their sub-recipients. Each state makes their own determination.

For paying the cost share, this FEMA guidance should put disaster applicants more at ease to select the funding source(s) that can most benefit them.  One key option is that SLTT governments can submit eligible COVID-19 emergency related costs to FEMA under the PA program for the 75% cost reimbursement, then use their Treasury’s CARES Act Coronavirus Relief Fund  or CDBG-DR or CDBG-CV funds for the 25% cost match. Recipients are also eligible to claim up to 7% for administrative costs on the PA grants and sub-recipients may claim up to 5% for administrative costs.

Another point to consider is the potential for recipients and sub-recipients  to be eligible to have their overall required cost share reduced, they should maximize the use of the FEMA PA program for COVID-19 reimbursement.  The 90% federal /10% non-federal cost share adjustment threshold is reached when all the eligible costs for the recipient plus their sub-recipients’ eligible costs equal or exceed $149 per capita of the recipient. This adjustment is for the whole disaster, not for individual sub-recipients. However, this adjustment must be approved by the President and if approved, would be retroactive to the date of the beginning of the incident period for the Stafford Act declaration.

Finally, this FEMA Fact Sheet, Coordinating Public Assistance and Other Sources of Federal Funding. is another recognition that the rules and authorities for COVID-19 expenses continue to evolve and require regular updates along with the COVID-19 public health response guidance requirements and requests for assistance.

The financial impacts of COVID-19 to all levels of government, the private sector, voluntary agencies, and the public have been, and continue to be, economically devasting with unfortunately no end in sight. Thus, applicants should continue to examine, re-examine, justify, and seek assistance for COVID-19 related needs given the additional authorities available under the Stafford Act (e.g., housing assistance, burial benefits, disaster unemployment), other federal laws and guidance, and the ongoing Congressional and federal debates concerning future appropriations and financial assistance

Who should care?

States, local, tribal, and territorial governments, and all eligible Public Assistance applicants, need to be aware of the options documented in the Coordinating Public Assistance and Other Sources Federal Funding Fact Sheet.  SLTT governments should seek to fully leverage all available monies and authorities to the maximum benefit possible for their communities.  The devastation that COVID-19 has had on our economies and institutions requires that the public sector examine all options available for funding and resources and leave nothing on the table.

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

[1] https://www.fema.gov/media-library-data/1593609857750-0a9c88370c27f1391b4c907818c1b3a2/FEMA-COVID-19_coordinating-public-assistance-and-other-sources-of-federal-funding_07-01-2020.pdf

[2] As stated in the FEMA Fact Sheet, “Given the multiple overlapping authorities and funding for the federal response to COVID-19, FEMA may provide PA funding to applicants for eligible costs under the COVID-19 declarations that may also be eligible for funding under another federal agency’s authorities. FEMA will not deny a PA eligible cost under a COVID-19 declaration solely because that cost may be eligible under another federal agency’s authorities, except as described…”