	Overview of the Disaster Relief Fund

The Disaster Relief Fund (DRF), sometimes referred to as the President's Disaster Relief Fund, is managed by the Federal Emergency Management Agency (FEMA). The DRF is the main account used to fund a wide variety of disaster assistance programs that provide grants and other forms of support to assist state, local, and tribal governments, as well as certain nonprofit entities during disaster recovery. The majority of assistance provided by the federal government in response to emergency and major disaster declarations is funded through the DRF. In general, funds from the DRF are released after the President has issued an emergency or major disaster declaration pursuant to the Robert T. Stafford Relief and Emergency Assistance Act ( P.L. 93-288 , as amended, hereinafter the Stafford Act). 2. FMAG declarations are relatively modest in cost when compared to emergency declarations and major disaster declarations. It also describes the Budget Control Act and the DRF Monthly Report. One benefit of a no-year account is that the unobligated balance in the account can be used to pay for future disasters the next fiscal year. Congressional concern over the number and amount of supplemental appropriations needed to fund disaster assistance has led to congressional debate concerning how the DRF should be budgeted, and whether the federal government is providing too much or too little assistance. These concerns are discussed more in depth in " The Debate over Supplemental Appropriations . " The available appropriation was a combination of prior-year funds that are carried over, the current fiscal year annual appropriation, and any supplemental appropriations. The enactments for those years were $7 billion and $6.2 billion respectively. These include the amount of funding appropriated to the DRF, the appropriateness and effectiveness of providing additional funding to the DRF through supplemental appropriations, and the use of policy mechanisms to reduce the amount of funding provided to states and localities for emergency and disaster assistance. One fundamental debate that has been of concern, particularly in the light of the national debt, is the federal role in providing disaster assistance. They argued that relying on supplemental appropriations for disaster assistance has the following drawbacks:
supplemental appropriations for disasters often are designated as an emergency expenditure, which under congressional budgetary procedures can exceed discretionary spending limits designed to reduce the federal deficit—creating an opportunity for lawmakers to circumvent budgetary enforcement mechanisms by underfunding the DRF during the annual appropriations process to make room for other spending; supplemental appropriations for disasters often move through Congress on an expedited basis, limiting the amount of time available to assess actual disaster needs and scrutinize spending to ensure that the spending is appropriately scaled, targeted, and that adequate safeguards are in place to address the potential for waste, fraud, and abuse. Advocates of the use of supplemental disaster assistance would argue that:
the timing and severity of disasters cannot be anticipated and appropriating a relatively large sum of funds through the regular, annual appropriations process may require Congress to reduce funding for other programs to pay for an unknown, and possibly non-existent, future event; the President is authorized to unilaterally determine when federal assistance is made available after a major disaster incident. Opponents might argue that a rainy-day fund is infeasible due to the high costs of catastrophic events. For example, Congress appropriated roughly $120 billion for Hurricane Katrina recovery efforts and $60 billion for Hurricane Sandy. One potential argument against the sole reliance on offsets to limit federal spending on disaster assistance is that it fails to address the growing number of declarations issued each year. Proposals for Managing Declarations

Restructuring the budgetary process is one approach that may reduce the need for supplemental funding to pay for major disasters. These include reforming the declaration process, adjusting the federal share for assistance, and shifting some of the responsibility for paying for recovery to the state and/or the private sector. In addition, the costs of disasters should be expected given changes in severe weather patterns, as well as increases in population size and development. Limiting the Number of Major Disaster Declarations

Some may contend that too many major disasters are being declared and should be limited. Other Potential Amendments to the Stafford Act

Other amendments to the Stafford Act could either limit the number of declarations being issued, or the amount of assistance provided to the state by the federal government. In other words, state and local governments currently provide 25% of disaster costs on projects and grants to families and individuals with the federal government assuming 75% of all costs. Some of these questions include the following:
The model for emergency and disaster response is built on the premise that emergencies and disasters are local. Is federal assistance to states and localities unintentionally creating a disincentive for states and localities to prepare for emergencies and major disasters?
The Robert T. Stafford Emergency Relief and Disaster Assistance Act (P.L. 93-288, as amended) authorizes the President to issue declarations for incidents ranging from destructive, large-scale disasters to more routine, less damaging events. Declarations trigger federal assistance in the forms of various response and recovery programs under the Stafford Act to state, local, and tribal governments. The Federal Emergency Management Agency's (FEMA's) Disaster Relief Fund (DRF) is the primary funding source for disaster response and recovery.
Funds from the DRF are used to pay for ongoing recovery projects from disasters occurring in previous fiscal years, meet current emergency requirements, and as a reserve to pay for upcoming incidents. The DRF is funded annually and is a "no-year" account, meaning that unused funds from the previous fiscal year (if available) are carried over to the next fiscal year. In general, when the balance of the DRF becomes low, Congress provides additional funding through both annual and supplemental appropriations to replenish the account.
The federal government provides a significant amount of money to state and local governments each year for emergency and major disasters. For example, Congress provided roughly $120 billion for Hurricane Katrina and $60 billion for Hurricane Sandy recovery. Even in years with relatively few major disasters, it is not uncommon for the federal government to annually appropriate between $2 billion and $6 billion to help pay for recovery projects. Studies and analyses of disasters indicate that there has been an uptick in the number of major disasters declared each year. In addition, scholars of disaster policy and other experts such as climatologists expect disasters to increase in both frequency and in costs in the near future.
Federal disaster assistance expenditures are influenced by both external and internal factors. External factors that increase federal spending on disaster costs include increases in the frequency and magnitude of weather related events, and increases in population size and development—especially in coastal and other flood prone areas. Internal factors also influence how much assistance is provided and include disaster assistance policies that have evolved over time that have expanded the federal role in emergency and major disaster declarations such as altering declaration criteria and adjusting the federal cost-share for response and recovery.
Congressional interest in disaster assistance has always been high given the amount of money provided to states and localities, but also because of increasing disagreements over the appropriate role of the federal government in providing assistance. Other congressional concerns include the use of supplemental appropriations to pay for disaster relief, offsetting expenditures for disaster assistance, and whether some of the federal burden for disaster assistance should be shifted to states and localities.
This report describes the declaration process and the types of declarations that can be issued under the Stafford Act: (1) emergency and major disaster declarations, and (2) Fire Management Assistance Grants. The report also examines how the DRF is financed. This discussion is followed by an analysis concerning the issues related to the DRF including the debate over supplemental appropriations, how the DRF is budgeted, and the influence the Budget Control Act has had on the DRF.
Some argue that the current method of funding and providing federal assistance for disaster response and recovery is functioning correctly and should not be changed. Others argue that the federal government should increase the amount of funding provided to states and localities for emergency and major disaster declarations. Still others argue that policy options that reduce federal costs for emergency and major disaster declarations or reduce the number of supplemental appropriations needed (or both) should be pursued. Policy proposals that could help achieve these ends include:
appropriating more funds for the DRF to reduce the need for supplemental funding, restructuring the budget procedures for disaster assistance, creating alternative funding methods such as a rainy-day fund or a contingency fund, reducing federal costs by eliminating unrelated spending in disaster funding bills, altering policies that would limit the number of declarations issued each year, and converting some or all disaster assistance to disaster loans.
This report concludes with policy questions that may help frame future discussions concerning federal emergency and disaster relief.
This report will be updated as events warrant.