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In the event of a disaster, the federal government will often provide support to state and local governments in their response and recovery efforts. While that support is provided through various agencies and departments, the Federal Emergency Management Agency (FEMA) plays a predominant role and gives financial assistance to local relief activities through its Disaster Relief Fund (DRF).
As severe storms become more common due to climate change, there will be an increase in the need for federal resources — which are also used to address other forms of emergencies, including earthquakes, chemical spills, mass violence, and pandemics. Here, we provide an overview of how federal disaster assistance works and what role the Disaster Relief Fund plays in federal disaster spending.
Climate and weather-related natural disasters are becoming increasingly frequent. In addition to endangering lives, they are economically costly. Since 2020, damages from climate and weather disasters have averaged $151 billion per year (adjusted for inflation) — a 57 percent increase from the prior decade and almost five times the cost of the 1990s. The average number of disasters that cause significant damages (those that cost at least $1 billion, adjusted for inflation) has also risen from about six events per year in the 1990s to 20 events per year over the last three years.
When a disaster or emergency occurs, the local government has the primary responsibility of overseeing the response and recovery operations. It uses its own funds and assets to provide initial emergency response services, but if the situation is beyond its capabilities, the state government steps in to provide additional assistance. The federal government steps in when a disaster exceeds a state’s ability to respond and the governor requests a presidential disaster declaration. The presidential disaster declaration triggers emergency response and recovery assistance for uninsured losses and expenses. State and local governments are expected to contribute funds to the relief efforts, and cost-sharing requirements vary by the type of assistance provided.
Upon issuance of a major disaster declaration, the federal government can activate dozens of its agencies and departments to provide emergency and financial assistance and/or deploy federal personnel and resources. FEMA is the main agency responsible for activating, implementing and coordinating federal disaster relief efforts. Other federal agencies such as the Department of Housing and Urban Development, the Department of Agriculture, the Department of Transportation, and the Small Business Administration may also provide assistance under certain circumstances. The Department of Defense may also provide emergency assistance including clean water and other supplies needed in the immediate aftermath of a major disaster.
The vast majority of federal resources goes for responding to and recovery from natural disasters, such as hurricanes and earthquakes, but funds have occasionally been used for other types of emergencies like man-made disasters and biological hazards. For example, the federal government authorized nearly $20 billion through four different agencies in response to the September 11 terrorist attacks. The federal government also invests in a variety of activities including disaster planning and training, disaster mitigation, evaluation of hazards, and long-term recovery programs.
The federal government funds disaster response through appropriations to nearly 20 different agencies and departments. Each agency funds its own disaster-related programs from its budget, which may be supplemented with additional appropriations throughout the year.
FEMA, housed under the Department of Homeland Security, is the primary agency responsible for general disaster assistance and receives the largest amount of money for financing federal disaster relief activities through its Disaster Relief Fund (DRF). Other agencies and departments coordinate responses to disasters that target specific populations.
The DRF accounted for 37 percent of all federal disaster relief funding in 2022 and provided funding for the aftermath of more than 18 weather- and climate-related events (some funds were provided for disasters that occurred in 2020 and 2021). The majority of DRF funds are used for grants and other direct financial assistance to state and local governments for the removal of debris and uninsured damage to public buildings and infrastructure. Federal assistance is also provided to individuals for temporary housing and limited uninsured losses. The Department of Agriculture and related agencies received the second largest amount, which was predominantly dedicated to producers who had suffered losses due to hurricanes, droughts, wildfires, and floods.
The Disaster Relief Fund is funded through the appropriation process as a part of FEMA’s budget. Any unused balance is carried over to the next fiscal year. In the event of a major disaster, Congress is likely to provide supplemental funding if the DRF’s balance and current funding are not sufficient to cover costs in a given year. While annual appropriations help the government to budget for costs in advance, supplemental appropriations enable Congress to address unanticipated needs on an ad hoc basis. Since fiscal year 1992, about 75 percent of all appropriations for the DRF has been provided through supplemental appropriations.
While the funding for and spending from the DRF can vary each year depending on frequency and severity of disasters, there has been an increase in DRF funding and outlays, on average, over the last thirty years — particularly after 2005. From 1992 to 2004, DRF spending averaged about $5 billion a year; spending has since increased to an annual average of almost $17 billion over the 2005 to 2021 period ($13 billion if pandemic-related spending is excluded).
That increase in spending has been primarily driven by supplemental appropriations for a handful of very severe disasters in the past several years. In particular, the relief efforts for hurricanes Katrina, Rita, and Wilma, all of which hit the United States in 2005, accounted for nearly 20 percent of DRF spending over the past 30 years (all hurricanes accounted for 44 percent of DRF outlays). The federal response to the COVID-19 pandemic, which authorized the use of DRF funds for certain types of unemployment compensation in addition to emergency assistance and medical treatment, also accounted for about one-fifth of such spending. Other severe events, such as wildfires, flooding, tornadoes, and earthquakes, also contributed to higher spending levels.
While the DRF constitutes a small portion of the federal budget, it is the single largest source of disaster spending by the federal government. Year-to-year appropriations have greatly fluctuated over time, given the difficulty of accurately predicting the timing and extent of disasters. However, the cost of disaster assistance has slowly increased, and that trend is projected to continue due to changing climate conditions.
As the nation faces increasing numbers of natural disasters and other unpredictable emergencies, lawmakers should consider ways to prioritize disaster needs in the budget, so that federal resources can be rapidly deployed to help ease human suffering and economic damage when adversity strikes.