Cost Share Adjustment History

Cost Share Adjustments
Cost Shares: 2005 Hurricane Season
History Of Cost Share Adjustments Nationwide

Cost Share Adjustments

In extreme situations where state and local hardships necessitate, the cost-share may be amended to 90 /10, or even eliminated for certain types of work related to emergency protective measures and debris removal.

The Federal cost share has been adjusted for past disasters to be more responsive to the recovery efforts of the state and local communities, based on prevailing regulations and authorities. The cost share adjustment for Public Assistance Obligations was codified in 1998 by the regulatory document, the 44 CFR (Code of Federal Regulations. This regulation has affected the federal cost share obligations for Presidential disaster declarations since 1999.

Federal cost shares can be adjusted for two forms of assistance: emergency work and permanent work. In order to adjust the 75 percent federal share of obligated costs:

The state must request that the President amend the cost share of federal obligations to the disaster.
FEMA may recommend only up to 90 percent of federal obligations for permanent work whenever a disaster is so extraordinary that actual Federal obligations under the Stafford Act, excluding FEMA administrative cost, meet or exceed a qualifying threshold.
The amendment of the cost-share primarily hinges on whether actual federal obligations under the Stafford Act, excluding FEMA administrative cost, meet or exceed a qualifying threshold of: $110 per capita of State population (Katrina).
By law, the federal cost share for hazard mitigation efforts undertaken with federal monies can not exceed 75 percent of total obligations.
The state may adjust its cost share agreement with the local governments to reduce the burden on the most affected communities.

Cost Shares: 2005 Hurricane Season

The 2005 hurricane season, unlike any other disaster in history, resulted in many new requests from federal, state and local officials for Public Assistance funding. FEMA has interpreted the Stafford Act authorities in the broadest terms to help communities to recover in a timely and effective manner.

The federal cost share in Louisiana as a result of the 2005 hurricane season has been adjusted to 100 percent for emergency work for 10 months for all declared parishes and for 16 months in 5 parishes. The amount of federal dollars obligated under declarations from Katrina and Rita for emergency work at this time is $2.80 billion. Emergency work includes debris removal, emergency sheltering, and overtime pay for emergency workers.
- The federal cost share for permanent work in Louisiana has been adjusted to 90 percent from 75 percent. Permanent work includes public assistance such as the repair and replacement of buildings and utilities, and other infrastructure restoration projects.
- FEMA has made available to Louisiana $4.57 billion for the federal share of project costs, administrative costs and state management costs from FEMA's Public Assistance program.

History Of Cost Share Adjustments Nationwide

The federal cost share for Emergency Work may be adjusted to 100 percent federal obligations for a limited period in the early days of a major disaster. This has occurred 35 times since 1998.
To date, the Federal cost share for Permanent Work has been adjusted from 75 percent to 90 percent 29 times since 1998.
To date, the federal cost share for permanent work has been adjusted to 100 percent 2 times. The following is a brief description of these two special occurrences. These are the only two presidential disasters for which FEMA has paid 100 percent federal cost share for eligible work.
- Cerro Grande Wildfire
  - The federal cost share was 100 percent from the onset of the disaster. This was mandated by Congress.
- September 11 terrorist Attacks.
  - The federal cost share was 100 percent from the onset of the disaster. One State, New Jersey, received an emergency declaration and was reimbursed only for emergency work. Virginia was reimbursed only for emergency work. New York was reimbursed for emergency and permanent work.

Apart from the above two incidents, there have been other notable disasters for which the cost share had been adjusted. These are listed below and include major declarations as well as emergency declarations:

Hurricane Andrew:
- For Hurricane Andrew, FEMA-955-DR-FL and FEMA-956-DR-LA, federal funding was 75 percent for the first $10 per capita of State population and then 100 percent for all remaining costs. So Florida paid a cost share of about $33 million and Louisiana paid $10.5 million.
- The State of Florida provided $33 million in non federal cost share (25 percent of first $132 million). FEMA provided 100 percent federal funding for all costs above $132M. The total assistance provided was $718 million.
- Therefore, the effective federal cost share was 95.6 percent (100 percent - 33/751) for Florida and 87 percent (100 percent - 10.5/79.5) for Louisiana.
Sheltering Emergencies Katrina and Rita
- 45 States sheltered evacuees from Hurricanes Katrina and Rita and were reimbursed 100 percent for all eligible costs.
Columbia Shuttle Response
- Two states received emergency declarations for recovery of shuttle debris and were reimbursed 100 percent for all eligible costs.

FEMA manages federal response and recovery efforts following any national incident, initiates mitigation activities and manages the National Flood Insurance Program. FEMA works closely with state and local emergency managers, law enforcement personnel, firefighters and other first responders. FEMA became part of the U.S. Department of Homeland Security on March 1, 2003.

Last Modified: Monday, 19-Mar-2007 15:34:27 EDT