Two different payment methods have been established for Public Assistance Program grants. The difference between the methods is dependent on whether a project is small or large. That determination is based on a cost threshold that changes annually. The threshold is updated at the beginning of each fiscal year and published in the Federal Register. For the year beginning October 1, 2013 thru February 25, 2014, the threshold is set at $68,500. If the estimated cost of a project is equal to or exceeds this threshold, the project is processed as a large project. As a result of the Sandy Recovery Improvement Act of 2013 (P.L.113-2) FEMA evaluated the threshold and has raised it to $120,000, and will continue to adjust it annually based on inflation. The $120,000 threshold is effective for new declarations on or after February 26, 2014.
Large Projects are funded using a final accounting of actual costs. The steps for processing a large project are described below.
A Project Worksheet is prepared by the Project Officer. FEMA approves funding using the estimate and obligates the Federal share of the funds to the State.
As the project proceeds, the Applicant periodically request funds from the State to meet expenses that have been incurred or that are expected in the near future. It may take time to process a request for funds through the State system, and the Applicant should take this into account when timing requests for funds.
When the project is complete, the State determines the final cost of accomplishing the eligible work, often performing inspections or audits to do so. The State then submits a report on the completed project to FEMA, certifying that the Applicant's costs were incurred in the completion of eligible work.
After reviewing the State's report, FEMA will consider adjusting the amount of the grant to reflect the actual cost of the eligible work.
While proceeding with the project, the Applicant must ensure that grant funds are used only for eligible work. When reviewing final costs, the State cannot provide funds for costs that are outside the scope of work approved by FEMA. The Applicant should contact the State if changes to the scope of work are foreseen or identified during performance of the work.
Similarly, an Applicant may find during construction that FEMA's initial estimate is too low. If this happens, the Applicant should request an increase in the funds FEMA has made available for the work. As with changes in scope, the Applicant should request funding level increases through the State as soon as the need becomes apparent.