In response to calls from Members of Congress, the Government Accountability Office, and the Department of Homeland Security’s Office of the Inspector General over the last several years for FEMA to reform how the federal government supports states following disasters, FEMA is exploring the concept of a disaster deductible. The Agency believes that such an approach has the potential to incentivize mitigation strategies and promote risk-informed decision-making to build resilience, including to catastrophic events; reduce the costs of future events for both states and the federal government; and facilitate state and local government planning and budgeting for enhanced disaster response and recovery capability through greater transparency.
This concept would include the establishment of a predetermined level of state disaster funding or investment in resilience before FEMA will begin to provide additional assistance through the Public Assistance program following a disaster declaration. FEMA is seeking public comments on all aspects of this concept until March 21, 2016 and may be submitted through regulations.gov under docket ID FEMA-2016-003.
FEMA is seeking comments on all aspects of the deductible concept including how to calculate the deductible, the scope of the deductible, how to satisfy the deductible, how this concept could influence change, implementation considerations and an estimated impact. The development of the Disaster Deductible Concept will apply strictly to Public Assistance funding, and will have no impact on FEMA’s funding to states through the Individual Assistance program.
Goals
Known as the disaster deductible, FEMA anticipates that the concept, if implemented, would:
- Incentivize mitigation strategies and promote risk-informed decision-making to build resilience, including to catastrophic events;
- Reduce the costs of future events for both states and the federal government; and
- Facilitate state and local government planning and budgeting for enhanced disaster response and recovery capability through greater transparency
- Add predictability for States ahead of disasters by allowing them to know in advance the financial commitment they would be expected to provide prior to receiving federal disaster assistance, allowing them to plan and budget for disaster response and recovery.
- A disaster deductible would require a state to spend or meet an established amount of funding prior to the Federal Government providing supplemental assistance.
- In addition to building resilience to catastrophic events, a disaster deductible could incentivize States and local communities to create, adopt, and implement programs that increase their resilience for recurring, routine events by providing them with a credit for such programs against their deductible requirement.
- FEMA believes that a deductible could result in more effective use of taxpayer resources.
- The transparency of a deductible requirement could facilitate state and local government planning and budgeting for more enhanced disaster response and recovery capability.
- FEMA’s Fire Management Assistance Grant (FMAG) Program operates on a model that is similar to a deductible model. Following an FMAG declaration the cost for each declared fire event must meet a minimum threshold either for the year or the individual fire to be eligible for reimbursement. However, once the threshold is met, FEMA does provide reimbursement for costs below the threshold. The threshold is adjusted annually based on the consumer price index and the state’s population.
Tribal Process
FEMA is currently consulting with federally recognized tribal nations on a separate process for tribes to request and receive presidential disaster declarations under the Stafford Act. That process does not incorporate a disaster deductible.
Advance Notice of Proposed Rulemaking
This approach would be a significant change and FEMA is committed to a transparent stakeholder engagement effort to explore how and if it should be adopted. Through the Advance Notice of Proposed Rulemaking (ANPRM), FEMA is seeking ideas, comments, and questions from the public on the concept of a disaster deductible. FEMA is not currently proposing to implement this concept.
Specifically, FEMA is soliciting comments on all aspects of the deductible concept, including how to calculate a state’s financial commitment, the scope of the financial commitment, how states can satisfy the commitment, how this concept could influence change, implementation considerations – including applicability to states, tribes and territories – and estimated impact.
FEMA will evaluate all comments received. If it chooses to pursue this credit for investing in resilience, FEMA will formulate a model based on the comments received and will seek public comment on the proposed model through a Notice of Proposed Rulemaking.
This ANPRM for a disaster deductible is an opportunity to work with our partners in considering and potentially crafting disaster policy that increases our nation’s resiliency. The ANPRM is currently available on the Federal Register for public review and comment through March 21, 2016.
Questions & Answers
What is a disaster deductible?
A disaster deductible would require a predetermined level of demonstrated financial commitment as a condition of eligibility for certain FEMA assistance programs made available through presidential major disaster declarations.
Why is FEMA considering this?
FEMA believes that a deductible could result in more effective use of taxpayer resources. It could incentivize proactive fiscal planning by states as recipients for disaster assistance, encouraging them to set aside funding specifically reserved for disaster response, recovery, and mitigation.
The Government Accountability Office and the DHS Office of Inspector General also issued audit reports in recent years recommending that FEMA consider changes to Public Assistance declaration criteria.
Would the deductible amount be required up front or could it be expanded over several years?
The deductible amount has not been decided, but FEMA would welcome comments about which approach would be most beneficial.
Are there other ways to meet the deductible other than money?
FEMA welcomes comments about any ideas to satisfy the deductible and has proposed a number of questions in the notice that we are seeking feedback on. FEMA believes that the availability of credits toward the deductible could incentivize increased planning and adoption of specific mitigation activities that will result in risk-informed mitigation strategies on a broad scale.
How long will this take to implement?
Following the collection of comments, FEMA will evaluate the comments and decide whether or not to pursue the concept. If so, FEMA would formulate a deductible model (based on the comments received) to be noticed in another solicitation for public comment, through a Notice of Proposed Rulemaking.
Would the disaster deductible concept apply to U.S. Territories?
FEMA envisions that this concept could potentially apply to U.S. Territories. However, FEMA anticipates that there will likely be a threshold of fiscal capacity below which a deductible would not apply. This may exclude some or all U.S. Territories from the concept. However, we welcome comments on the potential benefits and impacts this could have.
Would the disaster deductible concept apply to Tribal governments?
FEMA is currently consulting with federally recognized tribal nations on a separate process for tribes to request and receive presidential disaster declarations under the Stafford Act. While the ANPRM requests input regarding the potential applicability to tribes, FEMA does not anticipate applying a deductible to tribal requests at this time. However, a tribal government who applies for assistance under a state-requested presidential disaster declaration would be potentially impacted if FEMA were to implement this concept. FEMA welcomes comments on how the deductible concept from tribal governments.