An Examination of Federal Disaster Relief
Under the Budget Control Act

Bruce R. Lindsay
Analyst in American National Goverment
William L. Painter
Analyst in Emergency Management and Homeland Security Policy
Francis X. McCarthy
Analyst in Emergency Management Policy
February 10, 2012
Congressional Research Service
7-5700
www.crs.gov
R42352
CRS Report for Congress
Pr
epared for Members and Committees of Congress

An Examination of Federal Disaster Relief Under the Budget Control Act

Summary
On August 2, 2011, the President signed into law the Budget Control Act of 2011 (BCA, P.L. 112-
25), which included a number of budget-controlling mechanisms. As part of the legislation, caps
were placed on discretionary spending for the next ten years, beginning with FY2012. If these
caps are exceeded, an automatic rescission—known as sequestration—takes place across most
discretionary budget accounts to reduce the effective level of spending to the level of the cap.
Additionally, special accommodations were made in the BCA to address the unpredictable nature
of the need for disaster assistance while attempting to impose discipline on the amount spent by
the federal government on disasters.
The first section of this report addresses the traditional funding for major disaster declarations,
both through annual requested amounts and through supplemental appropriations to meet greater,
unanticipated costs. This section also explains the workings of the President’s Disaster Relief
Fund, a “no-year” fund that finances spending under the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (P.L. 93-288).
Next, this report provides a basic overview of how disaster assistance is appropriated, what
factors affect how much the federal government spends on disasters, how disaster relief is
impacted by the BCA, and what the policy implications are for disaster assistance going forward
under the constraints of the BCA. Included in this review are discussions of disaster spending,
how it is calculated under the BCA, and potential costs that may be excluded under that
calculation. The report also touches on the increasing number of disaster declarations and both
the possible causes and likely cost implications of a greater number of declarations.
This report will be updated as needed.


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Contents
Introduction...................................................................................................................................... 1
An Overview of Disaster Spending: Federal Disaster Assistance and the Stafford Act ............ 1
The Disaster Relief Fund..................................................................................................... 2
Supplemental Appropriations.............................................................................................. 2
Budget Control Act (BCA)........................................................................................................ 6
OMB Report .............................................................................................................................. 7
Analysis and Potential Policy Implications ............................................................................... 8
Expenditures Omitted from the 10-Year Average ............................................................... 8
Other Types of Excluded Stafford Assistance ................................................................... 11
Funding for Severe Disaster Years .................................................................................... 12
Contention over Disaster Assistance Offsets..................................................................... 13
Increasing Declarations ..................................................................................................... 14
Concluding Observations ........................................................................................................ 15

Figures
Figure 1. Disasters Costing $500 Million Dollars or More ............................................................. 3
Figure 2. Disaster Relief Fund, Administration Request and Appropriation................................... 5

Tables
Table 1. Supplemental Funding for Large-Scale Disasters............................................................ 14

Contacts
Author Contact Information........................................................................................................... 15
Acknowledgments ......................................................................................................................... 16

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Introduction
Concern over the size of the federal budget deficit and the national debt has brought
congressional attention, as an ancillary issue, to both the amount of funding the federal
government provides to states and localities for disaster assistance and the processes the federal
government uses to provide that assistance. The amount of funding provided by Congress for
declared emergencies and major disasters has grown considerably in the past decade, driven
principally by the hurricane season of 2005.1 Although funds have been reallocated at times from
one account to another to provide for disaster-related assistance, disaster relief funding has
historically not been fully offset. Disaster relief funding has usually not been tightly constrained,
either, with supplemental spending bills often funding these activities outside the allocations of
discretionary budget authority and outlays associated with budget resolutions. Two potential
methods for reducing the impact of disaster assistance spending on the federal budget are (1) the
use of offsets and (2) placing controls on the level of allowable spending.
Among its provisions, the Budget Control Act (P.L. 112-25, hereafter the BCA) provides a
mechanism designed, arguably, to limit spending on major disasters declared under the Robert T.
Stafford Disaster Relief and Emergency Assistance Act (P.L. 93-288, hereafter the Stafford Act),
thereby limiting the impact of such spending on the budget deficit.2 This report reviews current
disaster funding practices and examines potential issues presented to disaster funding under the
BCA mechanism. The report also discusses how OMB calculates the “allowable adjustment” to
discretionary spending caps for disaster relief pursuant to the BCA, and the potential policy
implications that may result from that process.
An Overview of Disaster Spending: Federal Disaster Assistance
and the Stafford Act

The Stafford Act authorizes the President to declare a major disaster in response to a governor’s
request for federal assistance.3 The declaration enables federal agencies to provide assistance to
state and local governments overwhelmed by the incident. While the majority of federal
assistance for major disasters to states and localities is provided through the Federal Emergency
Management Agency (FEMA), other federal agencies and offices also provide assistance once a
major disaster has been declared. These include the U.S. Army Corps of Engineering, the
Department of Transportation, and the Department of Education among others. The assistance
provided by these agencies is often requested, and then reimbursed by FEMA (this is referred to
as a Mission Assignment). However, in some circumstances the agencies have the authority to
fund their assistance efforts through their respective budgets—even when an incident is declared
under the Stafford Act. As will be shown later in this report, the assistance provided by these
agencies has a bearing on how the spending caps are determined under the BCA.

1 Data and information on disasters can be found at, NOAA: National Climate Data Center, National Climate Data
Center Billion Dollar U.S. Weather/Disasters Page
, NCDC Billion Dollar U.S. Weather/Climate Disasters page, June
17, 2011, http://www.ncdc.noaa.gov/oa/reports/billionz.html.
2 42 U.S.C. 5121 et seq. For further analysis on Stafford Act disaster assistance see CRS Report RL33053, Federal
Stafford Act Disaster Assistance: Presidential Declarations, Eligible Activities, and Funding
, by Francis X. McCarthy.
3 For further analysis on emergency and disaster declarations see CRS Report RL34146, FEMA’s Disaster Declaration
Process: A Primer
, by Francis X. McCarthy.
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The Disaster Relief Fund
As mentioned previously, the majority of disaster assistance is provided by FEMA. Once the
declaration has been issued by the President, FEMA provides various forms of disaster relief
through its Disaster Relief Fund (DRF). The DRF is a no-year account4 that is used to fund
response activities and pay for ongoing recovery programs. The DRF is also used to reimburse
Mission Assignments to other federal agencies, and pay for declared emergencies, fire
management assistance grants, and major disasters that might occur.5
Current budgetary practice generally consists of funding the DRF through regular appropriations
acts and begins with the Administration’s formulation of the budget request for the account.
Among the data points used to determine the budget request are: (1) funding levels currently
available in the DRF; (2) the five-year rolling average of “normal” disaster costs;6 (3) pending
recovery costs; and (4) the estimated monthly recoveries of unobligated funds.7
Based on these data points, since FY1998 the Administration’s request for the DRF has been $1.3
billion or more each year. The average budget request between FY2000 and FY2011 is roughly
$2 billion. Yet, the average the current spend-out rate8 for the DRF has been $350 million dollars
per month, which amounts to $4.2 billion a year.9 All things being equal, at this rate the DRF may
run out of funding in any fiscal year for which it is budgeted for less than $4 billion (see Figure
2
).
Supplemental Appropriations
Congress provides additional budget authority to the DRF when the balance is deemed
insufficient to provide for assistance and recovery projects.10 This is primarily done through
supplemental appropriations acts.11 Disasters costing more than $500 million are considered
outliers when FEMA budgets for the new fiscal year; however, this figure has been used for over
a decade without being adjusted for inflation. In addition, based on data provided by FEMA,
since 1992 there have been 20 declared disasters that have cost $500 million dollars or more (see
Figure 1). These declarations are presumably considered outliers for the purposes of budgeting
for disasters. However, some might argue these incidents occur too frequently to be considered as
outliers and ought to be included in calculating necessary budget levels for current and
prospective disaster costs.

4 While most appropriations expire after a set period of time, no-year appropriations are available until expended. This
is helpful in disaster recovery since infrastructure repair and mitigation projects can stretch out over several years.
5 Fire Management Assistance Grants (FMAGs) and emergencies under the Stafford Act are discussed later in the
report.
6 Normal disasters are declared incidents that cost less than $500 million dollars. Disasters costing over $500 million
are considered outliers and are removed from the calculation.
7 For example, when a recovery project is completed for less than the estimated cost.
8 The spend-out rate refers to the amount of money paid out of the account for a given period of time.
9 Based on a CRS discussion with FEMA staff from the Office of the Chief Financial Officer.
10 Congress also appropriates disaster funds to other accounts administered by other federal agencies pursuant to federal
statutes that authorize specific types of disaster relief.
11 For further analysis on emergency supplemental appropriations see CRS Report R40708, Disaster Relief Funding
and Emergency Supplemental Appropriations
, by Bruce R. Lindsay and Justin Murray.
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Figure 1. Disasters Costing $500 Million Dollars or More
1992-2011

Source: Based on data provided to the authors by FEMA’s Legislative Affairs Division.
Note: Spending on recovery continues for many of these events; these amounts represent a snapshot of disaster
costs as of December, 2011.
Moreover, additional budget authority has been needed when a series of events occurs over a
limited period of time. For example, in FY2008, additional budget authority for disaster
assistance was needed for wildfires, floods, and hurricanes. In that year, while two hurricanes—
Gustav and Ike—each exceeded the $500 million threshold, other disaster events, along with
ongoing disaster recovery needs from previous events, compounded the demand for federal
funding. Consequently, there has been an increased reliance on the DRF to support communities
and individuals in need. This can be seen in the funding history for the DRF from FY1991 to
FY2011, shown in Figure 2.
The prevailing trend in recent years is for the DRF to need more funding than is provided in its
base budget and in the regular appropriation acts—a need generally met through supplemental
appropriations legislation. The use of supplemental appropriations is of concern because
traditionally they have not been subject to budgetary constraints as they frequently have been
designated as emergency appropriations—allowing them to be provided in excess of spending
limits otherwise established by budget legislation intended to control the size of the deficit. Some
critics of past policies have asserted that Administrations have failed to request adequate funding
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for the DRF in order to mask potential disaster costs and project smaller deficits in their budget
documents.12
In Figure 2, FY1998 to FY2001 seem to be outliers, in that adequate funding was requested to
meet disaster needs, but when those years are more closely examined, the Administration’s
request for regular appropriations is actually less than $500 million in each of these years,
supplemented by an emergency appropriation requested as part of the base budget—essentially,
the budget process began with a built-in supplemental for disaster relief that would score outside
the discretionary spending caps. This practice continued until the FY2003 request.
As a result of the concern over the size of the deficit and rising level of national debt, Congress
has implemented measures to limit federal spending. The BCA includes measures that limit
discretionary spending while providing a mechanism that recognizes the unexpected nature of
disasters and the periodic need for disaster relief funding beyond what the budget envisions.


12 For example, see Office of Management and Budget, A New Era of Responsibility: Renewing America’s Promise,
Washington, DC, February 26, 2009, p. 36, http://www.gpoaccess.gov/usbudget/fy10/pdf/fy10-newera.pdf.
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Figure 2. Disaster Relief Fund, Administration Request and Appropriation
(Over FY1991-FY2011, budget authority in billions)

Source: CRS data using Administration budget documents and appropriations statutes.
Note: Figures have been rounded. Amounts reflect requests and appropriations in a given fiscal year, without
regard to emergency designations under budget control legislation or linkage to particular disasters.
Administration requests from FY1991 to FY1997 represent the previous average spending amount of $320
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mil ion during the disaster-quiescent 1980s, with the exception of 1994 when the request level reflected the
estimated spending for the Midwest flooding of 1993. Based on the increased disaster activity of the1990s and
outlier events such as the Mississippi flooding, Hurricane Andrew, and the Northridge earthquake, requested
amounts were recalibrated for FY1998 to better address the growth in disaster spending on an annual basis.
Rates of spending on disaster recovery by FEMA differ over time depending on available funding and emergency
needs.
Budget Control Act (BCA)
On August 2, 2011, the President signed into law the Budget Control Act of 2011 (P.L. 112-25),
which allowed the national debt ceiling to be raised while also implementing a range of budget-
controlling mechanisms.13 As part of the legislation, caps were placed on discretionary spending
for the next ten years, beginning with FY2012. If these caps are exceeded, an automatic
cancellation of budget resources—known as sequestration—takes place across most discretionary
budget accounts to reduce spending down to the cap.
The BCA allows for adjustments to the cap in a handful of situations, essentially raising it to
allow for certain categories of spending. One of those adjustments is for emergencies, which is
familiar to many observers of the budget process, but a new category of spending was defined in
law for “disaster relief,” allowing it to be treated separately from other emergencies.
In the past, “emergency appropriations” were often synonymous with “disaster relief.” As noted
earlier, although a base level of funding was provided in regular appropriations bills for the DRF
and other programs that support disaster response and recovery efforts, these accounts were often
bolstered by supplemental appropriations bills as needed. Often the disaster funding was
designated as an emergency appropriation, which meant that it would not count against statutory
or congressional discretionary spending limits and thus did not have to be offset.
Under the BCA, the discretionary spending limit can be adjusted upward to make room for an
uncapped amount of emergency spending and adds the following definitions to existing budget
law:
(20) The term “emergency” means a situation that—
(A) requires new budget authority and outlays (or new budget authority and the outlays
flowing there from) for the prevention or mitigation of, or response to, loss of life or
property, or a threat to national security; and
(B) is unanticipated.
(21) The term “unanticipated” means that the underlying situation is—
(A) sudden, which means quickly coming into being or not building up over time;
(B) urgent, which means a pressing and compelling need requiring immediate action;
(C) unforeseen, which means not predicted or anticipated as an emerging need; and
(D) temporary, which means not of a permanent duration.14

Prior to enactment of the BCA, supplemental appropriations for disaster relief were often
designated as emergency spending. The enactment of the BCA distinguishes disaster relief
spending, though often unanticipated, as separate from emergency spending and, as a result,
limits disaster relief. “Disaster relief,” under the BCA, is defined as activities carried out pursuant

13 For further analysis of the Budget Control Act see CRS Report R41965, The Budget Control Act of 2011, by Bill
Heniff Jr., Elizabeth Rybicki, and Shannon M. Mahan.
14 Budget Control Act of 2011, P.L. 112-25, §102.
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to a determination under Section 102(2) of the Stafford Act, which authorizes the President to
make a major disaster declaration.15 The BCA, however, created a separate limited cap
adjustment specifically for disaster relief, and says that funding designated as disaster relief is not
eligible for the unlimited cap adjustment for emergency spending.16
The limit established by the BCA on adjustments to the cap for disaster relief is based on the
average funding provided for disaster relief over the last ten years, excluding the highest and
lowest annual amounts, calculated by the Office of Management and Budget.17 If Congress
spends less than that average on disaster relief in a given fiscal year, the cap can be further
adjusted upward by the unspent amount in the following year. It is important to note that this
adjustment limitation is not a restriction on disaster assistance per se—rather it is a restriction on
how much the cap can be adjusted upward to accommodate the assistance. Also, spending within
the cap does not require offsets. As mentioned earlier, Congress has in the past funded the DRF
and other elements of the budget that provide disaster assistance with discretionary budget
authority that falls within the cap.
OMB Report
The Office of Management and Budget (OMB) manages the sequestration process and the limits
on adjustments available to raise the spending cap. The BCA requires OMB to annually calculate
the adjusted 10-year rolling average of disaster relief spending that sets the allowable cap
adjustment for disaster relief.
OMB’s methodology for calculating the allowable adjustment is tied to the language of the BCA’s
definition of “disaster relief” which includes only amounts that were appropriated or authorized
through legislation that specifically referenced Section 102(2) of the Stafford Act. In its report,
OMB illustrated this by comparing two similar education programs targeting students in
hurricane-affected areas.18 One program had appropriations language specifically referencing the
major disaster declaration—which was counted, and one program that had language only
mentioning the hurricanes rather than the disaster declaration—which was not counted. In making
its calculation, OMB included funding provided through both annual and supplemental
appropriations bills for 29 individual accounts managed by 11 agencies and departments. OMB
has not made any other estimates of “disaster relief” spending other than those called for by the
BCA.
In accordance with the BCA, OMB has calculated the allowable adjustment for FY2012 as $11.3
billion.19 OMB will make a similar calculation each year, taking into account the latest

15 Under a major disaster declaration, state and local governments and certain nonprofit organizations are eligible (if so
designated) for assistance for the repair or restoration of public infrastructure such as roads and buildings. A major
disaster declaration may also include temporary housing, unemployment assistance, crisis counseling for families and
individuals, and community disaster loans for local governments. The governor of the impacted state requests the types
of assistance considered necessary to address the needs of the state.
16 Budget Control Act of 2011, P.L. 112-25, §101.
17 Ibid.
18 Office of Management and Budget, OMB Report on Disaster Relief Funding to the Committees on Appropriations
and the Budget of the U.S. House of Representatives and the Senate
, Washington, DC, September 1, 2011, pp. 2-3.
19 Office of Management and Budget, OMB Report on Disaster Relief Funding to the Committees on Appropriations
and the Budget of the U.S. House of Representatives and the Senate
, Washington, DC, September 1, 2011, p. 1.
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information available on disaster funding for the 10 previous fiscal years, and excluding the
highest and lowest years. As the average rolls forward, the available adjustment will change.
It is worth noting, however, that the cap is calculated in nominal dollars and does not adjust for
inflation. This will become more significant over time if inflation rises, and if the allowable
adjustment begins to decrease as projected in 2016.
Analysis and Potential Policy Implications
A number of policy questions are emerging as a result of the implementation of the BCA. These
include what the implications are of possible failures to capture appropriate disaster relief
expenditures in OMB calculations; debate over Stafford Act assistance that is excluded from the
disaster relief calculations; whether severe disaster years will strain the adjustment mechanism;
debate over the use of offsets; and the implications of the rising number of emergency
declarations under the Stafford Act.
Expenditures Omitted from the 10-Year Average
As previously mentioned, under the BCA, future spending caps on disaster relief and OMB’s
methodology for calculating the allowable adjustment are based on Section 102(2) of the Stafford
Act. As a result of OMB’s interpretation of the definition, when OMB reviewed appropriations
for inclusion in the “disaster relief” calculation, if the Stafford Act was not explicitly cited those
amounts were omitted—even when the funding was clearly for response to incidents declared as
major disasters (see OMB quotations below). In some cases the legislative text included
“pursuant to the Stafford Act.” In other cases this specific language was omitted. It is not likely
that precision in the language contemplated that the wording would one day be the basis of a cap
on disaster spending.
Its review resulted in this construction: when the legislative text stated the funding was pursuant
to the Stafford Act, OMB included that amount in the 10-year average. On the other hand, when
the legislative text made no reference to the Stafford Act—whether it referred to the declared
incident or not—OMB did not include that amount in the 10-year average. OMB illustrated such
omissions in the Report’s methodological description. According to OMB:
... in determining the amount that was “provided for disaster relief” in fiscal year 2005, OMB
included in the calculation the funding that the Congress appropriated ... to the Department
of Education “Hurricane Education Recovery” account for “assisting in meeting the
educational needs of individuals affected by hurricanes in the Gulf of Mexico” because the
appropriations language specified that it was “for students attending institutions … located in
an area in which a major disaster has been declared in accordance with section 401 of the
Robert T. Stafford Disaster Relief and Emergency Assistance Act.”20

The OMB Report further states:

20 Office of Management and Budget, OMB Report on Disaster Relief Funding to the Committees on Appropriations
and the Budget of the U.S. House of Representatives and the Senate, September 1, 2011, p. 2,
http://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/disaster_relief_report_sept2011.pdf.
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OMB did not include in its calculations those amounts ... Congress appropriated in response
to a presidentially-declared major disaster when such amounts were not specifically
designated in statute to carry out activities pursuant to the Stafford Act and the Act itself was
not specifically referenced. For example, OMB did not include in its calculations for fiscal
year 2009 the appropriations ... Congress provided in December 2009 to the Department of
Education “Innovation and Improvement” account “for competitive awards to local
educational agencies located in counties in Louisiana, Mississippi, and Texas that were
designated by ... [FEMA] as counties eligible for individual assistance due to damage caused
by Hurricanes Katrina, Ike, or Gustav” because the amounts were not specified as being for
activities undertaken pursuant to a major disaster declaration under the Stafford Act and the
[Stafford] Act was not specifically referenced.21
OMB took this position despite the fact that it has not always been the practice to include a
specific reference to the Stafford Act in supplemental appropriations for assistance in response to
major disasters. An example of past practice is presented below.
Pre-BCA Disaster Assistance Spending
In the Disaster Relief and Recovery Supplemental Appropriations Act, 2008,22 Title I, Chapter 1
outlines relief funds provided through the Department of Agriculture, including the following
provisions (emphasis added):
NATURAL RESOURCES CONSERVATION SERVICE
EMERGENCY WATERSHED PROGRAM
For an additional amount for the “Emergency Watershed Protection Program”,
$100,000,000, to remain available until expended, for disaster recovery operations.
FARM SERVICE AGENCY
EMERGENCY CONSERVATION PROGRAM
For an additional amount for “Emergency Conservation Program”, $115,000,000, to remain
available until expended.
RURAL DEVELOPMENT PROGRAMS
RURAL DEVELOPMENT DISASTER ASSISTANCE FUND
For grants, and for the cost of direct and guaranteed loans, for authorized activities of
agencies of the Rural Development Mission Area, $150,000,000, to remain available
until expended, which shall be allocated as follows: $59,000,000 for single and multi-
family housing activities; $40,000,000 for community facilities activities; $26,000,000
for utilities activities; and $25,000,000 for business activities: Provided, That such funds
shall be for areas affected by hurricanes, floods, and other natural disasters occurring
during 2008 for which the President declared a major disaster under title IV of the
Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1974
: Provided
further, That the cost of such direct and guaranteed loans, including the cost of modifying

21 Ibid., p. 2.
22 Division B of P.L. 110-329, 122 Stat. 3585 et seq.
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loans, shall be as defined in section 502 of the Congressional Budget Act of 1974: Provided
further, That the Secretary of Agriculture may reallocate funds made available in this
paragraph among the 4 specified activities, if the Secretary notifies the Committees on
Appropriations of the House of Representatives and the Senate not less than 15 days prior to
such reallocation.
In addition, for an additional amount for grants, and for the cost of direct and guaranteed
loans, for authorized activities of the Rural Housing Service, $38,000,000, to remain
available until expended, for single and multi-family housing activities: Provided, That such
funds shall be for areas affected by Hurricanes Katrina and Rita: Provided further, That the
cost of such direct and guaranteed loans, including the cost of modifying loans, shall be as
defined in section 502 of the Congressional Budget Act of 1974.
Of all the appropriations listed, only the provisions in bold would be counted by OMB for
purposes of calculating the cap on the adjustment for disaster relief as defined under the Budget
Control Act. Only the Rural Development Disaster Assistance Fund appropriation specifically
noting the declaration of a major disaster under the Stafford Act meets the standard described in
OMB’s report. The other provisions, mentioning the storms that were the root cause of the
declaration, or the intent that the funds be for “disaster recovery” would likely not be adequate to
meet the OMB methodology for accounting for disaster relief spending.
Disaster Relief Spending Under the BCA
In the “minibus” legislation, P.L. 112-55, provisions providing disaster relief under some of these
same accounts were written as follows (emphasis added):
Section 735. There is hereby appropriated for the ‘Emergency Conservation Program’, for
necessary expenses resulting from a major disaster declared pursuant to the Robert T. Stafford
Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.), $122,700,000, to
remain available until expended: Provided, That the preceding amount is designated by the
Congress as being for disaster relief pursuant to section 251(b)(2)(D) of the Balanced Budget
and Emergency Deficit Control Act of 1985: Provided further, That there is hereby
appropriated for the ‘Emergency Forest Restoration Program’, for necessary expenses
resulting from a major disaster declared pursuant to the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (42 U.S.C. 5121 et seq.), $28,400,000, to remain available until
expended: Provided further, That the preceding amount is designated by the Congress as
being for disaster relief pursuant to section 251(b)(2)(D) of the Balanced Budget and
Emergency Deficit Control Act of 1985: Provided further, That there is hereby appropriated
for the ‘Emergency Watershed Protection Program’, for necessary expenses resulting from a
major disaster declared pursuant to the Robert T. Stafford Disaster Relief and Emergency
Assistance Act (42 U.S.C. 5121 et seq.), $215,900,000, to remain available until expended:
Provided further, That the preceding amount is designated by the Congress as being for
disaster relief pursuant to section 251(b)(2)(D) of the Balanced Budget and Emergency
Deficit Control Act of 1985.

All of this funding would be considered by OMB as disaster relief due to the citations of major
disasters under the Stafford Act, as well as the specific proviso in bold declaring Congressional
intent that it be categorized as such.
It could be argued that a more precise 10-year average of disaster assistance would include all
spending for major disasters regardless of whether the legislative text referred to the Stafford Act.
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There are at least two changes that could be made that would help ensure a more accurate
calculation of the 10-year average spent on disaster relief for use as a cap adjustment under the
BCA. First, Congress could change their practices and provide the Stafford Act designation in all
future appropriations legislation. However, it is important to note that at the time of appropriation,
it is not always clear if funding is going to a major disaster, thus meriting a designation. Second,
Congress could amend the BCA to require that OMB recalculate “disaster relief” amounts based
on a broader methodology. Both of these changes would likely result in a higher, and arguably
more accurate yearly total of disaster relief, and a larger allowable adjustment for disaster relief
under the BCA than under current practices.
For example, Hurricane Katrina was declared a major disaster on August 29, 2005. Since then,
Congress has provided disaster assistance through several supplemental appropriations and
numerous federal programs. Large incidents like Katrina often receive assistance from the federal
government years after the incident—the appropriations impact the budget for disaster assistance
as large infrastructure and mitigation projects are completed and reimbursed, yet because this
funding was appropriated without direct reference to a Stafford Act declaration, it is not factored
into the calculation for disaster relief.
Other Types of Excluded Stafford Assistance
The BCA excludes other types of assistance provided under the Stafford Act. These are
emergency declarations provided under Section 102(1) and Fire Management Assistance Grants
provided under Section 420(a). Emergency declarations authorize activities that can help states
and communities carry out essential services during emergency situations.23 Emergencies can also
be declared prior to an incident, at the request of the governor, to save lives and prevent loss.24
For example, emergency declarations have been declared prior to a hurricane making landfall to
help state and local governments take necessary measures (evacuation assistance, placement of
response resources, etc.).25 Unlike major disasters, the President does have the authority to
declare an emergency without a governor’s request when the incident involves a subject area
where the “Federal government exercises exclusive or primary responsibility and authority.”26
Compared to major disaster declarations, emergency declarations are generally considered a
minor expense (congressional notification is required when spending for an emergency exceeds
$5 million); however, numerous declarations can be declared in a year and, like major disasters,
they are funded through the DRF. In 2005, 68 emergency declarations were declared, 50 of which
were for each individual state to help relocate Hurricane Katrina victims who were displaced by
the storm. In addition, since Hurricane Katrina, the federal government has increased its efforts to
pre-position resources before a hurricane makes landfall. If this trend continues the cost
associated with emergency declarations may increase due to the more comprehensive
preparations.
In the OMB report, the spending levels on disaster relief from the DRF in OMB’s accounting is
less than the total amount expended from the DRF in the years reported. This difference may

23 For example, food, sheltering and medical care.
24 For example, evacuations and setting up shelters.
25 Recent examples of pre-event declarations include emergency declarations prior to Hurricanes Katrina, Rita, and
Gustav making landfall (emergency declarations 3212, 3260, and 3290 respectively).
26 44 CFR 206.35(d). This category would likely include acts of terrorism.
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include the omission of expenditures for emergency declarations and declarations for the Fire
Management Assistance Grant Program.27
Declarations for the Fire Management Assistance Grant Program include equipment, personnel,
and supplies to states and localities for the mitigation, management, and control of fires that
threaten to become a major disaster.28 As with emergency declarations, declarations for the Fire
Management Assistance Grant Program are relatively modest in cost when compared to major
disaster declarations. A review of declarations under the Fire Management Assistance Grant
Program shows the most expensive year was 1998, in which 53 declarations were made,
accounting for obligations of roughly $105 million.29
Because emergency and fire declarations derive funding from the DRF, it could be argued that
excluding them from the ten-year average calculation for disaster relief generates an artificially
low result. It could be further argued that including emergency and fire declarations would more
accurately forecast federal disaster expenses. Although it is likely that including all federal
assistance for emergency and disaster relief would increase the ten-year average, the size of the
increase would depend on the new methodology used to calculate the amount of assistance
provided.
Funding for Severe Disaster Years
Congress provided additional budget authority for disaster assistance in 10 appropriation laws
following the hurricanes of 2005. While OMB removed the $37 billion spent on disaster relief in
2005 as an outlier when calculating the allowable adjustment for disaster relief to the cap,
response and recovery to these storms went well beyond that first year. Appropriations for
recovery from these storms between FY2006 and FY2010 was still substantial—$32 billion was
spent in FY2006, in great part because of those ongoing recovery efforts.
The sizeable initial disaster relief expenditures for Hurricane Katrina and the other 2005 storms
will begin to lose relevance in calculating the allowable adjustment for disaster assistance for
FY2016, and will no longer impact calculations for the allowable adjustment in FY2017. Once
FY2005 and FY2006 rotate out, there will be a corresponding drop in the allowable disaster
assistance adjustments. The reduction in the allowable adjustment will be more significant if
disaster spending is below the 10-year average in the intervening years. In a scenario where
disaster spending stays at the 10-year average level, the allowable adjustment will fall by $2.2
billion from FY2015 to FY2016, and then by another $2.9 billion from FY2016 to FY2017—a
reduction of 41% in just two years. Moreover, as the Administration and Congress work to spend
under the adjustment, the cap could continue to decrease, increasing the likelihood of a bad storm
year significantly straining the budget mechanisms in place at that time.
Some policymakers might welcome such a series of developments, arguing the purpose of the
BCA is to rein in deficit spending by either keeping spending under the caps, or by triggering a
sequestration. Others might contend that the limitations on disaster spending are too severe, given
the unpredictable demand for disaster relief in the context of a very tight budget where offsets

27 OMB did not respond to CRS inquiries about the details of its methodology.
28 42 U.S.C. 5187.
29 DHS/FEMA, Calendar Year Summary of Obligations, 1988-2010.
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may be difficult to come by without significant impacts on government operations. Congress
would have to spend well above the eligible adjustment in at least two years before FY2016 to
maintain a consistent funding baseline for disaster assistance—decisions that could constrain the
rest of the discretionary budget.
It is possible that the Administration and Congress could rely on the available adjustment to fund
all accounts where disaster relief is appropriated, rather than relying on discretionary spending
under the cap to do so. This may be a particularly attractive option for appropriators as the
discretionary budget becomes more constrained. If this pattern of funding becomes the norm, and
a severe disaster year demands increased disaster relief, as Congress seeks more funds, there are
at least four possible outcomes: (1) discretionary spending cuts, either by Congress or through
sequestration, to “pay for” the additional assistance, (2) designation of disaster assistance as
emergency funding, despite the definitions in the BCA, (3) creation of designated revenue raisers
by the Congress to finance extra disaster relief spending, or (4) renegotiation of the underlying
budget control laws.
Another potential issue is the impact of a mega-disaster might have on the federal budget. For
example, the FY2005 supplemental for the 2005 hurricane season was $45.1 billion. If an event
with similar or even greater damage costs, such as a New Madrid earthquake, occurred under the
current budget constraints set forth in the BCA, Congress could find itself in need of roughly
hundreds of billions in offsets to pay for disaster relief or possibly facing a sequestration of
similar size if it adheres to the BCA’s definitions.30 One might question whether the federal
budget could absorb a sequestration of this magnitude without inflicting a severe impact on a
national economy already shocked by the direct impact of the disaster. An alternative to that
possibility is that, if such conditions arise, Congress may choose to reach an agreement outside of
the timelines and constraints currently set forth in the BCA.
Contention over Disaster Assistance Offsets
In the fall of 2011, there was extensive public debate over the possible requirement of offsets for
disaster assistance. Those opposed to the use of offsets argue that their use could politicize
disaster assistance by allowing policymakers to target certain programs for the needed spending
reduction. Assistance to disaster victims could be delayed while Congress debates the issue.
Opponents have also argued that emergency funding for other endeavors, such as war funding,
have not faced the same requirement.
Those in favor of offsetting disaster assistance argue that offsets do not deny disaster victims aid;
they merely provide a way of doing so without increasing the deficit. Proponents also argue that
the concern over delayed disaster assistance is without merit. As demonstrated in Table 1, while it
may take some time to provide relatively smaller incidents such as the Nisqually Earthquake with
supplemental funding, Congress has responded to the needs of disaster victims by appropriating
additional funds for disaster relief in a matter of days as with the September 11th terrorist attacks
and Hurricane Katrina. It should be noted however, the actions represented in Table 1 were
emergency spending actions that were not subject to offsets. Whether congressional action would
be as rapid under the BCA framework is uncertain.

30 W. Barksdale Maynard, “When the Big Muddy Ran Backward,” The Washington Post, January 31, 2012, p. E1.
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Table 1. Supplemental Funding for Large-Scale Disasters
Event
Date of Declaration
Date of Enactment
Days
Hurricane Katrina
August 29, 2005
September 2, 2005
3
Hurricane Isabel
September 18, 2003
September 30, 2003
12
9/11 Terrorist Attacks
September 11, 2001
September 18, 2001
7
Nisqual y Earthquake
March 1, 2001
July 24, 2001
114
Hurricane Floyd
September 16, 1999
October 20, 1999
34
Northridge Earthquake
January 17, 1994
February 12, 1994
26
Midwest Floods
June 11, 1993
August 12, 1993
62
Hurricane Andrew
August 23, 1992
September 23, 1992
31
Hurricane Hugo
September 20, 1989
September, 29, 1989
9
Source: CRS Report R40708, Disaster Relief Funding and Emergency Supplemental Appropriations, by Bruce R.
Lindsay and Justin Murray.
Note: Table 1 reflects the number of days it took to enact the first supplemental appropriation after the
incident was declared a major disaster. Some incidents (such as Hurricane Katrina) received more than one
supplemental appropriation for disaster relief.
Sequestration may seem more appealing to some Members rather than finding offsets for disaster
assistance if the allowable adjustment is inadequate and Congress chooses to not use emergency
appropriations to support the DRF. Although the net accounting effect is the same over the
medium term, sequestration involves automatic, largely across-the-board spending reductions
after the fact, rather than a specific Congressional decision, affirmed by votes of the House and
Senate and signed by the President to reduce funding for a specific program or programs with
allies and stakeholders who may be provoked to action. The potential risks incurred by an
automatic across-the-board cancellation of budget authority across the government regardless of
the possible effect on national priorities should not be discounted, however.
Increasing Declarations
Since FEMA’s first full year of operations (1979) there has been a steady increase in the number
of emergency and major disaster declarations. It is unclear what is causing the increase. On the
one hand, it could be the result of more incidents. On the other hand, it could be the result of an
increase in incidents for which a request for assistance is made (in other words, there is no
increase in the number of incidents, rather, there is an increase in requests for federal assistance).
The result could also be caused by a combination of the two, as well as by some other
undetermined cause. However, while the number of declarations is often a focus for criticism, it is
the costs within the declared events (determinations on eligible disaster spending) that can drive
the higher disaster spending amounts.
The BCA provides a mechanism designed to reduce the impact of disaster relief spending on the
national debt, but does not provide a means for limiting or reducing federal expenditures on
disaster assistance. If declarations continue to increase unabated, the federal budget may have to
absorb more and more of the costs associated with disaster assistance. Some might argue that in
addition to spending adjustments for disaster assistance, other policies designed to reduce federal
expenditures for assistance should also be pursued. These policy options include strengthening
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declaration criteria, reducing the federal cost-share for incidents, and creating incentives that
would encourage states to pursue more robust preparedness and mitigation measures.31
Concluding Observations
The debate over the use of mechanisms to reduce the impact of disaster assistance on the deficit,
such as the use of offsets, was temporarily moved to the back burner when FEMA deobligated
funds designated for projects that came in under budget, providing, in conjunction with delays in
funding for pending recovery projects to slow the use of resources, enough resources to fund the
DRF to last until the beginning of the 2012 fiscal year.
The debate over disaster assistance may take place again in the near future due to a number of
factors. While the current continuing resolution (P.L. 112-36) provided $2.65 billion in FY2012
for disaster relief, as previously mentioned, the average spend-out rate for the DRF is $350
million per month—or $4.2 billion a year. If the average spending remains the same there may be
another shortfall in the DRF some time before the end of FY2012. Moreover, in addition to
recovery costs associated with Hurricane Katrina, significant costs were incurred in FY2011 that
will also draw funding from the DRF in FY2012. These include Hurricane Irene (estimated at
roughly $1.5 billion), the 2011 fires, the Mid-Atlantic Earthquake of 2011, and Tropical Storm
Lee. As mentioned previously, the BCA is designed to allow for a limited amount of additional
spending on disaster relief beyond the discretionary spending limits it sets out. If the costs of
disaster assistance continue to grow, other parts of the federal budget will need to absorb those
costs if they exceed the adjustments. Policymakers may need to consider additional cost-saving
measures to prevent this from occurring.
While the BCA may help curb or contain the impact of traditional disaster spending, the
implications of a truly catastrophic incident such as Hurricane Katrina are unclear. If such
conditions arise, Congress may choose to reach an agreement outside of the timelines and
constraints currently set forth in the BCA.

Author Contact Information

Bruce R. Lindsay
Francis X. McCarthy
Analyst in American National Goverment
Analyst in Emergency Management Policy
blindsay@crs.loc.gov, 7-3752
fmccarthy@crs.loc.gov, 7-9533
William L. Painter

Analyst in Emergency Management and Homeland
Security Policy
wpainter@crs.loc.gov, 7-3335



31 For further analysis on emergency and major disaster declarations see CRS Report RL34146, FEMA’s Disaster
Declaration Process: A Primer
, by Francis X. McCarthy. For further analysis on FEMA cost-shares see CRS Report
R41101, FEMA Disaster Cost-Shares: Evolution and Analysis, by Francis X. McCarthy.
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Acknowledgments
The authors are grateful for the assistance of Justin Murray, Information Research Specialist, in preparing
this report.

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