Calculation and Use of the Disaster Relief Allowable Adjustment

Calculation and Use of the Disaster Relief Allowable Adjustment

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Updated March 6, 2023
Calculation and Use of the Disaster Relief Allowable Adjustment
The Budget Control Act (P.L. 112-25, hereinafter the BCA)
While carryover allowed for slightly greater use of the
established mechanisms to limit federal spending, as well as
allowable adjustment than the rolling average alone in
ways to adjust those limits to accommodate certain priority
Figure 1. Calculating the Allowable Adjustment
spending. One of these mechanisms—a limited “allowable
(in bil ions of nominal dol ars of budget authority)
adjustment” to discretionary spending limits to pay for the
congressionally-designated costs of major disasters under
the Robert T. Stafford Disaster Relief and Emergency
Assistance Act—represented a new approach to paying for
disaster relief. In the past, while some funding for disaster
costs had been included in annual appropriations measures
as part of the regular funding process, many of these costs
had been designated as emergency requirements and were
included in supplemental appropriations measures on an ad
hoc basis. The disaster relief designation and associated
allowable adjustment to spending limits brought more
disaster costs into the annual appropriations process, by
reducing competition with other funding priorities. This in
turn reduced the demand for supplemental appropriations
bills and emergency designations. The formula to calculate
the size of the allowable adjustment was revised in 2018.
Although the statutory authority for the adjustment has
expired, ensuing budget resolutions have included the same
mechanism, effectively exempting such funding from
spending limits within the congressional budget process.
Calculating the Maximum Adjustment
The maximum size of the allowable adjustment, as defined
in 2 U.S.C. §901(b)(2)(D), was originally based on a
modified 10-year rolling average of disaster relief
appropriations annually reviewed and calculated by the
Office of Management and Budget (OMB). To establish
amounts for the calculation prior to FY2012, OMB
identified appropriations associated with major disaster
declarations. For FY2012 and later years, OMB relied on
explicit congressional designations of appropriations as
disaster relief pursuant to the BCA. The top of Figure 1
shows the appropriations amounts used for FY2001-
FY2020 and the allowable adjustments calculated for
FY2012-FY2021. OMB continues its calculations in what it
considers an advisory capacity.
The calculated average disregarded the high and low
funding years in the 10-year data set. If Congress did not
fully exercise the allowable adjustment, the unused portion
could be rolled forward into the next fiscal year—however,
in calculations for FY2012-FY2017, this “carryover”
expired if unused in the next fiscal year. The second part of
Figure 1 shows the calculation of the adjustment for
FY2017. Annual disaster relief budget authority totals used
for the FY2017 allowable adjustment are darkened.

The Effect of One-Year Carryover
Source: CRS analysis of data from OMB sequestration reports.
A more detailed look at FY2012-FY2017 in the third part of
Notes: DRBA=Disaster Relief Budget Authority. Red arrows
indicate the value is beyond the scale. Total DRBA and emergency-
Figure 1 shows the impact of this one-year carryover.
designated disaster relief in FY2018=$96.2 bil ion; FY2020=$57.5
bil ion; and FY2021=$69.3 bil ion.
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Calculation and Use of the Disaster Relief Allowable Adjustment

As Figure 2 shows, aside from the DRF (included as DHS),
under the BCA, the disaster relief designation was applied
FY2013 and FY2017, roughly $12 billion of carryover that
to appropriations for six federal departments and agencies
was available in the years between expired unused.
with roles in disaster response and recovery. The Small
Business Administration (starting in FY2019) is the only
Changes to the Calculation
non-DRF recipient post-BCA. Three appropriations to the
The Bipartisan Budget Act of 2018 (Div. O, §102) modified
Department of Agriculture have received such funding. The
the calculation of the maximum size of the allowable
Department of Defense funding listed includes three
adjustment in two ways: (1) unused adjustment from prior
separate accounts in the U.S. Army Corps of Engineers’
fiscal years would no longer expire; and (2) 5% of the
Civil Works Program. Other past recipients include
amount of emergency-designated disaster relief (as defined
Economic Development Assistance programs at the
in the BCA) would be added to the allowable adjustment,
Department of Commerce, the Federal Highway
starting with a revision of the existing FY2018 calculation.
Administration’s Emergency Relief Program at the
Department of Transportation; and the Community
Originally, OMB’s allowable adjustment calculations did
Development Fund at the Department of Housing and
not include the funding for major disasters after FY2012
Urban Development.
that was designated as an emergency requirement. The red
markers in the first part of Figure 1 show the total disaster
Figure 2. Appropriations with Disaster Relief
relief funding level had the emergency-designated relief
Designations by Departments, FY2012-FY2021
been included. For example, Division B of P.L. 115-56 (the
(bil ions of nominal dol ars of discretionary budget authority)
FY2017 supplemental appropriation after Hurricane
Harvey) included $15.25 billion in emergency-designated
funding, $14.8 billion of which was specifically for the
costs of major disasters. Yet the $14.8 billion of funding
would not have contributed to the calculation of future
allowable adjustments because it carried an emergency
designation, rather than the disaster relief designation.
This was not an isolated occurrence: in 6 of the 10 fiscal
years covered by the BCA, more than $173 billion in
emergency-designated spending pursuant to major disasters
was appropriated above the allowable adjustment for
disaster relief. Section 102 allowed 5% of the total
emergency-designated disaster relief provided after FY2011
to be added to the calculation.

Due to these changes, FY2018’s allowable adjustment was
Source: CRS analysis of data from appropriations legislation.
revised upward by $1.855 billion (5% of the $37.101 billion
in emergency-designated disaster relief after FY2011 to that
Did the Allowable Adjustment Work?
point). This new factor, coupled with high levels of disaster
If the intent was to reduce the level of spending on
relief associated with catastrophic disasters and COVID-19,
disasters, it can be argued that it was not successful—
reversed a declining trend in the allowable adjustment.
disaster spending is largely linked to the parameters of the
existing relief statutes and the level of disaster activity.
After the Budget Control Act
There is little evidence that in the post-WWII era any type
The statutory adjustment ended with the expiration of the
of budget controls significantly constrained U.S. disaster
BCA discretionary budget caps in FY2021. In its FY2022
relief spending. If the intent was to bring disaster spending
budget request, the Biden Administration proposed
into the annual appropriations process for greater inclusion
extending special budgetary treatment for disaster relief.
in the debate and to reduce the demand for supplemental
Subsequently, congressional budget-setting measures have
appropriations, it can be argued that it was a success.
continued to include an adjustment for disaster relief. OMB
Should the Calculation Use Different Data?
continues to release estimates of the adjustment’s allowable
Accounting for federal spending on disasters with precision
size as part of its budget request, but as the statutory
is difficult due to a lack of consistent, authoritative data. If
requirements for BCA reporting have lapsed, they no longer
Congress seeks to link a future adjustment more closely to
release detailed calculations.
the actual costs of major disasters, it may require more
Frequent Adjustment Questions
authoritative agency reporting on disaster-related damages
and spending.
How Has the Adjustment Been Used?
For More Information
Of the more than $143 billion in discretionary spending
For more information on the DRF and the history of U.S.
covered by the disaster relief allowable adjustment from
disaster relief, see CRS Report R45484, The Disaster Relief
FY2012-FY2023, 95% went to FEMA’s Disaster Relief
Fund: Overview and Issues, by William L. Painter.
Fund (DRF) as part of the appropriations process.
William L. Painter, Specialist in Homeland Security and
Appropriations
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Calculation and Use of the Disaster Relief Allowable Adjustment

IF10720

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