What does the Federal Emergency Management Agency (FEMA) do, and how is it funded?

As the nation’s primary disaster relief agency, the Federal Emergency Management Agency (FEMA) plays an important role in funding recovery efforts at the state and local level and supporting survivors after natural disasters. For instance, in 2024, FEMA approved over $4.3 billion in aid to survivors of Hurricane Helene and deployed around 5,000 federal responders.

What is FEMA? What does it do?

The federal government began responding to disasters as early as 1803, when Congress provided aid in response to a devasting fire in New Hampshire. In 1979, Jimmy Carter established FEMA to oversee “emergency management and civil defense.” Now part of the Department of Homeland Security, FEMA operates across a wide spectrum of disaster management, with congressional mandates covering both immediate responses to disasters and initiatives to build community resilience. FEMA has 10 regional offices and employs more than 20,000 people across the country. In past disasters, its workforce has temporarily increased to 50,000 personnel.

Before a disaster, FEMA focuses on preparedness through education and engagement designed to reduce disaster vulnerabilities. After a disaster, it provides immediate assistance to individuals, state and local governments, and nonprofits that provide critical services. FEMA is also responsible for deploying search and rescue teams and ensuring that supplies like bottled water are stockpiled and available.

What types of aid does FEMA provide?

Individual Assistance helps individuals who have been directly affected by federally declared disasters. The aid includes funds for housing (temporary housing, repair, etc.) and other essential needs (food and water, medical treatments, etc.). Housing assistance is only provided for uninsured or underinsured damages, and the amount varies based on the extent of the damage determined through an inspection, with a maximum of $43,600 for repair and replacement in FY 2025. The amount of other assistance varies according to need, but also has a $43,600 cap.

At the individual level, FEMA assistance is intended to act as a safety net. However, this assistance is typically limited, only providing basic relief. For example, the average payout for Individual Assistance grants was $3,522 from 2010 to 2019.

Public Assistance provides grants to state, tribal, territorial, and local governments and some non-profits to cover the costs of debris removal, restoration of public infrastructure, and rebuilding utility systems. FEMA covers a minimum of 75% of costs for eligible projects, a level the president can increase. The remaining expenses fall to state and local governments and insurers. The share of funding provided through Public Assistance grants is typically much higher than funding allocated at the individual level, amounting to about ten times more in 2023.

Hazard Mitigation Assistance Grants help communities prepare for and reduce the risk of future disasters. Their main objective is to help communities become more resilient and reduce potential losses from future disasters. The program supports long-term projects like strengthening infrastructure, implementing flood control measures, and improving building safety standards.

FEMA coordinates with other federal agencies that also provide disaster support by sharing real-time data on needs and identifying vulnerabilities. For example, it works with the Small Business Administration (SBA) which offers low-interest loans for home repair, personal property replacement, and business losses.     

How is aid distributed?

The first step after a disaster occurs is for governors or tribal chief executives to ask the federal government for a disaster declaration. The president, under the Stafford Act, can then declare an emergency or a major disaster, which opens pathways for state and local governments to apply for various FEMA programs. In unusual cases where the federal government has responsibility for managing the emergency, such as the COVID-19 pandemic, the president can issue an emergency declaration without waiting for a request from a local government official. Once a disaster declaration is made, FEMA provides funding for Individual and Public Assistance grants through a formal application process; applicants must document their damages and submit requests for assistance.

What events have driven FEMA’s spending?

FEMA’s spending has increased over the years, partially due to the increasing frequency and severity of natural disasters driven by climate change. For example, the average number of disaster declarations in the last decade increased by 61% compared to the 1988-1997 average. As the effects of climate change intensify, they are expected to create long-term challenges for communities. As a result, FEMA spending is projected to increase, not only for disaster relief efforts, but also for funding hazard mitigation efforts to reduce the impact of future disasters.

In addition to the growing impact of climate-related disasters, other national emergencies have contributed to increases in FEMA spending. In 2020, President Trump issued a national emergency declaration for the COVID-19 pandemic, authorizing FEMA to use disaster relief funds. FEMA funded funeral costs, vaccine distribution, and supplemental payments for lost wages—spending $90 billion on pandemic-related aid in 2020 and 2021.

How is FEMA funded?

Congress funds FEMA’s Disaster Relief Fund (DRF), which the agency uses to pay for disaster relief, in the annual appropriations process. The initial appropriation usually isn’t sufficient to cover a full year’s disaster costs, so Congress often approves supplemental appropriations. (The initial annual appropriation counts against the caps on spending that Congress often adopts; the supplemental spending is often deemed an emergency and doesn’t count against those caps.) In recent years, the DRF has received historically high funding levels as shown in the below figure.

What happens when the Disaster Relief Fund (DRF) runs low?

When the balance in the DRF runs low, FEMA’s Chief Financial Officer can implement Immediate Needs Funding (INF) restrictions, which narrow the scope of funding to prioritize “lifesaving, life-sustaining, and critical ongoing disaster operations.” Under these restrictions, FEMA pauses new obligations for Public Assistance and Hazard Mitigation grants that are not for urgent response activities until DRF funds are replenished. After restrictions are lifted, FEMA resumes funding projects that were delayed during that period and begins processing new ones. This mechanism has been implemented multiple times; INF restrictions were imposed ten times from 2001 to 2024.

What happened to DRF allocation at the end of 2024?

Congress appropriated $20 billion to the DRF for the fiscal year that began October 1, 2024, but FEMA spent about half of this amount in just eight days. Most of this funding went to longer-term recovery efforts that were delayed due to INF restrictions from August 7 to October 1.

A continuing resolution to fund the government through March 14, 2025, approved by Congress on December 20, 2024, included more than $100 billion in disaster aid, of which $29 billion was allocated to the DRF. That funding level, however, remains roughly $10 billion short of FEMA’s estimates of its projected need.