The Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), as amended, defines the federal government's role during disaster response and recovery. The Stafford Act also establishes the programs and processes through which the federal government provides disaster assistance to state, tribal, territorial, and local governments, as well as certain nonprofit organizations and individuals. According to the act, the President can declare a major disaster after a governor or chief executive of an affected tribal government finds that a disaster is of such severity and magnitude that effective response is beyond the capabilities of the state and local governments and that federal assistance is necessary. That is, when the governor of a state or the chief executive of an Indian tribal government requests a declaration for a major disaster, FEMA evaluates the requests and makes a recommendation to the President, who decides whether or not to declare a major disaster and commit the federal government to provide supplemental assistance. Generally, state and local governments are responsible for the remaining share of disaster costs. If the President declares a major disaster, the declaration can trigger a variety of federal assistance programs for governmental and nongovernmental entities, households, and individuals. FEMA provides disaster assistance to states, tribal governments, localities and individuals through several programs including: the Public Assistance (PA) and the Individual Assistance (IA) programs.disaster assistance programs. It provides grants to fund debris removal, and the repair, replacement, or restoration of disaster-damaged facilities. PA also funds certain types of emergency protective measures that eliminate or reduce immediate threats to lives, public health, safety, or improved property. To determine whether to recommend that a jurisdiction receive PA funding, FEMA relies on a series of factors including the statewide per capita impact indicator. PA is the largest of FEMA's FEMA's IA program ensures that disaster survivors have timely access to a full range of programs and services to maximize their recovery, through coordination among federal, state, tribal and local governments, nongovernmental organizations, and the private sector. Among other things, IA programs provide housing assistance, disaster unemployment assistance, crisis counseling, and legal services. households may be eligible for financial assistance or direct services if, due to the disaster, they have been displaced from their primary residence, their primary residence has been rendered uninhabitable, or they have necessary expenses and serious needs that are unmet through other means, such as insurance. The IA program provides assistance up to $32,900 for fiscal year 2015 to eligible individuals and households who, as a direct result of a major disaster or emergency, have uninsured or under insured necessary expenses and serious needs that cannot be addressed by other means, such as through other assistance programs or insurance. Specific IA programs and areas of responsibility include: the Individuals and Households Program, including Housing Assistance and Other Needs Assistance; the Disaster Unemployment Assistance Program; Disaster Legal Services; the Crisis Counseling Assistance and Training Program; the Disaster Case Management Program; Mass Care and Emergency Assistance Coordination; Voluntary Agency Coordination; and Disaster Recovery Center and Disaster Survivor Assistance Coordination. If approved for federal disaster assistance, states, tribal governments, and localities are expected to contribute toward disaster response and recovery costs. The usual cost share arrangement calls for the federal government to pay not less than 75 percent of the eligible PA costs of a disaster and for nonfederal entities (e.g., state and local governments) to pay the remaining nonfederal share of 25 percent. The federal government covers 100 percent of the Individuals and Households Program but requires states to contribute 25 percent to the Other Needs Assistance component of this program. This component covers repair or replacement costs for personal property including furniture and personal belongings, and some uninsured medical, dental, funeral, and transportation expenses as well as child care and other expenses. If states are denied federal disaster assistance, they may choose to cover some of these costs. Disaster funding, like most other state expenditures, is typically part of a state's annual operating budget providing appropriations through the fiscal year. Disaster costs typically compete with other state priorities unless states establish a separately sourced disaster fund outside of the funds tied to their state's balanced budget requirements. Most states have constitutional or statutory provisions requiring that they balance their operating budgets, commonly referred to as their general fund. All 10 states in our review used a range of mechanisms to ensure the availability of funds for unforeseen disaster costs during the fiscal year or current budget cycle. While each state had its own set of budget mechanisms, all of the selected states provided disaster funds at the start of the fiscal year and as needed during the course of the fiscal year. The types of unforeseen disaster costs states encountered depended, in large part, on the kind of disaster, but were typically related to emergency response activities. For instance, the costs of clearing debris and repairing roads along with emergency policing were typical expenses that states incurred after a major storm. Many of those expenses qualified for federal reimbursement under a presidential disaster declaration. Statewide disaster accounts. Statewide disaster accounts provided funding for disaster expenditures across state agencies or for localities. As shown in figure 2, all 10 states in our review established one or more types of statewide disaster accounts that received funds from general fund appropriations or from other revenue sources. All 10 states funded these statewide accounts through general fund revenues and 6 states-- Alaska, California, Florida, Indiana, North Dakota, and Vermont--used other revenue sources in addition to general fund revenues to cover unforeseen costs that arose during the fiscal year. For example, Florida imposed an annual surcharge on homeowners' residential insurance policies and on commercial and business owners' property insurance policies, which the state then deposited into a trust fund to be used for emergency management purposes. In addition, one of Indiana's statewide disaster funds relied on public safety fees generated through the sale of retail fireworks, while North Dakota funded its statewide disaster account through a biennial appropriation from the revenues of the state's share of oil and gas taxes. The states in our review based initial funding levels for statewide disaster accounts on a range of considerations, such as estimates of disaster costs based on past events and emergency response costs for unforeseen disasters. Although some statewide disaster accounts allow unexpended balances to be carried over into future fiscal years, states typically budgeted these costs for a single budget cycle. For example, based on its past disaster costs, Alaska typically budgeted disaster relief funds to cover the costs of two state-declared disasters (totaling $2 million) and two federally-declared disasters (totaling $5 million to $6 million). Some states, such as North Dakota and California, may also establish funding amounts in statute. Specifically, North Dakota's Disaster Relief Fund receives an appropriation of $22 million every 2 fiscal years or each biennial budget cycle, while California's Disaster Response- Emergency Operations Account receives an annual appropriation of $1 million at the beginning of each fiscal year, consistent with the state's budget cycle. In establishing statewide disaster accounts, states typically defined the criteria under which the account funds could be used. For example, in Oklahoma, the governor is authorized to distribute funds from the state's disaster account to agencies that requested funds for emergency situations including: (1) destruction of public property; (2) operation of the National Guard; (3) matching funds for federal disaster relief programs; (4) asbestos removal from public buildings; and (5) emergency response necessary to protect the public health, safety, or welfare of livestock or wild animals. In North Dakota, the state's Disaster Relief Fund could be used to reimburse state agencies for disaster-related expenses incurred above the agencies' normal operating costs. Budgets of state agencies. Nine of the 10 selected states also covered a portion of unforeseen disaster costs through the operating budgets of state agencies with missions relevant to disaster response and recovery, For example, in West Virginia, such as public safety and transportation.the state's Division of Homeland Security and Emergency Management within the Department of Military Affairs and Public Safety used its regular operating budget to cover disaster response costs. Other agencies in West Virginia, such as the state's transportation and police departments, also used funds in their operating budgets to cover major disaster costs. These agencies then submitted these costs to the emergency management office for reimbursement. As was shown in figure 2 earlier, of the 10 selected states, seven maintained contingency accounts for disasters. For example, Florida's Department of Environmental Protection established a disaster contingency account funded through user fees on Florida's state parks. In addition, the contingency fund for California's Department of Forestry and Fire Protection typically received an appropriation based on the average emergency cost from the previous five years. Supplemental appropriations. Eight of the 10 states in our review made use of supplemental appropriations when the funds appropriated to statewide accounts or agency budgets at the beginning of the fiscal year were insufficient. When states' general funds served as the source of supplemental appropriations, these funds were unavailable to spend on other budget areas. Statewide multipurpose reserve accounts, such as budget stabilization funds (also referred to as rainy day funds), could also be tapped in the event that funds were not available through other means. A few states expanded the conditions for which budget stabilization funds could be tapped to include similar unanticipated expenses not directly related to revenue shortfalls or budget deficits. For example, although initially intended to offset revenue shortfalls, West Virginia's budget stabilization fund was subsequently modified to allow the state legislature to make appropriations from the fund for emergency revenue needs caused by natural disasters, among other things. However, budget officials from several states in our review told us that it was uncommon to access budget stabilization funds to cover disaster expenses because their state could generally provide disaster funding from a combination of general fund revenues and spending reductions in other areas. For example, despite having expanded its acceptable uses to include natural disasters, West Virginia only accessed its budget stabilization fund once since 2005 to cover disaster-related expenses. Similarly, in Florida, the state's budget stabilization fund was last used for disaster costs during the 2004 and 2005 hurricane seasons. Funding transfers. In addition, nine states in our review had mechanisms to allow designated officials (e.g., the governor, budget director, or a special committee) to transfer funds within or between agencies or from statewide reserve accounts after the start of the fiscal year. For example, in Indiana, if funds within an agency's budget are insufficient to cover the unexpected costs of a disaster, a special finance board can authorize a transfer of funds from one agency to another. In addition, the state's budget director can transfer appropriations within an agency's accounts if needed for disaster assistance. The authority to release funds from disaster accounts varied by state and resided with the governor, the legislature, or special committees. As we have previously reported, a state where the legislature is in session for only part of the year might give the governor more control over the release of disaster funds.legislature is out of session, the presiding officers of the legislature can agree in writing to suspend the $1 million limit placed on the Governor's disaster spending authority. For example, in the event that the Alaska Also, if a state legislature already appropriated a portion of general fund or other revenues to a disaster account, the governor or budget director can exert greater control over access to the reserves. For example, in California, a gubernatorial emergency declaration grants the state's Director of Finance the authority to tap into any appropriation in any department for immediate disaster response needs. All states in our review budgeted for ongoing costs associated with past disasters. Typically, these ongoing costs included recovery-related activities, such as rebuilding roads, repairing bridges, and restoring public buildings and infrastructure. Costs associated with past disasters included the state's share of federal disaster assistance and disaster costs the state would cover in the absence of a federal declaration.for the costs of past disasters, all 10 states determined their budgets based on cost estimates for the upcoming fiscal year, even though each disaster declaration could span several budget cycles. As was shown in figure 2, all selected states used a range of budget mechanisms to cover the cost of past disasters. These mechanisms were similar to those the states used to budget for unforeseen disaster costs. States used some of the mechanisms to appropriate funds at the start of the fiscal year and used other mechanisms to provide disaster funds during the course of the fiscal year. For example, in Missouri, multiple agency accounts funded the expenses from past disasters incurred by state agencies, while a separate statewide account covered the non- federal match of disaster programs. The funding levels in states' accounts varied from year to year depending on annual estimates of expected disaster costs, primarily determined through the project worksheet process--the means by which the estimated costs are determined by FEMA and the state. For example, Florida's emergency management agency forecasts the ongoing costs associated with past disasters for three future fiscal years and reports these cost estimates on a quarterly basis. In New York, the Governor's budget office, along with its emergency management agency, periodically estimated the amount of disaster program costs the federal government would cover in addition to costs the state would have to bear. Most states in our review had established cost share arrangements with localities and passed along a portion of the required nonfederal cost share to them. Two states--Alaska and West Virginia--covered the 25 percent cost share for federally declared disasters while only one state-- Indiana--passed the 25 percent nonfederal cost share onto its affected localities. In Vermont, municipalities that adopted higher flood hazard mitigation standards could qualify for a higher percentage of state funding for post-disaster repair projects, ranging from a minimum of 7.5 percent to a maximum of 17.5 percent. In Florida, the state typically evenly splits the nonfederal share with local governments but would cover a greater percentage of the nonfederal share for economically distressed localities.each state in our review. None of the 10 states in our review maintained reserves dedicated solely for future disasters outside of the current fiscal year. As discussed earlier in this report, although funds in some states' statewide disaster accounts could be carried forward into the future, funding for these accounts was typically intended to fund a single fiscal year. For example, unexpended balances from Indiana's State Disaster Relief Fund--which receives an annual appropriation of $500,000, could be carried forward from one year to the next. Similarly, North Dakota's Disaster Relief Fund, which receives a biennial appropriation, can carry forward unexpended fund balances into the next biennial cycle. According to a North Dakota state official, this procedure was established in statute to provide a ready source of disaster funding. Otherwise, according to this official, the state legislature would need to identify large amounts of funding from the general fund account at the start of each budget cycle. Some state officials reported that they could cover disaster costs without dedicated disaster reserves because they generally relied on the federal government to fund most of the costs associated with disaster response and recovery. During the past decade, the federal government waived or reduced state and local matching requirements during extraordinary disasters such as Hurricanes Katrina and Sandy. For Hurricane Sandy, however, 100 percent of the federal funding was only available for certain types of emergency work and for a limited period of time. As we have reported in our prior work on state emergency budgeting, natural disasters and similar emergency situations did not have a significant effect on state finances because states relied on the federal government to provide most of the funding for recovery. Alaska's individual assistance program also provides reimbursement for personal property loss and assistance with housing repairs at 50 percent of the annual approved amounts for the federal IA Program. provided disaster assistance to localities on several occasions after being denied federal assistance. Overall, states did not make major changes to their approaches to budgeting for disaster costs between fiscal years 2004 and 2013. Some states in our review did take steps to increase the availability of disaster funds, while others changed procedures related to legislative oversight. Although the national economic recession occurred during this time (officially lasting from December 2007 to June 2009) and resulted in state revenue declines of 10.3 percent--states in our review reported that they were able to ensure the availability of funding to cover the cost of disasters. Officials in Alaska and North Dakota, for example, reported that state revenues generated from oil and gas taxes buffered their states from much of the fiscal distress that other states had experienced during the 2007 to 2009 recession. Three states in our review--Alaska, Indiana, and North Dakota--changed their budgeting approaches to further ensure the availability of disaster funding prior to a disaster rather than after a disaster. While these moves did not provide funding for future disasters beyond the current fiscal year, they did improve the availability of funds for disaster response within the current fiscal year. For example, Alaska established a statewide disaster fund in the late 1960s to ensure the availability of disaster funding. Prior to 2010, Alaska primarily funded the disaster fund through supplemental appropriations after a disaster had occurred and after the state's administration and emergency management agency had requested funding. However, according to a state official, this approach did not provide funding timely enough for state agencies and localities to respond quickly to a disaster. Rather, the approach involved waiting for the state legislature to appropriate funds to the state's disaster account, which could have taken weeks, particularly if the legislature was not in session. At that time, Alaska experienced multiple concurrent disasters. In addition, the nature of Alaska's climate and the remote location of many of its communities resulted in a need for the state to take swift action to respond to disasters so that residents were able to repair or rebuild their damaged homes before the onset of winter. Consequently, the state began to forward fund the disaster fund to have more money available immediately after a disaster. According to this state official, the change in approach relied on cost estimates of multiple disasters to develop an annual budget figure. In 2006, Indiana began appropriating funds to its State Disaster Relief Fund from the revenues it generated from firework sales to ensure the availability of a dedicated source of disaster funding. Although the state established the disaster relief fund in 1999, it did not appropriate funds to the account due to fiscal constraints. In 2006, the state began dedicating funds from the sale of fireworks. Then in 2007, the state established in statute that the fund would receive an annual appropriation of $500,000 from revenues generated from the firework sales. Prior to 2006, the state relied on general revenue funds to pay for disasters on an as- needed basis. North Dakota established its Disaster Relief Fund during its biennial legislative session (2009 to 2011) to ensure the availability of funding in the event of a disaster. The state appropriated money to the fund at the beginning of the state's biennial budget cycle with revenues generated from the state's tax on oil and gas production. In order to respond to disasters prior to the establishment of this fund, state agencies with emergency response missions, such as the Department of Transportation, had to request funding directly from the state legislature during the time it was in session.session, state agencies were required to obtain a loan from the Bank of North Dakota to cover their immediate disaster costs. Then, to repay the loan, the agencies needed to request a supplemental appropriation when the state legislature reconvened. A North Dakota state official told us that this process was inefficient, so the state legislature established the Disaster Relief Fund to provide an easier means for accessing disaster relief funds. However, if the legislature was out of Legislatures in three of our review states-- North Dakota, Missouri, and West Virginia--took steps to increase their oversight of disaster spending. After North Dakota established a dedicated revenue source to ensure the availability of disaster funding, the state legislature took subsequent steps to increase the oversight of disaster relief funds. In particular, the legislature required state agencies to submit a request to the state's Emergency Commission in order to receive disaster funding. Established in 2011, the Emergency Commission, comprised of the Governor, Secretary of State, and the House and Senate majority leaders, has the authority to approve the appropriation of supplemental funding when there is an imminent threat to the safety of individuals due to a natural disaster or war crisis or an imminent financial loss to the state. Prior to 2011, the state's emergency management agency had been authorized to access disaster relief funds directly without approval from the Commission. According to a state emergency management official, the legislature took this action in response to a number of instances in which federal PA funds initially awarded to the state were deobligated, leaving the state with unanticipated disaster response costs. In one instance, for example, federal PA funds were deobligated because the state did not properly document the pre-existing conditions of a parking lot damaged by the National Guard in responding to a disaster. In this particular case, the state had to appropriate funds from their disaster relief fund to cover the cost of repair, rather than rely on federal PA funding to cover these costs. To provide more oversight for disaster expenditures, the Missouri legislature changed its requirements for accessing funds from the State Emergency Management Agency (SEMA) budget. Specifically, the legislature required that the administration seek legislative approval for all supplemental appropriations to the SEMA budget. According to Missouri budget officials, SEMA used to submit a budget request that represented a rough estimate of anticipated costs for the upcoming fiscal year. If actual costs exceeded SEMA's appropriation, the administration had the authority to appropriate additional money from general revenues for specific line items on an as-needed basis without additional legislative approval. West Virginia's legislature increased oversight of disaster funding by restricting the use of funds appropriated to the Governor's Contingent Fund. In prior years, the legislature appropriated funds to the Governor's Contingent Fund as a civil contingent fund--a very broad term, according to a state budget official. Over the last few years, the legislature changed the appropriations bill language to limit spending flexibility for money appropriated to the fund. For example, appropriations bill language specified that funds were being appropriated for "2012 Natural Disasters" or "May 2009 Flood Recovery." States rely on the assurance of federal assistance when budgeting for disasters. Based on current regulations, policies, and practices, the federal government is likely to continue to provide federal funding for large-scale disasters. In light of this federal approach to funding disaster response and recovery, the states in our review designed their budgeting approaches for disasters to cover the required state match for federal disaster assistance as well as the costs they incur in the absence of a federal declaration. For unforeseen disaster costs and for ongoing costs associated with past disasters, these states relied on a number of budget mechanisms including statewide disaster accounts, state agency budgets and supplemental appropriations, to ensure the availability of funding for disasters. However, none of the states in our review maintained reserves dedicated solely for future disasters outside of the current fiscal year. More frequent and costly disasters could prompt reconsideration of approaches to dividing state and federal responsibilities for providing disaster assistance. Given the fiscal challenges facing all levels of government, policymakers could face increased pressure to consider whether the current state and federal approach for providing disaster assistance balances responsibilities appropriately. Absent federal policy changes, the experience of the 10 states we reviewed suggests that states will likely continue to rely on federal disaster assistance for most of the costs associated with the response to large-scale disasters. We provided a draft of this report to the Secretary of the Department of Homeland Security for review and comment. The Department of Homeland Security generally agreed with our findings and provided technical comments, which we incorporated as appropriate. Additionally, we provided excerpts of the draft report to budget officers and emergency management officials in the 10 states we included in this review. We incorporated their technical comments as appropriate. As arranged with your offices, unless you publicly announce its contents earlier, we plan no further distribution of this report until 30 days after its issue date. At that time, we will send copies of this report to the Secretary of the Department of Homeland Security and interested congressional committees. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov. If you have any questions concerning this report, please contact Michelle Sager at (202) 512-6806 or sagerm@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix III. The objectives of our review were to determine (1) the approaches selected states use to budget for and fund state-level disaster costs; and (2) how, if at all, state disaster budgeting approaches have changed over time, including the factors influencing those changes and any challenges states encountered in budgeting for state-level disaster costs. To address the objectives, we selected a nonprobability sample of 10 states from the 50 states and the District of Columbia. To select the states for our sample, we obtained data from the Federal Emergency Management Agency's (FEMA) Integrated Financial Management Information System on major disaster declarations by state during fiscal years 2004 through 2013. We focused on this time frame because it contained the most current data for major disaster declarations. We assessed the reliability of the FEMA data by discussing with another GAO team their recent access and use of the data in a prior year's report and their determination that the data provided reliable evidence to support findings, conclusions, and recommendations. We also discussed data quality control procedures with FEMA officials who were knowledgeable about the specific types of data recorded in the database. Based on how we intended to use the information, we determined that the data were sufficiently reliable for the purpose of selecting states for our study. We sorted the data obtained based on the total number of major disaster declarations approved by state. We calculated the median number of major declarations approved by FEMA and identified states directly above the median. For those states, we also identified the number of major disaster declarations that had been denied by FEMA during the same time period, which ranged from zero denials to seven denials. We then calculated the statewide Public Assistance per capita amount of funding, based on FEMA's statewide per capita indicator of $1.39 and the U.S. Census Bureau's 2013 population estimate for each state. That is, we multiplied the 2013 population estimate for each state by the PA per capita indicator of $1.39. We then grouped the states according to low, medium, and high per capita threshold levels. To ensure geographic dispersion and a range of per capita amounts, we selected 10 states-- four low per capita states (Alaska, North Dakota, Vermont, and West Virginia), two medium per capita states (Missouri and Oklahoma), and four high per capita states (California, Florida, Indiana, and New York) (see table 1 for additional information). The results of our study are not generalizable to state budgeting approaches for all states and the District of Columbia. We then developed and administered a semistructured interview to state budget officers and emergency management officials in the10 selected states regarding the approaches they used to budget for and fund state- level disaster costs and how, if at all, approaches changed over time. To address the first objective, we analyzed information from the semistructured interviews about selected states' approaches to budgeting for disasters. We also obtained and analyzed state budget and other relevant documents to determine how states estimate, authorize, and appropriate state disaster funds, the extent to which states share costs with affected localities, and how cost share arrangements with affected localities are determined. To address the second objective, we analyzed information from the semistructured interviews about how states' budgeting approaches have changed during the past decade, factors influencing any changes, and any challenges states face in funding disaster assistance. We focused our questions on the period covering fiscal years 2004 through 2013. We also analyzed FEMA data regarding major state disasters to identify possible trends in the frequency, severity, type, and cost of state disaster events during the period from fiscal years 2004 through 2013. For both objectives, we analyzed relevant state statutes and regulations that govern the use of state disaster funds. In addition, we interviewed FEMA officials who participate in making recommendations to the President as to whether state requests for federal disaster funding should be approved or denied. We conducted this performance audit from April 2014 to March 2015 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. The 10 selected states in our review used a range of budget mechanisms to cover the costs of disasters. This appendix provides additional detail on the range of disaster-specific funds, disaster assistance programs, and cost share arrangements in the 10 states. In addition to the contact named above, Stanley Czerwinski, Brenda Rabinowitz (Assistant Director), Kathleen Drennan (Analyst-in-Charge), Mark Abraham, Liam O'Laughlin, and Robert Yetvin made key contributions to this report. Aditi Archer, Amy Bowser, Jeffrey Fiore, Robert Gebhart, Carol Henn, Donna Miller, Susan Offutt, and Cynthia Saunders also contributed to this report.

Summary:
In recent years, natural and human-made disasters have increased in the United States in terms of both numbers and severity. For presidentially declared disasters, the federal government generally pays 75 percent of disaster costs and states cover the rest. As a result of this trend, governments at all levels have incurred increased costs for disaster response and recovery. An understanding of the approaches states take to budget for disaster costs can help inform congressional consideration of the balance between federal and state roles in funding disaster assistance. GAO was asked to examine how states typically budget for costs associated with disasters and any changes to those budget approaches during the past decade. This report reviewed (1) the approaches selected states use to budget for and fund state-level disaster costs; and (2) how, if at all, state disaster budgeting approaches have changed over time. For this review, GAO selected 10 states based on criteria such as the number of major disaster declarations and denials for each state from fiscal years 2004 to 2013. GAO reviewed state statutes, budgets, and other documents explaining states' approaches to budgeting for disaster costs and interviewed state officials. Although GAO's findings are not generalizable, they are indicative of the variation in budget mechanisms among the states. GAO is not making recommendations. GAO received and incorporated, as appropriate, technical comments from the Department of Homeland Security and the 10 selected states. The 10 selected states in GAO's review--Alaska, California, Florida, Indiana, Missouri, New York, North Dakota, Oklahoma, Vermont, and West Virginia--had established budget mechanisms to ensure the availability of funding for the immediate costs of unforeseen disasters and the ongoing costs of past disasters. All 10 states provided disaster funds at the start of the fiscal year and then as needed during the course of the fiscal year. Each of the selected states had its own combination of budget mechanisms that generally fell into four categories: Statewide disaster accounts . These accounts provided the 10 states with the flexibility to fund disaster expenses across state entities or for local governments. States typically funded these accounts through general fund revenue. Six states also used other sources, such as revenues from oil and gas taxes and fees on homeowner's and commercial insurance. The amounts appropriated to these accounts at the start of the fiscal year were based on a range of considerations, such as estimates of disaster costs based on past events and emergency response costs for unforeseen disasters. State agency budgets . Nine of the 10 states also covered a portion of unforeseen disaster costs through the operating or contingency budgets of state agencies with missions relevant to disaster response and recovery. For example, West Virginia's Division of Homeland Security and Emergency Management used its operating budget to cover disaster response costs. Florida's Department of Environmental Protection had a disaster contingency account funded through user fees on state parks. Supplemental appropriations . When advance funding proved insufficient to cover disaster costs, eight of the 10 states provided supplemental funding to pay for the remaining costs. While reserve accounts such as rainy day funds could be used to provide this funding if general funds were unavailable, budget officials said their state rarely tapped these funds. Transfer authority . All 10 states in our review allowed designated officials (i.e., the governor, budget director, or a special committee) to transfer funds within or between agencies or from statewide reserve accounts after the start of the fiscal year. None of the 10 states in GAO's review maintained reserves dedicated solely for future disasters. Some state officials reported that they could cover disaster costs without dedicated disaster reserves because they generally relied on the federal government to fund most of the costs associated with disaster response and recovery. While some states have increased the oversight and availability of disaster funds, all 10 states' approaches to budgeting for disasters have remained largely unchanged during fiscal years 2004 through 2013. Specifically, three states--Alaska, Indiana, and North Dakota--changed their budgeting processes to ensure that funding for disasters was appropriated before rather than after a disaster occurred. In addition, legislatures in three states--Missouri, North Dakota and West Virginia--took steps to increase their oversight of disaster spending.