FEMA's cost-share policy for the public assistance program that repairs, restores or replaces public facilities of all kinds (buildings, roads, public utilities, water and sewer projects, etc.) was part of the original Disaster Relief Act of 1974. That statute authorized the President to help state and local governments in the repair or replacement of public facilities and mandated that "the federal contribution for grants made under this section shall not exceed 100 per centum of the net cost." However, the defined cost-share commitments (not the waivers) were originally established by regulation in 1980. As one observer explained, The nonfederal contribution to all other assistance remained subject to negotiation until May 1980, when FEMA administratively adopted a general policy of requiring state and local governments to agree to pay 25 percent of the eligible costs of public assistance programs. This policy removed the administrative problem associated with attempting to determine a "reasonable" commitment for each disaster. This administrative policy was codified into law in amendments to the Stafford Act contained in P.L. 100-707 , in 1988: Minimum federal share – Except as provided in paragraph (2), the Federal share of assistance under this section shall not be less than 75 percent of the eligible cost of repair, restoration, reconstruction, or replacement carried out under this section. Currently, a state must have accumulated more than $133 in damages per capita within the state to reach a traditional cost-share waiver for sections 403, 406 and 407. Sections 403, 406 and 407 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act ( P.L. 93-288 , the Stafford Act) address emergency assistance, infrastructure damage and debris removal. These sections all share the same statutory language regarding the federal share; that it "shall not be less than 75 percent of the eligible costs." The cost-shares are reflective of the Stafford Act's fundamental insistence on state participation and that the State "will comply with all applicable cost-sharing requirements of this Act." Emergency assistance (Section 403) can entail overtime payments for safety personnel, reimbursements for actions the state has taken such as executing an evacuation plan or sandbagging to prevent additional flooding. It can also include the provision of federal resources (equipment, supplies, contracted assistance) referred to as Direct Federal Assistance, such as providing temporary facilities for essential community services such as temporary classrooms for schools. Section 406 is the repair or replacement of public infrastructure. The actual categories are: A – Debris Removal, B – Emergency Protective Measures, C – Road Systems and Bridges, D – Water Control Facilities, E – Buildings, Content and Equipment, F – Utilities, and G – Parks, Recreational Facilities and Others. Also, non-profit organizations may be eligible for this form of assistance if they are providing "critical services" such as power, water, water treatment, emergency medical service or other similar service. Assistance for debris removal under Section 407 is generally used (with some exceptions) for the removal of debris from publicly owned lands. Typically this aid involves clearance of debris from main public roads to provide access for the community to their homes, jobs and public services. Information provided by FEMA indicates that the larger cost-share adjustment, affecting Public Assistance categories C through G, has been done 54 times, amounting to about 21% of all cost-shares and occurring for less than 0.5 % of all major disasters declared since 1985. These figures point to an exceptional event being needed to qualify a state for the reduction in cost-share. An adjustment of the cost-share from 25% state and local share of a project to 10%, as proscribed in regulation, can greatly reduce the costs of the disaster for state and local governments while increasing federal expenditures. As noted earlier, the state and local cost-share had been placed in regulation in 1980 and was then codified in law in 1988. But the greatest attention to the cost-share, and provisions for its adjustment, were made in the spring of 1993. The cost-share amount was set at $64 per capita for the Midwest floods of 1993. FEMA increased this amount through rulemaking initiated with a proposed rule in 1998 and set in regulation in April of 1999. The rule stated that the $64 amount had been in use since 1985, so bringing it up to current dollars in 1999 would set the per capita amount at $75. The rule then increased the effective amount to $85 beginning on January 1, 2000, to $100 per capita on January 1, 2001, and then adjusted that amount for inflation after January 1, 2002, based on the Consumer Price Index. As of 2013, the per capita amount of damage required for a cost-share adjustment is $133. That amount far exceeds the per capita costs that FEMA employs when determining if an incident qualifies for a disaster declaration. In comments on the proposed rule for cost-share adjustments, several parties noted that there was no analysis of the original per capita threshold and that any raising of that amount would not consider individual state capabilities and would also discourage states from taking mitigation measures that would limit the impact of future disasters. FEMA's response indicated that since the base threshold amount had not been changed for a number of years it was in need of adjustment. Rather, the $64 threshold is simply a yardstick to determine when the economic impact of a disaster is of such severity that it warrants recommendation for a cost-share adjustment. We are quite willing to work with our state partners to identify capability or mitigation measures that might justify consideration of a cost-share adjustment. However, we view that as a longer-term effort separate from this rule. With respect to measuring economic impact, no commenters offered alternatives to the use of a per capita impact although two did suggest that we lower the threshold to $50 per capita. We believe instead that the 1985 threshold should be brought up to current dollars and adjusted annually using the Consumer Price Index for All Urban Consumers, since that is the legislative basis for annually adjusting the small project grants under the Public Assistance Program and grants under the Individual and Family Grant Program. Some have questioned whether the per capita amount employed by FEMA is reasonable based on average per capita amounts of damages for major disaster declarations. Some postulate that the per capita threshold may be set at too high an amount for most states to qualify for a reduced cost-share. Others suggest that the threshold is set at an appropriate level that signals an extraordinary event meriting special consideration for a reduced state and local share. In some catastrophic events, such as Hurricane Katrina, the estimated eligible damage amounts crested the cost-share threshold early in the disaster recovery period (in the case of Katrina, two months following the event) and the cost-share was adjusted. For other events, such as Hurricane Floyd that hit North Carolina in 1999, the cost-share waiver was not made until one year later, when the accumulated total eligible costs had surpassed the state per-capita threshold. The time involved in determining whether a state has reached its threshold can be important, since many decisions made at the state and local level are based on the amount of cost-share that the entities anticipate when selecting and prioritizing projects. As of February 2013, a total of 244 cost-share adjustments have been made for major disaster declarations over the last 24 years. The Appendix of this report provides a listing of cost-shares adjusted by FEMA from 1985 to 2013. It may be useful to break down the large number of waivers into four, non-exclusive categories: 1. repairs or replacement of structures, roads, and other permanent work; 2. cost-share waivers for U.S. territories; 3. cost-share waivers for a limited time period; and 4. other historical waivers that used a cap of state per capita costs. Category 1 represents cost-share adjustments for the PA program (generally beyond emergency work, encompassing PA categories C through G). These are the waivers intended to be made through FEMA's cost-share adjustment process as defined in regulation using a per capita threshold amount of damage. While the majority of cost-share waivers have met this threshold, others have been included for various reasons that will be detailed throughout this report. Category 2 represents a significant number of the adjustments (with more eligible categories of spending included) provided to the U.S. territories due to the provisions of the Insular Areas Act that allow for broader cost-shares with a less stringent threshold than that described for Category 1 for permanent work. The territories account for 59, or just over 25%, of all cost-share adjustments. The Insular Areas Act provides for a waiver of "any requirement for local matching funds under $200,000 (including in-kind contributions) required by law to be provided by American Samoa, Guam, the Virgin Islands and the Northern Mariana Islands." Category 3 represents a substantial number of the cost-share adjustments. These are the short-term or time-limited variety, such as waiving of the cost-share for a 72 hour (or other limited) period while states and local governments address the most significant, and costly, immediate problems. The time periods involved have ranged from 48 hours all the way up to 319 days. These waivers are not tied to the per capita threshold but are based on FEMA's judgment regarding the severity of a situation. These adjustments are based on FEMA regulations that offer limited relief for the start of the disaster. The regulation states: (d) If warranted by the needs of the disaster, we recommend up to one hundred percent (100%) Federal funding for emergency work under Section 403 and 407, including direct Federal assistance, for a limited period in the initial days of the disaster irrespective of the per capita impact. The language of the regulation with phrases such as "if warranted" and "a limited period" provide a significant amount of discretion to FEMA and the actions resulting from this regulation rest on FEMA's judgment of a disaster situation. The invocation of this waiver during the "initial days" is not commonplace but has happened frequently. Out of 244 approved cost-share adjustments, 104 (or over 40%) have been in the "limited time" category (see the Appendix and Figure 1 ). Several of the most recent adjustments, both for Hurricane Sandy and prior to that time, have been for limited time. But in addition, a recent trend in emergency declarations generally has been to use the emergency authority primarily to deliver Direct Federal Assistance (DFA). This assistance, directly contracted by the federal government, is then funded rather than the more general emergency assistance such as the funding of debris removal and other emergency protective measures carried out by state and local governments. This represents a more limited but, some might argue, more targeted approach to assisting the state during the emergency phase. It can be argued that it is valuable for FEMA to have this option available early on in a disaster in order to act quickly and decisively in ways that aid state and local governments in accomplishing emergency missions. This vital early work, such as the clearing of debris from major roads, can contribute to an expedited recovery. However, while this option is beneficial, it might be argued that FEMA should consider identifying some of the indicators employed in reaching this cost-sharing waiver decision, similar to the factors employed when considering disaster requests. Category 4 represents a small number of waivers that were made from 1984 to 1992 that capped state and local contributions at the level of $10 per capita with all remaining eligible costs being absorbed by the federal government. The growing frequency of cost-share adjustments reflects not only the increased scope and impact of large scale disasters but also the expectations of state and local governments that a cost-share waiver may be the rule rather than the exception. As one observer noted in the aftermath of Hurricane Katrina: State and local officials, for their part, have been called in by Congress to testify on how the intergovernmental response to disasters ought to go. But such sessions have frequently had the familiar ring of both state and local tensions over who controls federal funding, as well as a little tin-cup rattling. Sections 403, 406, and 407 are those Stafford provisions that reimburse emergency work, permanent infrastructure repair and debris removal. While the waivers for permanent work are covered by regulations that stipulate per capita amounts and ways of calculating damage estimates that could result in cost-share waivers, the regulations for waivers for emergency work are of a more general nature. The regulation for such an "emergency" waiver states: If warranted by the needs of the disaster, we recommend up to one hundred percent (100%) Federal funding for emergency work under section 403 and section 407, including direct Federal assistance, for a limited period in the initial days of the disaster irrespective of the per capita impact. While the phrase "a limited period in the initial days" has often been interpreted as a 72-hour period, other events have pushed that definition into much longer periods of federal payment. For example, disaster events in Alabama and Missouri (during 2011) resulted in extended periods of cost-waivers to handle the emergency work in those areas (see Table A-1 ). Along with the sections previously listed, Congress included, for Hurricanes Katrina, Rita, Wilma and Dennis, a cost-share waiver for the Other Needs Assistance (ONA) program within Section 408, which authorizes the Individuals and Households Program (IHP). The ONA waiver for the Gulf Coast marks only the second legislative waiver (see "World Trade Center - 9/11 Cost-Share Waivers" later in this report) for this program or its predecessor. It could be argued that ONA spending was so great for these disasters that the ONA waiver provided effective relief for states absorbing those costs. The ONA portion of IHP is the program that helps to pay for furniture, personal belongings, some uninsured medical and funeral expenses. Unlike the flexibility noted above for the programs with a floor of "not less than 75 percent," the Stafford Act states that "the Federal share shall be 75 percent," necessitating legislation to adjust that amount for the ONA program. Along with ONA, the Individuals and Households (IHP) program includes temporary housing, which is always funded at 100% by the federal government. In addition to the programs previously noted, the cost-share for the Hazard Mitigation Grant Program (HMGP, Section 404 of the Stafford Act) has only been waived once, for the World Trade Center (WTC) declaration in 2001. Section 404 of the statute provides that "the President may contribute up to 75 percent of the cost of hazard mitigation measures." Cost-share reduction legislation for the Gulf Coast (including the declarations for Hurricanes Katrina, Rita, and Wilma) did not address the HMGP section; as a result, the cost-share for hazard mitigation costs remains at 75 % federal and 25% state and local. While the declaration for New York for 9/11 required no cost-share for hazard mitigation work or any other program related to that disaster, the President's declaration letter also reduced by two-thirds the amount of potential hazard mitigation funding from 15% of total disaster spending to 5% of total disaster spending for this large event, as noted below. Furthermore, because of the unique nature and magnitude of this event, the federal contribution for the Hazard Mitigation Grant Program is authorized for up to five percent of the estimated aggregate amount of grants (less any associated administrative costs). In this instance, the "unique nature" was a terrorist event of tragic and tremendous consequences. Based in part on this experience, Congress has provided a formula to project the amount of funds that will be made available for hazard mitigation based on the size of disasters. Under P.L. 109-295 , the Post Katrina Emergency Management Reform Act (PKEMRA): The third sentence of section 404(a) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5170c(a)) is amended by striking ''7.5 percent'' and inserting ''15 percent for amounts not more than $2,000,000,000, 10 percent for amounts of more than $2,000,000,000 and not more than $10,000,000,000, and 7.5 percent on amounts of more than $10,000,000,000 and not more than $35,333,000,000''. Essentially, this formula would put the great majority of disaster declarations (those with less than $2 billion in estimated damages) at the 15% level and reduce the percentage of potential hazard mitigation funding as the total estimated damage increases. The first large disaster to be cost-shared under Stafford Act authority was the Mount Saint Helens volcano eruption in the state of Washington which was declared a disaster by President Carter on May 21, 1980. Part of the impetus for the cost-share policy came from then FEMA Associate Director William H. Wilcox who had previously been director of recovery for the state of Pennsylvania. During the disaster-quiescent 1980's the question of cost-share was not a prominent part of the discussion for either Congress or the state and local governments affected by disaster declarations. The principle that states should have a financial stake in their own recovery was a part of legislation across the range of federal assistance programs and was evident in the Stafford Act in Section 401 that listed a "state commitment" that should be significant. But in the wake of the devastation left by Hurricane Hugo in 1989 and later Hurricane Andrew in 1992, FEMA and the President George H.W. Bush Administration developed a formula to lessen the cost-share burden on the states most impacted by that storm, Florida and Louisiana, and their respective communities. For Hurricane Andrew, FEMA-955-DR-FL and FEMA-956-DR-LA, federal funding was 75 percent for the first $10 per capita of State population and then 100 percent for all remaining costs. So Florida paid a cost-share of about $33 million and Louisiana paid $10.5 million. The State of Florida provided $33 million in non federal cost-share (25 percent of first $132 million). FEMA provided 100 percent federal funding for all costs above $132M. The total assistance provided was $718 million. Therefore, the effective federal cost-share was 95.6 percent (100 percent - 33/751) for Florida and 87 percent (100 percent - 10.5/79.5) for Louisiana. The formula for cost-share adjustments following the multi-state floods along the Mississippi in 1993 employed the then traditional per capita amount of $64. But the federal government also added a second qualifying factor that sought to cast the cost-share decision in a national light. The second criteria for shifting to a 90/10 cost-share was presented as the following: "for multi-state disasters with significant impact on the national economy, the alternative threshold has been established at 0.1 % of the Gross Domestic Product." This second threshold was used to qualify the nine Midwestern states most impacted by the flooding for a reduced cost-share. However, a closer examination suggests that at the time of the adjustment, total cost projections for the nine states totaled $900 million. Even with the large hazard mitigation grant program that followed those floods, it seems unlikely that disaster costs ever reached 0.1% of a Gross Domestic Product in 1993 of more than $6.6 trillion. Computed against a national total, disaster damage amounts generally do not have the same significance for the nation as a whole as they would suggest for the region that experienced the flooding damage. The flooding of the Red River in the spring of 1997 was a huge disaster event for the states of North Dakota, South Dakota, and Minnesota. Using the per capita formula, North Dakota easily qualified for a cost-share adjustment with per capita costs approaching $617. South Dakota also qualified for the reduced cost-share based on per capita costs of $94. However, due to the size of its population against the total eligible damage, Minnesota's per capita damage of $61 did not meet the threshold requirement. President Clinton and House leaders, along with other Members of Congress, visited the area in late April of 1997 and promised help for the area as a whole. Since the FEMA regulatory cost-share adjustments were made for the Dakotas at the end of April, Members exerted pressure to provide similar treatment for Minnesota. This legislative change to the cost-share was effected in the Balanced Budget Act of 1997 which became law in early August. The provision stated that assistance to several Minnesota counties damaged by the Red River flooding "shall be at least 90 percent." This appears to be the first legislative waiver of disaster costs for state and local governments since the cost-share adjustment regulations were created in 1980. The section that follows will discuss more recent cost-share waivers; some that have qualified based on per capita thresholds, some made legislatively as a part of an overall regional waiver regardless of estimated damage amounts, and a few others that fall outside of those parameters. Deliberations in the 110 th Congress on P.L. 110-28 , supplemental appropriations legislation for the war in Iraq and disaster recovery from Hurricane Katrina, along with congressional hearings focusing on Gulf Coast recovery after the 2005 hurricanes, again brought attention to the subject of state cost-shares in presidentially declared disasters. The attention was warranted since the cost-share reductions in the legislation were among the largest ever granted. A provision of P.L. 110-28 provided a waiver of all state and local cost-shares for four disaster assistance programs that are a part of the Stafford Act. These programs generally are cost-shared in statute at 75% federal and 25% state and local. The exceptional nature of this legislation was both its federal assumption of all costs (rather than a 90% federal, 10% state and local ratio) and its inclusion of state costs under the Other Needs Assistance (ONA) program within Section 408. That section of Stafford states that the "Federal share shall be 75 percent." Given that language, FEMA does not have discretion to grant a cost-share adjustment and legislative language was necessary to waive that cost-share. Section 4501 of P.L. 110-28 , the "U.S. Troops Readiness, Veterans Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007," states in part, the following: (a) Notwithstanding any other provision of law, including any agreement, the Federal share of assistance, including direct Federal assistance, provided for the States of Louisiana, Mississippi, Florida, Alabama and Texas in connection with Hurricanes Katrina, Wilma, Dennis and Rita under sections 403, 406, 407, and 408 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 USC 5170b, 5172, 5173, and 5174) shall be 100 percent of the eligible costs under such sections. (b) APPLICABILITY (1) IN GENERAL—The federal share provided by subsection (a) shall apply to disaster assistance applied for before the date of enactment of this Act. (2) LIMITATION—In the case of disaster assistance provided under Section 403, 406 and 407 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, the Federal share provided by subsection (a) shall be limited to assistance provided for projects for which a "request for public assistance form" has been submitted. The statutory cost-share waivers were provided for five states. Per capita damage for Louisiana, Mississippi, and Alabama from Hurricane Katrina, and for Louisiana from Hurricane Rita, had already qualified those states for a decreased state cost-share (from 25% to 10%) through FEMA's regulatory formula based on estimated damage. Congress' inclusion of Florida and Texas may have been an effort to not separate out related damages within a devastating hurricane season. Also, the decision to grant cost-share waivers to Florida and Texas may have been in recognition of the amount of help both states had provided to Mississippi and Louisiana, respectively, in both emergency management resources and in hosting large numbers of evacuees in the wake of the storms of 2005. The "Limitation" in the legislation was intended to ensure that the projects receiving the waiver were ones already identified by applicants and not newly created projects, or perhaps, projects not necessarily related to the event. The legislation states that a "request for public assistance" submitted prior to enactment of the bill (May 25, 2007) will require no cost-share. Any "requests for public assistance" not submitted prior to the enactment of the bill will be cost-shared at the 90% federal, 10% state and local cost-share for the affected states. This provision appeared to be intended to provide the generous cost-share to those projects already selected by the state rather than projects that could be developed or submitted based on 100% federal funding. There have been several instances when Congress chose to adjust a state's cost-share by legislation. Prior to large cost-share adjustments made to several FEMA programs as noted above, Congress also legislatively reduced cost-shares for states affected by Hurricane Rita. In June of 2006, P.L. 109-234 included the following provision. That for states in which the President declared a major disaster (as that term is defined in Section 102 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 USC 5122) on September 24, 2005, as a result of Hurricane Rita, each county or parish eligible for individual and public assistance under such declaration in such states will be treated equally for purposes of cost-share adjustments under such Act, to account for the impact in those counties and parishes of Hurricanes Rita and Katrina. Arguably, through this action Congress recognized not only the degree of localized damage in some areas, but also that the state of Texas had absorbed the great majority of evacuees from Hurricane Katrina. The state was reimbursed for that sheltering effort, but not all costs incurred were necessarily covered. This legislation may have been a way to provide additional help to the State of Texas by lessening its cost-share for public assistance damage as a result of Hurricane Rita (Louisiana had qualified for such an adjustment for Hurricane Rita eight months earlier). In addition to the cost-shares that were computed and adjusted based on accumulated damage estimates, FEMA provided 100% cost-shares to 44 states (this includes the District of Columbia) that received emergency declarations for hosting Hurricane Katrina evacuees. This emergency sheltering was performed under the authority of Section 403 of the Stafford Act and was reimbursed fully by FEMA. Section 403 costs are generally cost-shared on a 75% federal and 25% state and local basis. These 44 states took in thousands of evacuees in the weeks following the impact of Hurricane Katrina and provided them shelter, food, and other services while the evacuees were being registered for standard FEMA Stafford Act assistance. Since the states were offering their help in coordinating this effort in response to a disaster that was not within their borders, FEMA and the Administration elected to provide all eligible funding without a cost-share. Supplemental appropriations legislation for FY2009, P.L. 111-32 , reduced cost-shares for damages from Hurricane Ike. The legislation reduced the state and local share for permanent rebuilding work from 25% to 10% and eliminated all state and local cost-shares for emergency work, which includes debris removal and emergency protective measures. This applied to two disaster declarations made for Hurricane Ike, DR-1791 for Texas and DR-1792 for Louisiana in 2008. While the damage estimates for Texas indicated it would surpass the $122 per capita threshold, Louisiana damage for Hurricane Ike alone did not appear to meet that mark. However, Louisiana had sustained a great amount of damage earlier from Hurricane Gustav, for which it had its cost-share adjusted from 25% to 10%. The decision to adjust the cost-share for Louisiana would provide a cost-share dividend for the state. But the adjustment, it can be argued, was important to lessen administrative confusion since all of the parishes designated for assistance due to Hurricane Ike had also been designated just two weeks earlier for Hurricane Gustav. The decision to include Louisiana was also similar to previous congressional cost-share actions that sought to include all states affected by a chain of disaster events. This approach was used on cost-share adjustments for Hurricanes Katrina, Rita, Dennis and Wilma as discussed in the previous section. But along with those cost-share waivers, the supplemental legislation also included similar waivers for disasters that occurred in Kentucky and West Virginia earlier in the spring of 2009. Those disasters were declared based on severe storms and flooding. However, the per capita damage amounts in both states were far below the per capita qualifying criteria. In early 2013, total federal costs were still being compiled to determine if the affected states would receive a cost-share adjustment for the permanent repair work under Section 406. However, the major disaster declarations for the affected states did contain a cost-share adjustment for the Direct Federal Assistance provided for power and transportation help. The initial declarations for Connecticut, New Jersey, and New York were for 10 days with a 100% federal cost-share. Following those declarations, an additional three declarations were made (one for each state) which extended that assistance for an additional five days with the same cost-share arrangement. Broad waivers of 100% across all programs for the Gulf Coast states, as provided for in P.L. 110-28 , had only one similar precedent; the legislation following the World Trade Center (WTC) terrorist attacks of September 11, 2001. In that event, the Bush Administration established the federal nature of the contribution early in the process. Given the unique and tragic circumstances of the 9-11 attacks, and the federal responsibility for the overall response, the legislation eliminated all cost-shares and settled on an overall federal payment to address all associated costs. . Following the Columbia Space Shuttle tragedy, the President issued emergency declarations and FEMA provided 100% assistance to Texas and Louisiana to reimburse some of their search efforts. The consideration of cost-share waivers links closely with the general discussion of how disasters are declared and the role of political favoritism in those decisions. One observer suggested that the cost-shares in 1992 reflected not only the major damage incurred but the political realities of the time as well. Two weeks after Hurricane Andrew, Hurricane Iniki struck Hawaii, causing intense devastation on the island of Kauai. No direct legislative response ensued from the Andrew/Iniki disasters since the Bush administration would soon leave office. In the midst of his re-election campaign, however, President Bush enlarged the federal share of disaster assistance in both recovery efforts to virtually 100 percent. Similar suggestions of political influence have been made regarding disaster cost-share assistance decisions made during ensuing administrations, ascribing political motivations, as both disaster damage and disaster costs have grown. Two researchers asserted that presidential and congressional influence have an impact on the decisions for declarations and spending. We find that presidential and congressional influences affect the rate of disaster declaration and allocation of FEMA disaster expenditures across states. States politically important to the President have a higher rate of disaster declaration by the President, and disaster expenditures are higher in states having congressional representation on FEMA oversight committees. While those findings comported with suspicions or assumptions of political corruption of the disaster declaration process and disaster spending, follow-up studies have questioned those assumptions. As two other researches have noted: There was no statistical evidence to suggest that gubernatorial and presidential party similarity, U.S. House of Representatives and presidential party similarity, FEMA congressional oversight committee membership, electoral votes, or FEMA regional office location influenced success in securing emergency or major disaster declarations. Another researcher who has closely followed disaster declaration activity noted the declining rate of turn downs for governors' requests and concluded: Since 1989, following adoption of the Stafford Act, the odds that the president will approve a governor's request have risen to about four in five (80.3 percent) chance. Certainly the broader authority to judge what is or is not a disaster under the Stafford Act has provided president's since 1988 with more latitude to approve unusual or "marginal" events as disasters or emergencies. This may be one reason for the higher rate of gubernatorial request approvals since 1988. An additional reason for the increase in approvals may also rest with the increasing capacity of states to make effective requests and understand and anticipate FEMA's review process and what would likely constitute a request that would result in a declaration. While this discussion and these studies focused on various forms of disaster declaration decisions and overall spending, none of these studies has focused on the cost-share adjustments that have been made by the executive and legislative branches. These changes have generally comported with regulations in place or have been done within a context of overall help to a region. But some other cost-share waivers for disasters that do not approach the damage per capita threshold indicate a potential openness for increased congressionally directed spending for all disasters. In a sense, this takes the issue full circle to a time when Congress legislated assistance by specific incident and proscribed the form and amount of the assistance. As one observer has noted: The U.S. Congress was not entirely unmoved by these and other disasters: Between 1803 and 1947, 128 specific acts expressed sympathy and sometimes supplied token financial assistance. Obviously now the assistance available is well beyond token, and in fact, the negligible contribution could conceivably be the state's share. This is the exception since most states have a clear interest in the recovery work that is reflected in their work and commitment. But regulatory cost-share waivers, if applied broadly and without the compelling support of recent congressional legislative waivers, could chip away at that commitment and complicate, rather than strengthen, the federal-state partnership The cost-shares for the funding of Stafford Act programs speak to the cooperative working relationship reflected in that legislation between the two levels of government in addressing disaster response and recovery work. While waivers can grant needed relief to states that have absorbed a great deal of disaster damage, those same waivers can undercut the state's investment, not only in resources but also in its oversight and accountability, in contributing to its own recovery. The adjustment of cost-shares is likely to remain a subject of interest to all states and localities that receive a major disaster declaration and have an interest in reducing their state commitment of resources during the recovery process. All discussions of cost-shares over the last four years lead back to the hurricane season of 2005 and the damage inflicted by Hurricane Katrina. The damage Katrina delivered has also affected public policy expectations. Hurricane Katrina was an outlier in its size and impact, yet many legislative modifications meant to adapt solely to that storm and its unprecedented aftermath, are now used as rationale for suggesting identical treatment for subsequent disasters. Congress may continue, after future disasters, to consider legislative adjustments to Stafford Act cost-share requirements, examining the need for exceptions to current regulatory waivers or expanding such waivers. Congress may wish to consider if the threshold currently employed appropriately reflects state capacities and commitments toward disaster recovery. Recent congressional actions demonstrate a recognition of the financial burdens caused by disaster damage, while also demonstrating a willingness to adjust cost-share amounts for events that are not of the scope and size associated with previous cost-share adjustments. Just as with Katrina for large events, these adjustments for lesser damage can also push public policy expectations. The resulting additional assistance provided to states and localities, through more generous cost-shares, increases the overall disaster costs to the federal government. For the last decade the federal government has begun to budget for disaster spending through greater annual appropriations. While not entirely accounting for all disaster spending, the increases in annual budgets for the Disaster Relief Fund reflect a lessening of the dependency on emergency spending for that purpose. Within this new reality, the cost-share adjustments, and their increase of the federal share, could begin to impinge on the annual budget choices faced by the Obama Administration and Congress. Table Legend

Summary: The Robert T. Stafford Disaster Relief and Emergency Assistance Act (The Stafford Act, P.L. 93-288) includes the Public Assistance (PA) program, Sections 406 and 407 of the act. These sections provide assistance to states, local governments and non-profit organizations for debris removal and rebuilding of the public and non-profit infrastructure. The Stafford Act is a partnership between the federal and state governments and part of the partnership is the notion that state and local governments should have some "skin in the game." That is, they should contribute toward some of the costs incurred by the disaster response and recovery programs. The division of costs between federal and state governments is known as a "cost-share." The language of the Stafford Act defining cost-shares for the repair, restoration, and replacement of damaged facilities provides that the federal share "shall be not less than 75 percent." These provisions have been in effect for over 20 years. The Stafford Act also gives the President the authority to adjust some of the cost-shares. While this authority is long standing, the history of FEMA's administrative adjustments and Congress' legislative actions in this area, are of a more recent vintage. In all, there have been 245 cost-share adjustments of varying sizes and lengths of time dating back to 1986. In 1998 FEMA promulgated regulations that provide a more consistent and open approach to cost-share adjustments. The overwhelming majority of these cost-share adjustments have been based on that regulatory authority and carried out by the executive branch through administrative actions. However, since 1997, and particularly in the wake of the difficult issues caused by the Gulf Coast storms of 2005, Congress has begun to exercise its authority to adjust cost-shares. The recent trend toward legislative cost-share waivers suggests that Congress may have an interest in continuing to influence the federal/state relationship in providing resources to respond to disaster situations. The cost-share regulation establishes eligible per capita disaster damage amounts that could qualify a state for cost-share reductions. The per capita amounts are updated on an annual basis. With the adjustment process formalized in regulation, and with larger disasters more frequent in succeeding years, the cost-share waivers have also become more common. Certainly the interest in achieving such a reduction for the state and local share has grown with the awareness of the cost-share adjustments during large disaster events such as Hurricane Katrina. Beyond actions by the executive branch, Congress has adjusted cost-shares through legislation when a state or states may not, or have yet to meet, the per capita threshold. FEMA and the Clinton administration adjusted the cost-shares for some states affected by the 1993 Mississippi River flooding that had not met the per capita policy amount. In 2007, Congress adjusted the cost-shares following the Gulf Coast hurricanes of 2005 for states that did not meet the identified threshold and also waived cost-shares for programs other than the PA program. Most recently, in P.L. 111-32, Congress again adjusted the state cost-shares for the two states most impacted by Hurricane Ike in 2008. The legislation also waived the cost-share for two other states, separate from the hurricane area, with major disaster declarations that did not meet the qualifying threshold. There have been multiple cost-share adjustments for the Hurricane Sandy major disaster declarations. Broader administrative cost-share adjustments for the major disaster declarations for Hurricane Sandy will depend on whether the eligible per capita disaster damage totals mandated by regulation are reached. While the expenditures for Sandy are large, so too are the populations in the affected states. Under the Insular Areas Act, a different threshold is implemented for U.S. territories that provides a more generous cost-share for smaller disaster events in several of the territories. Cost-share waivers have also been frequently applied. Cost-share waivers can be a great help to a state and its communities seeking to recover from a disaster event and reeling from the economic problems caused by the disaster. But such waivers also reduce the supplemental nature of Stafford Act funding through the increase of the federal share. How such cost-share waivers are administered is an issue that FEMA has addressed through regulation and Congress has addressed through legislation. This report will be revised as warranted by events.