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.