Signed into law on August 2, 2011, the Budget Control Act (P.L. 112-25, hereinafter the BCA) established a set of limits on federal spending, as well as a set of mechanisms to adjust those limits to accommodate spending that has special priority. One of these mechanisms—a limited allowable adjustment to pay for the congressionally designated costs of major disasters under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (hereinafter "the disaster relief allowable adjustment" or "allowable adjustment")—represented a new approach to paying for disaster relief. By providing this flexibility in the budget caps, Congress changed the way it approached funding disaster relief and recovery efforts. The BCA is now halfway through its 10-year term. This report looks at how the adjustment has functioned over the first five years, and what the future of disaster relief (as defined under the BCA) may look like under current law for the next five years and beyond. The BCA defined disaster relief as activities carried out pursuant to a declaration of a major disaster under the Stafford Act. A limited amount of appropriations designated by Congress as being for disaster relief each year can be accommodated by adjusting the BCA's discretionary spending limits. That limitation is based on a modified 10-year rolling average of disaster relief appropriations calculated by the Office of Management and Budget (OMB). The average is calculated disregarding the high and low funding years in the 10-year data set. Unused adjustment can be rolled forward into the next fiscal year—however, this "carryover" expires if unused in the next fiscal year. The first calculations of the allowable adjustment, which applied to FY2012, relied entirely on BCA-mandated OMB calculations of past appropriations pursuant to major disaster declarations. The OMB report on disaster spending used to calculate the initial allowable adjustment noted the parameters of its task: Section 251(b)(2)(D)(i)(I) requires the calculation of "the average funding pro vided for disaster relief over the previous 10 years, excluding the highest and lowest years." "Disaster relief" is defined in section 251(b)(2)(D)(iii) as "activities carried out pursuant to a determination under section 102(2)" of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act). A "determination under section 102(2)" means the Presidential declaration of a "major disaster." OMB itself noted challenges in making the prescribed retroactive assessment, pointing out that "OMB's calculation does not reflect total appropriations that were provided to respond to major disasters, but rather only funding that was provided pursuant to appropriations or authorizing language that specifically referenced the Stafford Act." OMB interprets the language of the BCA as directing them to use annual totals of congressional disaster relief designations as annual totals for disaster relief spending used in calculating the allowable adjustments for FY2013 and later. Reliance on this total of annual congressional disaster relief designations as a measure of major disaster costs is not wholly accurate either. Some major disaster costs are absorbed by federal agencies within their budgets after the completion of the appropriations cycle, when those costs were not anticipated. Congress also has chosen not to designate all costs of major disasters as "disaster relief." The application of this designation has been limited to the allowable size of the disaster relief adjustment in a given year, with costs beyond that limit being designated by Congress as emergency funding. Figure 1 , below, shows the OMB-calculated amounts of disaster relief from FY2001 through FY2011, and the amount designated as disaster relief by Congress from FY2012 through FY2016 as solid bars on the chart. For FY2012 through FY2016, blue data points connected by a line indicate the allowable adjustment for disaster relief available under the BCA. In FY2012 and FY2013, the disaster relief allowable adjustment approached full usage. In FY2014, for the first time, several billion dollars of the adjustment went unused, and was carried over to FY2015. Figure 2 illustrates how the allowable adjustment was calculated for FY2016. Blue bars indicate the ten years of disaster relief from FY2006 through FY2015 that the calculation is based on: black Xs indicate the high and low years that were excluded from the calculation. The average of the eight remaining years, plus the unused portion of the allowable adjustment from FY2015 (excluding carryover from FY2014), is the allowable adjustment for FY2016. The disaster relief provided in FY2005 and FY2006—which was largely driven by hurricanes Katrina, Rita, and Wilma—is in the process of "aging out" of the disaster relief allowable adjustment calculations. Those two fiscal years supported a higher average than otherwise would have been calculated in their absence. Beginning in FY2017, the only other year in the data set with disaster relief spending in excess of $20 billion (FY2008), will be the high year, and therefore be excluded from the calculation for the allowable adjustment. The implications of these changes for the allowable adjustment are discussed in greater detail below. As noted above, the annual total of disaster relief appropriations for years after FY2011 used to calculate the allowable adjustment is based on the congressional designation of appropriations as disaster relief. As years pass, the calculation is becoming less reliant on OMB's somewhat more inclusive annual totals of disaster relief and more reliant on annual congressional designations of disaster relief that have, in practice, been constrained to an extent by the allowable adjustment. The allowable adjustment has been most often used to accommodate budget authority for the Federal Emergency Management Agency's Disaster Relief Fund (DRF)—the primary FEMA account used to fund disaster response activities and pay for ongoing disaster recovery programs. However, the use of the allowable adjustment is not limited to the DRF. It has accommodated funding for several other departments and government agencies, as shown in Figure 3 . In FY2016, three departments received funding in annual appropriations designated as disaster relief—the Departments of Homeland Security (which includes FEMA), Agriculture, and Housing and Urban Development—the broadest use of the designation across agencies since FY2012, the first year of its use. As Congress considers the future of federal disaster relief and budgetary controls, it may choose to consider changes to the disaster relief allowable adjustment. Under the status quo, the disaster relief allowable adjustment will continue to be available through FY2021, after which the limitations on discretionary spending under the BCA expire. As past years roll out of the calculation and new years roll in, it is possible to assess potential future scenarios for the size of the allowable adjustment. Using OMB's methodology for calculating the allowable adjustment, three models of potential future scenarios are presented here: Maximum Usage Scenario : presumes Congress will designate the maximum amount available under the allowable adjustment for disaster relief each year; Medium Usage Scenario : presumes obligations for major disaster activities will follow FEMA's 10-year average of non-catastrophic major disasters, which is less than the total disaster relief allowable adjustment. Minimum Usage Scenario : presumes that no catastrophic disasters occur, no further major disasters are declared, and that the designation is only used to cover ongoing costs anticipated to the DRF from the past major disasters as of November 15, 2015. From FY2013 through FY2016, Congress appropriated almost $31.1 billion under the disaster relief designation, of which the DRF has received almost $30.6 billion—98.3% of the total funds designated. Given this pattern of predominant usage, the medium and minimum usage scenarios are based on projections of DRF spending on major disasters, with those appropriations being designated as disaster relief as has been congressional practice since FY2012. Figure 4 shows what the allowable adjustment would look like for the next five years if it were fully exercised every year, leaving no carryover. The allowable adjustment declines to roughly $6.8 billion as high expenditure years "age out" of the average, before increasing to nearly $7.5 billion in 2021. Figure 5 shows a projected future scenario for the allowable adjustment based on a FEMA projection from November 2015, of anticipated usage of the DRF over the next five fiscal years. According to FEMA, this anticipated usage includes estimates for existing disasters and future non-catastrophic major disasters calculated using a 10-year average of non-catastrophic major disasters adjusted to FY2017 dollars. FEMA's five-year projection provided a data point for FY2017, and a projection for the total cost of major disasters over the full five-year time horizon through FY2021. Due to the unpredictable nature of disasters, FEMA did not make annual projections. For purposes of developing a hypothetical scenario, CRS estimated annual levels by dividing the total projected spending for years two through five (FY2018-FY2021) evenly among those years. As noted above, given that the predominant usage of the allowable adjustment has been for the DRF, the DRF projection is being used as a surrogate for all disaster relief spending in this scenario. In this scenario, like the "maximum usage" scenario, the allowable adjustment declines through FY2018, but then rebounds in FY2019 to almost $9.7 billion due to the impact of carryover of unused adjustment from the prior year. This effect is temporary, as the carryover effect expires after a year. Lower levels of annual usage ultimately begin to impact the average and drive the allowable adjustment back down, falling to just above $8.4 billion in FY2021. Figure 6 shows a projected future scenario for the allowable adjustment based on a FEMA projection from November 2015, of anticipated usage of the DRF over the next five fiscal years, funding only the costs of previously declared disasters.