FEMAParametric Block Grants Could Fix Some of FEMA’s Worst Problems
Federal intervention into America’s state-led disaster management system has produced a long list of ills, including slow response times, inadequate mitigation, ballooning costs, and wasteful spending.
Federal intervention into America’s state-led disaster management system has produced a long list of ills, including slow response times, inadequate mitigation, ballooning costs, and wasteful spending. The administration and Congress are separately considering reforms to the Federal Emergency Management Agency (FEMA), which administers federal disaster assistance. One idea being floated, block grants with parametric triggers, would ameliorate a few of FEMA’s many issues, but policymakers should be wary of any reform effort that falls short of meaningfully limiting federal spending and involvement in disaster assistance.
FEMA’s Cost-Sharing Structure Encourages Waste
FEMA provides disaster assistance through two primary channels. Public Assistance (PA) programs provide grants to states and localities for emergency response and recovery work. Individual Assistance (IA) programs provide direct support to individuals who sustain losses due to disasters. The resulting costs are supposed to be shared between the federal government and the states on a 75/25 federal-to-state basis. However, presidents routinely raise the federal share—sometimes to 100 percent of costs—leaving federal taxpayers holding the bag.
Over the last decade, federal disaster spending has grown from $19 billion in 2016 to $33 billion in 2025, adjusted for inflation (2026 dollars). When subnational governments and the private sector expect the federal government to bear the bulk of disaster costs, their incentives to invest in mitigation, avoid building in risky locations, and insure against disaster risks weaken.
Requiring states, localities, and private actors to shoulder a greater share of the financial burden of disasters would reduce federal costs and better align incentives with actual risk, resulting in a more just, effective disaster system.
Parametric Block Grants Address Some of the Core Problems with FEMA
Any serious effort to control disaster spending must address FEMA’s PA programs. PA is the primary cost driver of FEMA’s Disaster Relief Fund, and where the agency’s failures are most visible. Nearly half of FEMA’s PA projects aren’t even obligated—a legally binding commitment to spend—within a year of the initial aid request. Historically, around 20 percent of FEMA’s Disaster Relief Fund spending is consumed by administrative overhead. Overly burdensome documentation requirements and state officials’ confusion over federal red tape have hobbled federal disaster assistance programs since before FEMA existed.
