FEMA Review Council Report: A Plan to Scale Back Federal Disaster Recovery

After 17 months of outreach and debate, the Federal Emergency Management Agency (FEMA) Review Council released its Final Report on Thursday, May 7th. Despite the administration’s threats to dismantle the agency, the Council recommended keeping FEMA intact at the federal level while passing more responsibilities to states, nonprofits, and individuals. If enacted, this plan would reduce the number of disasters that will qualify for federal assistance, lower the percentage of costs that the federal government would cover, and eliminate key functions that the federal government has previously performed. 

We break down four of the Council’s 10 recommendations below. These are some of the largest recommended changes to the federal disaster recovery system, but none of these changes are certain. Enacting many of these recommendations would require congressional action to amend the Stafford Act, the primary law governing federal disaster response and FEMA programs. But the vision of a reduced federal response to disasters laid out in the report is already being enacted in many ways, and Texans need to understand what these changes would actually mean for future disasters.

Raising the Threshold for Federal Disaster Declarations
Under our current disaster response and recovery framework, state, local, territorial, and tribal governments are primarily responsible for disaster response and recovery. FEMA is not involved in a disaster unless the Governor of the affected state has asked for a federal declaration and the President has approved one. The Governor’s request must be “based on a finding that the disaster is of such severity and magnitude that effective response is beyond the capabilities of the State and the affected local governments.” (Stafford Act 42 USC 5170)

The President has discretion to decide whether or not to grant a federal declaration, but this decision is usually based on a recommendation from FEMA which uses a number of factors, including measurable damage indicators, to determine whether the disaster meets a “threshold” for federal assistance. While some of the details remain unclear, the Council’s overall recommendation is that there should be fewer federal disaster declarations and that states, territories, and tribes should take on increased responsibility for disaster response and recovery. For example, the Council recommended increasing one of these indicators, the statewide Public Assistance per capita indicator, from $1.94 to $2.99. In plain terms, this would raise the minimum financial threshold of damage a state, territory, or tribe must sustain before qualifying for federal aid. By the Council’s own calculations, if this higher indicator had been applied between 2012 and 2025, there would have been 29% fewer federal disaster declarations.

The Council does not provide a plan for how states would shoulder the additional costs of responding to more disasters. Disasters that do not meet the federal threshold already provide a challenge for local elected officials and emergency managers, and for individual families in particular. Most states, including Texas, do not have disaster recovery programs that provide help to individual survivors with home repairs, rebuilding, or other disaster-caused needs.

In addition to raising the threshold for a disaster declaration, the report also recommends that FEMA impose a minimum annual amount that states have to spend before they can request a declaration. The amount would be based on the state’s size, but the report does not include further information on how this new disaster deductible would work. 

Some states, may, in fact, have more capacity to respond to disasters than the current per capita or other indicators capture, but more rural and economically distressed areas struggle to meet the current thresholds. Reducing the number of declared disasters is not a good outcome if it means the areas with the fewest resources to recover get less help and become less resilient. The federal disaster system currently functions as a backstop,ensuring that places with less capacity have access to disaster response and recovery resources.

State budget surpluses, often referred to as “Rainy Day Funds,” vary widely. Take North Carolina and Texas, two states that are no strangers to disaster. Texas has roughly 3 times the population of North Carolina and more than 7.5 times the budget surplus, according to the Pew Charitable Trusts.¹ Assuming states act to spend their surpluses on disaster relief — which is rare — Texas residents would be looking to a state with much greater fiscal capacity than their counterparts in North Carolina. 

In addition to varying between states, state budget surpluses are shrinking.² The average state Rainy Day Fund decreased in FY2025 for the first time in almost two decades. With state resources shrinking, more disaster survivors and local communities could find themselves completely unsupported if the federal disaster declaration threshold is raised. 

While the report recommends making formal changes to the declaration thresholds through regulation, it also reminds the President that he has discretion to order that only requests above a higher threshold be considered. But effectively changing the threshold for a federal disaster declaration doesn’t even require an Executive Order. FEMA told the New York Times that it had already adjusted the damage threshold for inflation over a week before the Council’s report was released, and the President ultimately has discretion over granting or denying federal declarations regardless of FEMA’s recommendation.

Overhauling Individual Assistance 
The Council recommends dramatic changes to the Individual Assistance program that would reduce the number of households that receive assistance, eliminate current individual assistance programs, and tie assistance to the assessed value of a survivor’s home. These changes would require Congressional action.

In the current Individual Assistance (IA) program, disaster survivors apply for FEMA assistance and then are sorted into programs that fit their needs. The largest IA programs are Housing Assistance and Other Needs Assistance (ONA). Each type of assistance is capped at $44,800; so survivors are currently eligible for up to $88,900 in IA overall. The proposed system would instead combine all assistance types, and distribute them as a single lump-sum payment through two programs distinguished by applicant type, Homeowner Assistance and Renter Assistance. The Council proposes calling this program the Framework for Accessible Individual Relief (FAIR) program.

The Council recommends that only disaster survivors whose homes are uninhabitable or destroyed should be eligible for Individual Assistance from FEMA. After the July 2025 floods in Central Texas, just 34.3% of applicants assessed their homes as uninhabitable or destroyed. The overwhelming majority of applicants needed assistance even though their homes were “habitable,” demonstrating the high level of need that would remain unaddressed if eligibility was limited this way. In past storms, we have heard from direct service providers that many applicants will tell FEMA their home is “habitable” even if it is extremely damaged or without power or water because they are living in the home with nowhere else to go. If FEMA intends to use self-reported habitability to screen out applicants, they need to reframe the question so that families will not miss out on major assistance simply because they have nowhere else to go. 

Under the FAIR program, Homeowner Assistance payments would be capped at 15% of the applicant’s locally assessed home value up to $150,000. Renter Assistance would be capped at the amount of three months of HUD Fair Market Rent for the applicant’s household size. 

This new system would direct more benefits to families with expensive homes. A family with a million dollar home could receive up to $150,000 from FEMA, more than the current capped amount for Housing and ONA combined, but assistance for a family with a $200,000 house would be capped at $30,000, almost $60,000 less than the current IA cap. Using HUD 2026 Fair Market Rents, a family in Galveston who needed a two bedroom apartment would receive a maximum of $4,719 in FEMA assistance, over $10,000 less than the ONA cap alone, even if they needed to not only find new housing but replace everything they owned or transportation to work. The current system provides up to 18 months of rental assistance to displaced homeowners and renters, and that assistance is not counted as part of the housing assistance cap.

Despite the fact that new assistance levels are based on home values or a rent formula, survivors are expected to use these funds to cover medical expenses, transportation, childcare, and other needs previously covered by ONA in addition to housing needs. This means that wealthy families would get more funding not only for home repairs or rent but other essential needs as well. FEMA assistance already disproportionately benefits wealthier families and communities; the FAIR program would make discrimination based on economic status mandatory.³

In addition, FEMA would no longer provide direct housing assistance in the form of temporary units, like mobile homes, for displaced homeowners and renters. States would have a cost share of 25% for housing assistance, which is currently 100% covered by federal funds. The Council also suggests that states should take on administering housing programs that are currently administered by FEMA, which would require states to be able to rapidly expand their capacity to accept and process large numbers of applications and issue benefits. 

Remaking Public Assistance 
The Public Assistance (PA) program is currently tied to the actual cost of eligible work on a project-by-project basis. The new program, which the Council calls the Reformed and Partnered Initiative for Disasters (RAPID) program, would replace the process of assessing damage and estimating eligible costs using a “parametric formula,” which provides a predetermined amount of funding when specific metrics are met. The Council lists population, wind speed, flood depth, or earthquake magnitude as examples of metrics that could be used to determine how much assistance is appropriate. A percentage of the parametric amount would be transferred to the affected state as a block grant within 30 days of the disaster declaration, and the state would be responsible for determining which activities and projects are eligible, conducting environmental and other reviews, and submitting audits to FEMA. 

RAPID would reduce the federal government’s cost share for PA from a minimum to 75% to a minimum of 50%. Texas received over $2.9 billion in FEMA PA after Hurricane Harvey in 2017; under the proposed cost share changes, the state would have received almost a billion dollars less. Jurisdictions would be eligible for up to a 75% federal cost share of the parametric amount based on performance metrics under RAPID. These changes would require Congressional action.

Uncoupling disaster relief from damage assessments and actual costs would get funds to states faster but limit the overall amount of federal funding available to disaster affected communities. A parametric trigger amount that doesn’t account for local conditions would disadvantage places like Hawaii and Puerto Rico, where materials need to be imported, and could discourage communities from adopting building and land use codes that increase building costs, even if they would make homes and communities less vulnerable to future disasters. If disaster response and rebuilding costs are higher than the parametric trigger amount, states are not eligible for additional federal funding to meet those needs.

The recommended changes would also entrench inequality into community recovery by using performance metrics to award greater funds to communities that already have a greater capacity to recover. In November 2020, FEMA’s National Advisory Council warned that “ [b]y perpetually assisting larger communities that already have considerable resources, the smaller, less resource-rich, less-affluent communities cannot access funding to appropriately prepare for a disaster, leading to inadequate response and recovery, and little opportunity for mitigation. Through the entire disaster cycle, communities that have been underserved stay underserved, and thereby suffer needlessly and unjustly.” 

Unlike the corporate world, where merit-based rewards could improve performance, local governments are constrained by finances, geography, capacity, and in some cases, a lack of experience in responding to disasters. Through pre-emption and Tax and Expenditure Limits, states disallow certain types and levels of revenue generation at the local-level, creating huge differences in local financial capacity across state lines.⁴ Rural communities have fewer options for contracted services like debris removal. And as climate change intensifies, disasters are occurring in areas that have not experienced them before. Through no fault of their own, officials in these places do not have the same level of familiarity with the recovery process. Across the country, local governments are not operating on an even playing field, so incentives will simply benefit the communities with the greatest resources and experience. 

State-level restrictions on revenue generation have become a major issue as funding transfers from federal and state to local governments have declined. In the 1970s, the average municipality could count on the federal and state governments to provide roughly 31% of their budget.⁵ These funds came from federal programs like Revenue Sharing, a program where the federal government would divide the revenue it received from income taxes and other sources across states and local governments without restrictions on how that funding could be spent.⁶ Now, local governments receive much less funding, with municipalities only seeing 16% of their funding coming from state and federal sources, and that funding is often restricted to specific uses.⁷ States themselves are constrained by restrictions like balanced budget amendments and the timing of legislative sessions from responding quickly to the need for disaster response and recovery funding, and are facing the loss of federal funding across multiple programs.

Reconfiguring the Hazard Mitigation Grant Program
FEMA provides hazard mitigation assistance to state and local governments through programs that are available following a disaster declaration, like the Hazard Mitigation Grant Program (HMGP), and programs that are available to communities at any time, like the Building Mitigation Assistance Program and the Flood Mitigation Assistance Program. The Council’s plan focused on programs to replace HMGP, but did not detail what would happen to other Hazard Mitigation Assistance Programs. 

The Council recommended replacing the HMGP with the “Refined Risk Reduction” Program (R3P) which would have two parts: Rapid Mitigation Advance and Strategic Mitigation Allocation. Rapid Mitigation Advance would go out within the first 30 days after a federal disaster declaration. It would provide up to 5% of the federal disaster estimate and be targeted towards mitigation projects folded into recovery efforts. The Strategic Mitigation Allocation, up to 10% of the federal government contribution provided in the first 6 months, would be focused on repetitive or severe repetitive loss properties and critical infrastructure. All Strategic Mitigation Allocation projects would be focused on improving the performance of the National Flood Insurance Program. 

While these changes elicit many questions, some central questions include what will happen to the other Hazard Mitigation Programs? And why only 5% for integrating disaster mitigation into recovery? To truly include mitigation in the recovery process — helping communities to dramatically reduce the potential harm of future disasters during the rebuilding phase — would take serious investment that wouldn’t necessarily fall underneath the arbitrary 5% line. Integrating mitigation would mean that disaster survivors and communities have choices, including rebuilding in place, modifying their homes to be more disaster-safe through home elevation or fire breaks, or relocating entirely. These are the options that survivors should have, but they require adequate investment.

Less Money, More Problems
The largest issue with these reforms is that they are predicated on the idea that state and local governments have untapped funds and capacity that could be effectively deployed in disasters. Many do not. If the federal government pulls back from disaster recovery, it will create a patchwork of underfunded state efforts and leave thousands of people without assistance when disaster strikes. 

We want to be clear that the federal disaster recovery system needs significant reform, particularly when it comes to direct help for disaster survivors. As the Council points out with regard to Individual Assistance, survivors are often forced to fill out multiple applications and provide the same information multiple times for different federal programs, the programs themselves are complex, and the delivery systems are often misaligned with outcomes. However, the Council’s recommendation doesn’t actually address these issues. It would make fewer survivors eligible for help, reduce the amount of help available, particularly for middle-class and low-income survivors, and shift significant costs and administrative responsibilities to the states. 

As a whole, the FEMA Review Council’s recommendations are designed to reduce the role of the federal government in the disaster recovery system. If enacted, states would be left to deal with more disasters on their own. For disasters that meet the threshold for federal assistance, these reforms could get funding out faster but reduce the amount of funding that states, communities, and survivors receive. 

The reduced disaster recovery funding that the Council recommends providing would exacerbate existing systemic biases. By folding private-sector performance mechanisms into public assistance funding, these reforms would provide the most funding to the communities that already have the greatest capacity to recover - already a longstanding problem with FEMA programs. The new IA program would ensure that wealthy households benefit the most from Individual Assistance by explicitly tying assistance amounts to home values. 

Notable Omissions
Beyond the new issues arising from these reforms, the suggested reforms fail to address central issues with the current FEMA system. Our national disaster recovery system was set up in the 1970s and is not well-suited to the current pace and severity of disasters or the current level of economic inequality. This reality was captured in the stakeholder feedback provided to the Council. Stakeholders, including emergency managers, governors, and survivors, decried the pace and bureaucratic complexity of FEMA’s programs, but they also agreed that FEMA was critical to a functioning disaster recovery system and that both state and local governments and survivors needed more help and not less.

The Council also missed an opportunity to recommend simple, common-sense reforms that FEMA has needed for decades. For example, there should be a single application that survivors fill out to assess eligibility for all federal disaster programs. Processes should be clear and well-communicated. Disparities in disaster recovery assistance levels based on race, ethnicity, political affiliation, or economic status should be identified and remedied in real time. Disaster funds should be flexible enough to handle extreme heat and cold weather events, as well as natural disasters. 

The Big Picture
The FEMA Review Council Report is a set of recommendations to the President. It does not have legal effect, and the most significant changes to federal programs would require Congressional action. But this report does present a specific vision of FEMA’s role; one in which FEMA has transferred a wide set of responsibilities to state and local governments, while simultaneously making significant cuts to federal funding for disaster response, recovery, mitigation, and non-disaster capacity. We are particularly concerned that the proposed changes to IA would serve to funnel more disaster recovery funding towards the wealthiest survivors with the greatest capacity to recover while slashing the assistance available to survivors overall.

As the Review Council has grabbed headlines, major changes have already occurred within FEMA. Without congressional action, the administration has transformed the agency through massive layoffs, shifts in funding and priorities, and delaying and denying federal disaster declarations. Regardless of how many of the Council’s recommendations are acted upon, we are witnessing an unprecedented shake up of the national disaster recovery system. 

¹ Forrest, P., & Theal, J. (2026, March 24). Strength of State Rainy Day Funds Declines as Budgets Tighten. https://www.pew.org/en/research-and-analysis/articles/2026/03/24/strength-of-state-rainy-day-funds-declines-as-budgets-tighten
² Ibid. 

³ See, e.g. Junia Howell and James R. Elliott, “Damages Done: The Longitudinal Impact of Natural Hazards on Wealth Inequality in the United States”. Social Problems, Oxford University Press (August 14, 2018). Available: https://academic.oup.com/socpro/advancearticle/doi/10.1093/socpro/spy016/5074453; Rebecca Hersher, “How Disaster Recovery Favors the Rich”, All Things Considered, National Public Radio (March 5, 2019). Available: https://www.npr.org/2019/03/05/688786177/how-federal-disaster-moneyfavors-the-rich; and Thomas Frank, “How FEMA helps white and rich Americans escape floods” POLICICO (May 27, 2022) Available: https://www.politico.com/news/2022/05/27/unfair-fema-climate-program-floods-00032080

⁴ What Are Local Governments’ Taxing Authorities? (n.d.). ITEP. Retrieved May 11, 2026, from https://itep.org/what-are-local-governments-taxing-authorities/

⁵ Randall, M. (2020, April 21). Census of Governments Illustrates Declining Aid to Localities, Other Trends in State and Local Finance | Tax Policy Center. Tax Policy Center. https://taxpolicycenter.org/taxvox/census-governments-illustrates-declining-aid-localities-other-trends-state-and-local-finance

⁶ Gruson, L. (1987, January 31). END OF FEDERAL REVENUE SHARING CREATING FINANCIAL CRISES IN MANY CITIES. The New York Times. https://www.nytimes.com/1987/01/31/us/end-of-federal-revenue-sharing-creating-financial-crises-in-many-cities.html

⁷ Randall, M. (2020, April 21). Census of Governments Illustrates Declining Aid to Localities, Other Trends in State and Local Finance | Tax Policy Center. Tax Policy Center. https://taxpolicycenter.org/taxvox/census-governments-illustrates-declining-aid-localities-other-trends-state-and-local-finance