Disaster Aid Groups Can Now Keep Unspent Management Funds for Future Preparedness

The new Disaster Management Costs Modernization Act is a straight-up administrative tweak, but it’s one that could make a real difference the next time a major storm or emergency hits your town. Simply put, this bill changes how federal disaster aid recipients—think state agencies, local governments, or non-profits—handle money set aside for administrative costs that they don't end up spending.

The Fine Print on Leftover Funds

Right now, if a county gets a grant after a flood and is allocated $100,000 for “management costs” (things like payroll, audits, and paperwork) but only spends $70,000, that extra $30,000 usually gets returned to the federal government when the grant closes out. This Act flips that script. Under Section 2, the President can now authorize the organization to keep those “excess funds for management costs.” This is a big deal because it means efficiency is rewarded, not penalized.

What can they do with the savings? They can’t just throw a party. The funds must be reinvested into future disaster work. Specifically, the money can be used to build up the organization’s ability to prepare for, recover from, or lessen the impact of a future disaster—or to cover management costs for any other ongoing preparedness or mitigation effort. Think of it as a resilience savings account. If a city saves $50,000 on the administrative side of one disaster, they can now use that money over the next five years to buy better emergency communication equipment or update their flood maps. This is a clear win for long-term planning, as it takes money that would otherwise go back to the Treasury and puts it directly into local resilience efforts.

The Real-World Impact on Your Community

This change applies to grants issued for disasters declared after the bill becomes law. For communities constantly dealing with severe weather—coastal towns, areas prone to wildfires, or regions with aging infrastructure—this is a powerful incentive. Imagine a small rural county that manages its recovery efficiently. Instead of handing back $20,000, they can now use that money to finally hire a part-time grant writer dedicated to securing mitigation funds, which could significantly reduce the damage from the next event. The bill essentially allows local governments to turn a temporary recovery effort into a long-term investment in safety.

However, there’s a small catch: the President has to authorize the retention of these funds, which introduces a layer of executive discretion that isn't strictly defined in the bill. While the intent is clearly to promote efficiency, the application might not be uniform across all disaster declarations.

Making Sure the Numbers Add Up

The bill also includes a critical check-and-balance via the Government Accountability Office (GAO). Section 2 mandates that the GAO study the current management cost percentages to see if they are appropriate. They have 180 days to figure out if the current administrative allowances are too high, too low, or just right. This review is important because it ensures that the federal government isn't simply over-allocating funds for administrative costs just so grantees can save and reinvest them later. The GAO will look back at the past five years to audit how management money was used and how long past disasters took to resolve, providing necessary data to keep the system honest and effective.