This bill amends section 324 of the Stafford Act to let states, Tribes, and territories use any excess funds that remain for management costs to support other disaster recovery efforts. It defines what counts as excess funds, designates who may receive them, and specifies eligible uses such as capacity building and ongoing management costs tied to major disasters, emergencies, preparedness measures, and mitigation activities.
The legislation also creates a five-year window for using these funds, requires a GAO study within 180 days, and states that no new funds are authorized to carry out these amendments.
At a Glance
What It Does
The act retools how management costs are handled by disaster grants, allowing excess funds to be redirected to capacity-building and management activities for other disasters. It restructures the relevant sections and creates a defined definition of excess funds.
Who It Affects
State, Tribal, and Territorial emergency management programs that receive disaster relief grants, plus grantees and subgrantees under related sections (403, 404, 406, 407, 502).
Why It Matters
This increases flexibility to close recovery projects more efficiently and possibly scale up recovery efforts, but it also shifts administrative responsibilities and raises questions about oversight and proper use of funds.
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What This Bill Actually Does
The Disaster Management Costs Modernization Act changes how disaster grant funds designated for management costs can be used after a project closes. It introduces a clear definition of “excess funds for management costs” as the difference between the authorized management costs and what was actually spent when a grant ends.
The President would be able to provide these excess funds to grantees and subgrantees under certain disaster grant programs to cover management costs and to support activities that build capacity to prepare for, recover from, or mitigate major disasters, emergencies, preparedness measures, and specific mitigation activities. Importantly, those funds would remain available to the recipient for up to five years.
The Act applies to new major disaster or emergency declarations after enactment and does not authorize additional funding beyond existing appropriation levels. A GAO study is required within 180 days to assess how management costs were used historically and how the new flexibility should be evaluated in practice.
The Five Things You Need to Know
The bill defines ‘excess funds for management costs’ as the difference between authorized management costs and the costs actually expended when the grant is closed.
, The President may make excess management cost funds available to grantees or subgrantees under specified disaster grant programs (sections 403, 404, 406, 407, 502).
The funds can be used for capacity-building activities and for ongoing management costs related to major disasters, emergencies, preparedness measures, or mitigation activities listed in the statute.
Excess funds remain available for five years after being made available to the recipient; no new funds are authorized to carry out these amendments.
Section-by-Section Breakdown
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Reorganization of subparagraphs governing management cost rates
The bill reorganizes the language around ‘rates’ for management costs by redesignating subparagraphs and inserting new framing that points to excess funds as the key new resource. This sets the stage for a separate subsection that defines excess funds and their permissible uses, shifting how funds are tracked and allocated across disaster grants.
Definition and accessibility of excess funds
This new subsection defines ‘excess funds for management costs’ as the difference between authorized management costs and the actual expenditures at grant closure. It then authorizes the President to make those excess funds available to grantees or subgrantees for specified disaster-related purposes, and it clarifies that these funds can be used for the range of activities listed in the bill.
Available to grantees and subgrantees
Excess funds may be made available to grantees or subgrantees receiving financial assistance under sections 403, 404, 406, 407, or 502 of the Stafford Act. The provision creates a formal mechanism for reallocating funds in a way that supports ongoing recovery and preparedness work rather than being tied strictly to the original grant’s final reporting.
Permitted uses of excess funds
Excess funds may be used for capacity-building and management costs associated with any major disaster, emergency, disaster preparedness measure, or mitigation activity authorized under the referenced sections. The clause enumerates the broad categories to ensure flexibility while maintaining a policy focus on building resilience and sustaining recovery activities.
Five-year availability window
Funds made available under this subsection remain accessible for up to five years from the date they are provided to the grantee or subgrantee. This creates a finite but extended period during which agencies can reallocate funds to meet evolving recovery and mitigation needs.
Applicability to new grants
The amendments apply to grant awards for major disasters or emergencies declared on or after enactment and funded with appropriations made after enactment. This ensures the policy applies to fresh recovery cycles while not retroactively altering older grants.
GAO review and reporting
Not later than 180 days after enactment, the Comptroller General must report to the designated committees on how management costs have been used under the Stafford Act, the adequacy of the existing framework, and recommendations for implementing the new excess-funds mechanism.
No new appropriations
The act makes clear that no additional funds are authorized to carry out these amendments, meaning program administrators must work within current appropriation levels while utilizing excess funds in approved grants.
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Explore Government in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- State emergency management agencies gain a new source of flexible funds to close recovery projects while expanding capacity for ongoing operations.
Who Bears the Cost
- Grantees and subgrantees face new administrative requirements to track, report on, and justify the use of excess funds.
Key Issues
The Core Tension
The central dilemma is balancing flexible use of excess management funds to accelerate recovery with the need for strong oversight and avoidance of funds being diverted from immediate relief to administrative purposes.
The bill adds flexibility by allowing recovery funds to be reallocated for management and capacity-building activities, but it also raises concerns about how funds are pooled, tracked, and audited. Because no new money is appropriated, agencies must manage within existing budgets, which could concentrate administrative effort on compliance rather than direct relief.
The GAO review is intended to provide a check on how the new mechanism performs in practice and to identify any unintended consequences or implementation bottlenecks.
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