Article 1: Examples of Common Ineligible Costs (1 of 2)
(Category: costs-eligilbilty)
Article Summary
The Stafford Act limits Public Assistance funding strictly to work required as a direct result of a declared incident; it does not cover all peripheral economic losses or administrative costs. This article outlines critical categories of Ineligible Costs:
- Duplication of Benefits: FEMA is legally barred from duplicating financial assistance from other sources. Grants are reduced or de-obligated by the amount of any insurance proceeds received. For non-Federal grants and private cash donations, duplication depends on whether the funds were given for an identical, otherwise eligible purpose.
- Loss of Revenue: Financial drops resulting from an incident are completely non-reimbursable. This includes hospitals releasing non-critical patients or losing capacity due to physical damage, states waiving tolls or ferry fees to expedite public evacuations, utility system shutdowns, and commercial event cancellations caused by a venue being repurposed for emergency sheltering.
- Loss of Useful Service Life: FEMA will not fund the projected reduction in an asset's operational lifespan. For instance, if a public road is submerged under floodwaters for a prolonged period, an applicant cannot claim funding for anticipated long-term structural degradation caused by that saturation.
- Tax Assessments: Expenses associated with conducting real property tax re-assessments following a disaster are completely ineligible, as they do not address an immediate safety hazard or connect to the physical restoration of an eligible facility.
Increased Operating Costs: General cost increases for running a facility or delivering a public service post-disaster are ineligible. Short-term exceptions apply only when extra operating expenses are directly required to accomplish specific emergency health and safety tasks under Category B (Emergency Protective Measures).
Five Key Takeaways for CTA FEMA Compliance
- Deduct Insurance and Purpose-Specific Donations: Deduct all commercial insurance settlements from your project worksheets upfront, and review non-federal grants to ensure they do not duplicate Stafford Act funds for the same scope of work.
- Omit Revenue Omissions and Fee Waivers: Completely exclude any claims for lost operational income, such as waived transit fares, canceled facility rentals, or suspended utility billing, from your grant applications.
- Focus Claims Exclusively on Physical Restoration: Do not attempt to calculate or claim financial losses for a shortened structural lifespan (such as water-weakened pavement); project worksheets must focus entirely on discrete, immediate physical repairs.
- Isolate Post-Disaster Administrative Tasks: Keep local administrative expenses—such as real property tax re-assessments—completely separate from disaster claims, as they do not qualify as permanent restoration or emergency safety work.
- Tie Operating Increases Directly to Category B Tasks: If claiming increased facility operating costs (such as emergency utility utility increases), provide meticulous documentation proving they were short-term, exigent, and explicitly dedicated to executing emergency health and safety tasks.
