Article 23: Management Costs
(Category: debris-removal)
Article Summary
The Disaster Recovery Reform Act of 2018 (DRRA) fundamentally reshaped how administrative expenses are reimbursed by expanding the definition of Management Costs to include both direct and indirect administrative expenses. Under Section 1215 of the DRRA, FEMA replaced legacy administrative tracks with a streamlined, percentage-based reimbursement framework designed to provide state and local governments with greater financial flexibility.
The statutory reimbursement caps are established as follows:
- Public Assistance (PA) Management Costs: Reimbursed up to a maximum of 12% of the total disaster grant award. Of this total, up to 7% is allocated for the primary Recipient (the State), and up to 5% is allocated directly to the Subrecipient (the local applicant).
- Hazard Mitigation Grant Program (HMGP) Management Costs: Reimbursed up to a maximum of 15% of the total mitigation award. The Recipient may utilize up to 10%, while the Subrecipient is allocated 5% for administrative costs.
Standard Operating Procedures (SOPs) mandate that recipients and subrecipients formally select and notify FEMA of their chosen management cost options within strict disaster notification windows to ensure uniform documentation, verification, and processing.
Five Key Takeaways for CTA FEMA Compliance
- Budget for the 5% Subrecipient Reimbursement Cap: Plan and track your local internal administrative, tracking, and grant management activities around the strict 5% direct subrecipient cap for both PA and HMGP grants.
- Combine Direct and Indirect Administrative Expenses: Aggregate both direct project management hours and indirect administrative overhead under the unified management cost umbrella as authorized by DRRA Section 1215.
- Observe Formal Option Selection Deadlines: Ensure your agency files its formal management cost option selection within the strict deadlines mandated by FEMA clarify memos post-declaration.
- Implement the Management Cost SOP Framework: Set up financial tracking repositories that mirror the uniform documentation and processing rules outlined in the Public Assistance Management Costs SOP.
- Isolate Management Costs from Direct Project Worksheets: Keep administrative management costs operationally separated from physical project worksheets to avoid duplicate claims and ensure compliance during closeout audits.
