Hazard Mitigation Grant Program

Changes to Management Costs under 44 CFR Parts 206 & 207

Frequently Asked Questions

On November 13, 2007, 44 CFR Part 206 was amended and Part 207 was
published that describe how FEMA determines the amount of funds that it
will contribute for management costs for the Hazard Mitigation Grant
Program for a declared major disaster.   FEMA received several comments
to the interim rule that it will address in the upcoming final rule.  In
addition, FEMA regional offices have been receiving questions regarding
implementation of the rule that is currently in effect.  To answer those
questions, provide implementation guidance, and ensure that the guidance
is uniform and available to the public at large, FEMA provides the
following FAQ’s: 

Q:  What is the effect of this rulemaking?

A:  The sliding scale used to calculate the Hazard Mitigation Grant
Program (HMGP) Grantee and subgrantee administrative costs will be
eliminated for disasters declared after November 13, 2007.  In addition,
funding for State Management Costs and indirect costs provided to
grantees will be eliminated.  Instead, administrative costs, management
costs and indirect costs will be combined into a single Management Cost
rate.  A flat rate of 4.89% of the projected Federal funding for HMGP
will be used to calculate Management Costs available to States and
Federally-recognized Indian Tribal Governments acting as grantees. 
Management Costs under this rulemaking include any indirect costs,
administrative expenses, and any other expenses not directly chargeable
to a specific project that are reasonably incurred by a grantee or
subgrantee in the administration and management of the HMGP.  

The sliding scale, State Management Costs, and grantee indirect costs
will continue to be available for disasters declared prior to November
13, 2007; however, funding for such costs will be available only for a
maximum of eight years from the date of major disaster declaration.

Q:  What are the cost share requirements?

A:  Management Costs provided to grantees will be 100% Federally-funded.
 However, the percentage used to determine Management Costs will be
applied only to the projected Federal share of the program; FEMA expects
that grantees would reasonably contribute at least a comparable amount
of Management Cost funds to the non-Federal share of the program. 
Management Cost funding is provided outside the Federal assistance limit
for HMGP projects.   

Q:  How do grantees apply for Management Costs?

A:  Grantees will apply for Management Costs using the HMGP project
narrative.  State Administrative Plans (SAPs) first must be revised to
address how a reasonable percentage or amount of pass through funds will
be made available to subgrantees for Management Costs. The basis,
criteria or formula for equitable distribution is determined by the
State and must be included in the SAP.  Grantees must have a
FEMA-approved SAP before they can apply for Management Costs.  FEMA
encourages all States to update their SAPs as quickly as possible to
reflect these new HMGP requirements.

Q:  When and how is the initial lock-in determined?

A:  FEMA will provide the initial lock-in of the amount available for
HMGP Management Costs based on the projections of the Federal share of
HMGP assistance no earlier than 30 days and no later than 35 days from
the disaster declaration date.  The FEMA Chief Financial Officer (CFO)
will supply this data to the Regional Office and the Joint Field Office
(JFO). 

Q:  How are Management Costs initially obligated after a disaster
declaration?

A:  After the 30- to 35-day lock-in, grantees can request and FEMA must
provide up to 25% of the estimated available Management Costs without
supporting documentation as long as they have a FEMA-approved SAP that
includes a reasonable percentage or amount of pass through funds for
Management Costs to the subgrantees.  The initial obligation will be
processed by the Regional Office or the JFO.  

Q: When do grantees have to submit documentation?

A:  The grantee has up to 120 days from the disaster declaration date to
submit documentation for eligible costs and activities based on the
projected lock-in amount.  The FEMA Regional Office will work with the
grantee to accept or reject the State’s documentation within 30 days
of receiving it.  If rejected, the grantee will have 30 days to resubmit
the documentation for reconsideration and approval.

Q: When and how can grantees request interim obligations?

A:  Requests to the Regional Administrator for an interim obligation can
be made at the 6-month lock-in.  Requests for an interim obligation must
be reviewed and approved by the CFO and must justify a bona fide need
for the additional obligation.  The grantee should keep in mind that
only a set amount of Management Costs funds will be provided and that
the grantee will need to ensure that HMGP grant management and
administration activities will be able to be performed for the life of
the program with that set amount of funding.  The CFO can approve up to
an additional 10% of the estimated 6-month lock-in amount.  Once the CFO
approves the interim obligation, the Regional Office will obligate the
funds to the State.    

Q: Can the estimated amount available for HMGP Management Costs change
over the 12 month period after the disaster declaration date?

A:  The amount of HMGP funding available for Management Costs may
increase or decrease at both the 6-month and the 12-month lock-in.  The
CFO will determine the final lock-in amount for Management Costs 12
months after the disaster declaration date or after the determination of
the final HMGP lock-in ceiling, whichever is later.  At the 12-month
lock-in, the grantee must submit its final Management Costs funding
request, with any document revisions to the Region Administrator.  The
Regional Office will obligate the remainder of the lock-in amount.

Q: Is there a Cap on the amount of Management Costs funds that grantees
may receive per disaster?

A:  The amount provided to a grantee for Management Costs for a single
disaster declaration will not exceed $20 million.  

Q:  Are there record keeping requirements?

A:   Grantees and subgrantees must keep records of all expenditures for
Management Costs.  No later than November 13, 2010, FEMA will review
expenditures to determine if the 4.89 % is a reasonable amount for
management costs.

