American Flag Over Tornado Destruction

If your state or local government must deal with the devastating effects of a natural disaster, you’ll be glad you proactively planned for recovery grants.

Reducing risk

Five Steps to Proactive Disaster Recovery Grant Management for Governments

  • Eric Miller
  • Allison Slife
  • 8/1/2018

Natural disasters can hit with little to no warning and cause a lot of chaos. The same can be said for disaster recovery grants. State and local resources dry up quickly amid the devastation of a hurricane, earthquake, flood, or fire, and your government entity may suddenly find itself clamoring for federal funds to help restore operations and services. If disaster strikes, you can avoid the frenzied pursuit of recovery grants with some advance preparation.

Natural disasters prove to be an unpredictable burden

The National Oceanic and Atmospheric Administration (NOAA) estimates total damages from natural disasters in 2017 amounted to more than $300 billion in the United States alone. Organizations impacted by these natural disasters are increasingly relying on disaster recovery grants administered by the Federal Emergency Management Agency (FEMA) to rebuild.

A typical disaster recovery grant provides 75 percent of federal assistance, with the remaining 25 percent split among state and local resources. Disaster recovery grants are also available in the form of hazard mitigation, which can be awarded for reducing future disaster losses through proactive risk management measures.

Entities rush to this funding source to remedy the effects of a natural disaster, sometimes incurring costs before a grant agreement has been signed. And now the Department of Homeland Security’s Office of Inspector General is recommending FEMA incorporate more grant oversight and monitoring. These processes are cumbersome, and when you need funds in a hurry, a lack of preparation can slow your access to them.

Five tips for proactive disaster recovery grant management

You may have policies and procedures in place for all grant awards, but are you taking the same measures for these sudden occurrences?

Crafting proactive policies and procedures to deal with a crisis before it occurs will help you manage disaster recovery grants in a very trying time. It’s not enough to have a loose, high-level idea of what to do; you need specifics. Here are five of the most effective things you can do before, during, and after your entity enters into a disaster recovery grant.

1. Put a disaster recovery plan in place

A proactive policy should be created in consultation with citizens and board members and include:

  • A plan of action for coping with an outage in your information technology (IT) infrastructure
  • Alternative procedures for administering aid to the community, including mechanisms for tracking resources used
  • Specific action needs for entering into a disaster recovery grant, such as board approvals
  • A list of individuals responsible for approving expenditures under these grants
  • Procurement requirements for disaster recovery grants
  • Advance bids for recurring emergency items and on-call contracts to meet procurement requirements

With a documented plan to govern your decisions and actions amid a disaster, you can alleviate confusion and better handle the turbulent nature of these events. Training your people on your organization’s policies is highly recommended so that your team can implement the disaster recovery plan as smoothly as possible.

2. Track disaster recovery grant activities and expenses

Disaster recovery grants can have a long lifespan. You need to consider multiple ongoing projects; the breakout of federal, state, and local funding; and the timing of reimbursements. Track these grants separately from all of your entity’s other activities. Create new accounts within your general ledger for ease of tracking, and resist the urge to commingle the activity of these grants with established ledger accounts.

3. Designate a point person

Separate departments may handle different aspects of projects depending on the recovery efforts needed. But the decentralized nature of disaster recovery grants makes it important to have one individual within your finance department responsible for communicating with all other departments.

Build a process flow to ensure that:

  • All agreements entered into and signed contracts are routed to a single location
  • All invoices, expenditures, and revenues are accurately tracked and routed to the finance department and are entered into your general ledger

Involve the point person with the annual reporting of federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA). This will help him or her understand annual FEMA grant reporting requirements, as well as the recognition requirements designated by the Office of Management and Budget (OMB). Your point person will need to know how and when expenditures must be recorded and tracked for SEFA reporting.

4. Establish project close-out procedures

Build and document procedures to be taken upon completion of a project. Agreements and projects can span as much as four or five years or more — a time period in which personnel may come and go. Make sure you know how to handle turnover and transitions so that anyone on the project team, regardless of experience with your organization, can see a project through to its completion.

5. Read and understand all compliance requirements

Because disaster recovery grants utilize federal funds, there are strict compliance requirements. OMB and FEMA have documented compliance requirements specific to each disaster recovery grant. Ensure that all individuals working with disaster recovery grants read and understand them. This will help you be prepared for an external audit.

How we can help

CLA’s state and local government professionals can help organizations of all sizes prepare for unlikely but potentially devastating natural disasters by proactively managing disaster recovery grants. We can work with you to provide effective strategies for implementing grant procedures, reviewing policies, and other risk management consultations.