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Part 5 of 6 in a series that focuses on lessons learned and leading practices in COVID-19 disaster recovery.
In brief
- When FEMA declares a disaster, this allows for entities to apply for Public Assistance (PA).
- FEMA may pay for a Recipient’s administrative costs incurred.
As discussed in Part 1, Part 2, Part 3 and Part 4, there are many areas to the COVID-19 disaster recovery. Eligible applicants throughout the country continue to be impacted financially, physically and mentally as a result of COVID-19, hurricanes, wildfires and other disasters. When the Federal Emergency Management Agency (FEMA) has declared a major disaster, this allows for eligible entities to apply for public assistance (PA) reimbursements for eligible permanent and emergency work as a result of the incident. However, as a steward of receiving federal grant funding, along comes the responsibility to use these funds in compliance with grant requirements and maintain the audit trail to prove it. If not, applicants will risk the potential claw back of federal funding received. This increased administrative burden is unplanned and often unstaffed, as employees still need to fulfill their normal duties.
Download the full article on: Public assistance grants — easing the administrative burden
We help clients navigate unprecedented events and provide solutions to help achieve their financial recovery goals.
Kara Yost
Senior manager, Insurance & Federal Claims Services, Ernst & Young LLP
The good news is FEMA will pay for a recipient’s (such as a State) or a subrecipient’s (such as a hospital, school or county) indirect costs and direct administrative costs, and other administrative expenses that are reasonably incurred while administering a grant or subgrant award. Management activities can be performed by an Applicant’s own employees or an external consultant. Often, many applicants look to external contractor support to supplement their bandwidth to oversee the influx of grant funding. Some example activities and costs may include:
- Meetings with FEMA regarding the public assistance program or overall reimbursement process
- Meetings with FEMA regarding specific project worksheets
- Collecting, copying, filing or submitting documents to support a claim
- Reviewing and approving project worksheets
- Requesting reimbursement of public assistance funds
- Preparing correspondence
- Project closeout activities
- Training
- Travel expenses
- Office supplies, equipment or space
Summary
Natural disasters can create financial and administrative burden that may be addressed through applying for FEMA PA. This can provide options to seek reimbursement for reasonable administrative expenses and potentially seeking eligible external assistance for management of the funds. Some important matters to consider are:
- Does your organization have the capacity to track management costs?
- Does your organization have the capacity to coordinate with FEMA and ability to access funding efficiently?
- Is there a plan in place to frequently submit reimbursements with the adequate documentation?
How EY can help
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EY Insurance & Federal Claims Services teams help clients with disaster assistance through federal disaster recovery grants and insurance claims services.
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