The future of the Federal Emergency Management Agency remains open for debate as another credit agency has a warning for reforms championed by the White House's FEMA Review Council.
"The Review Council's proposal would shift much of the funding-management and project-eligibility role to states, tribes, and territories and reduce FEMA's project-by-project review role," said KBRA.
"The state/local shift could give governments more flexibility and faster access to recovery funds, but it would also expose them to greater fiscal and administrative risk."
The quotes come from research published by KBRA on Monday that breaks down recommendations floated by the Review Council in May.
States trying to access delayed FEMA funds after a natural disaster are at risk of credit downgrades and higher borrowing costs.
The concept of reforming FEMA enjoys wide bipartisan support, and a bill has already been passed by the House Transportation and Infrastructure Committee.
The legislation involves eliminating the current reimbursement system and transitioning to a grant system that provides relief funds upfront.
At this point, there is no Senate version of a FEMA reform bill.
The Review Council's version of FEMA focuses more on setting up parametric formulas to determine how much money a disaster qualifies for and transferring federal funds to state and local governments for dispersal.
"FEMA is not the first responder, but rather a force multiplier standing shoulder to shoulder with states, tribes, and local governments to ensure rapid and effective recovery," said Department of Homeland Security Secretary Markwayne Mullin.
KBRA weighs the pros and cons of the Council's "RAPID" system that would cut FEMA's reimbursement rate to 50% from 75%.
According to KBRA, the new rules would require the states to "strengthen their own disaster reserves, insurance coverage, and contracting capacity."
Local governments would be tasked with establishing, "reliable documentation and compliance processes to receive state-administered funds."
"The potential benefit is that funding could move faster after qualifying disasters, but the tradeoff is that more fiscal and administrative risk could burden state and local governments," said KBRA.
Any kind of FEMA reform can't happen without a unified act of Congress. "The Council report did not change the law," said KBRA. "Rather, the report serves as the administration's reform blueprint for FEMA."
KBRA's concerns are one in a chorus of doubt expressed by the public power sector, and the National Association of Counties.
S&P Global Ratings has also expressed concerns about changing "the federal-state funding partnership related to disaster preparedness."
FEMA is currently being led by Robert Fenton Jr. who is serving as the Senior Official Performing the Duties of Administrator.
Cameron Hamilton has been nominated as the permanent Administrator and was approved last month via an 8-4 vote by the Homeland Security and Governmental Affairs Committee.
Hamilton needs approval from the entire Senate to seal the deal before the August recess begins at the end of this week.
If he's not approved by Friday, he'll have to wait until mid-September.
Whoever is in charge of the agency needs to deal with a
Hurricane season, which is typically a busy time for FEMA, runs from June 1 to Nov. 30.
