D.1. Strategic Funds Management Procedures

This section delineates the procedures for strategic funds management.

Applicants and subapplicants are encouraged to consider FEMA’s use of strategic funds management early in the decision-making process to help facilitate the development of a feasible activity budget and appropriate activity milestones. If FEMA determines an activity is suitable for strategic funds management (such as HMA activities with a $1 million federal share or greater), the subrecipient should prepare activity budgets so that line items for logical segments of work can be selected for each obligation. This will avoid having to rework the budget later when FEMA determines the activity required strategic funds management. The work schedule should include the time frame in which subsequent obligations are anticipated.

Recipients, subrecipients and FEMA staff must evaluate all HMA activities with a $1 million federal share or greater to determine whether the activity is a candidate for strategic funds management. This evaluation will allow FEMA to approve and obligate only the assistance drawn down by the recipient within a reasonable period.

FEMA recognizes that certain activities may not be suitable for strategic funds management. The following mitigation activities are not required to use strategic funds management:

• Mitigation activities that require an approved source of assistance (full obligation) by the state, local, tribal and territorial procurement requirements for the applicant to enter procurement and contracting.
• Mitigation activities for which most of the assistance will be disbursed within 180 calendar days.

If strategic funds management is not used on a mitigation activity with a federal share of $1 million or greater, the recipient must provide proper justification to FEMA. While FEMA may decide not to apply strategic funds management to the mitigation activity, management costs may still be incrementally obligated.

If a mitigation activity is selected for strategic funds management, FEMA will notify the recipient if the subaward needs to be revised to facilitate strategic funds management by adjusting budgets and schedules accordingly. The recipient must ensure the budget reflects line items that support incremental assistance based on the proposed work schedule. The recipient should coordinate with the subrecipient to revise the subaward to support strategic funds management.

FEMA and the recipient must capture the proposed obligation schedule in the electronic application system.

If any of the strategic funds management award increments are $1 million federal share or greater, the large project notification process is required. FEMA must complete the large project notification process prior to the obligation and approval of the initial strategic funds management increment.

FEMA verifies the need for subsequent obligations through quarterly reporting. Subsequent obligations are based on subaward progress and milestones as reflected in the quarterly reports. If a recipient is not on target for scheduled assistance drawdowns or subaward completion requirements, FEMA will work with the recipient to revise the award dates and update the spend plan. For more information about spend plans, refer to Part 10.

The recipient notifies FEMA in writing (email or other correspondence) when they require assistance to meet the activity schedule. Recipients should request the release of the next increment of assistance a minimum of 30 calendar days before they need the assistance. The 30-day minimum allows FEMA and the recipient time to coordinate the spend plan and any strategic funds management schedule adjustments. Additional obligations are processed through electronic application systems pursuant to the normal course of activity implementation and subsequent assistance.

FEMA regional offices are encouraged to share strategic funds management reports with recipients for ongoing coordination.

The decision to use strategic funds management, including the timing and execution of the obligation action by FEMA, is not subject to appeal.