A.9. HMGP: Management Costs

Management costs are indirect costs, direct administrative costs or other administrative expenses associated with a specific project or mitigation activity. The amounts, allowable uses, and procedures for HMGP management costs are established in Section 324 of the Stafford Act,^[293] as amended by Section 1215 of the Disaster Recovery Reform Act of 2018.^[294] For more information on eligible management costs activities, refer to Part 13.

Management costs are provided outside of, and separate from, the HMGP ceiling amount. The total allowable management costs are up to 15%, of which up to 10% may be used by the recipient and up to 5% by the subrecipient. The subrecipient cannot request more than five percent of the total amount of the grant subaward. FEMA will obligate management cost assistance applied for by recipients and subrecipients in accordance with strategic funds management. There is no additional cost share requirement for HMGP management costs. For the recipient management cost calculation, the “total amount of the HMGP award” means the total amount of contributions based on applications submitted when the HMGP application period closes or when the total HMGP ceiling is determined, whichever is later. The total amount of the HMGP award includes the 75% federal share plus the required 25% non-federal share. In cases where the recipient submits subapplications totaling more than the HMGP ceiling, FEMA will only calculate management costs on subapplications amount up to the final HMGP ceiling amount. Figure 10 highlights how HMGP management costs are calculated.

The recipient and subrecipients will be reimbursed for actual management costs incurred. All assistance exceeding the incurred costs will be returned to FEMA.

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FEMA will establish the amount of assistance that it will initially make available for management costs based on point-in-time HMGP assistance projections. FEMA will provide preliminary management costs—the 30-day estimate—no sooner than 35 calendar days after the date of the major disaster declaration. This estimate is developed from the Disaster Projection Report and is based on the HMGP ceiling amount. FEMA will revise the estimated amount at six months. FEMA will determine the total management costs estimate 12 months after the date of the major disaster declaration or after determination of the total HMGP grant award, whichever is later.

Recipients cannot receive an additional 5% for management costs if also acting as a subrecipient. Management costs cannot be duplicated. However, other state and territorial agencies (other than the agency designated in the award agreement) who submit subapplications may apply for subrecipient management costs.

Additional information regarding specific management costs activities can be found in Part 13.

Upon receipt of the initial 30-day management costs estimate, recipients with a FEMA-approved enhanced mitigation plan and who also have a Program Administration by States (PAS) designation may apply to FEMA for 35% of the estimated amount(s). Other recipients may apply to FEMA for 25% of the estimated amount(s).

If the six-month management costs estimate increases beyond the 30-day estimate, and if the recipient can justify a need for additional management costs before the HMGP ceiling is established, the recipient may apply for available assistance. A recipient with an enhanced mitigation plan who also has a PAS designation may apply for 75% of the available or remaining recipient management costs. Other recipients may apply for 50% of the available or remaining recipient management costs.

Recipients may apply to FEMA for an adjustment in available assistance based on the 30-day or six-month estimates—that is, if they need management costs more than the 30-day (35/25% ) and six-month (75/50% ) percentage estimates. This option is intended for recipients that either do not have sufficient capacity because of lack of assistance, staffing or other necessary expertise to satisfy HMGP requirements or that have experienced significant disruption from a declared disaster or other event that impacts their ability to complete HMGP activities.

Recipients must apply to FEMA for an adjustment, provide justification that they need an exception, and complete one of the following:

• Provide a management plan that outlines how they will build state or tribal workforce proficiency and experience in grants management, mitigation planning or application review. This option is only available to recipients for whom FEMA has determined the degree of risk in making a federal award to and requires that special conditions be attached to the award according to 2 CFR § 200.206.
• Enter into a PAS agreement if they meet program requirements.

The recipient is eligible to apply for the total management costs award subject to certain withholdings 12 months after the major disaster declaration.

FEMA will provide management costs for subrecipients (through the recipient) upon the agency’s approval of each subaward, up to 5% of each project cost. Subrecipients must meet application and submission requirements.

If the recipient does not fully apply for the HMGP ceiling, FEMA must adjust the amount of available or obligated management costs based on the total amount of subapplications submitted by the end of the application period. If the HMGP ceiling is adjusted after the application period has closed, FEMA may provide additional management costs based on budget amendments applied to existing subapplications.

Regardless of when subawards are obligated, if the total amount of the award is adjusted for any reason, FEMA will de-obligate management costs that exceed the 15% cap (10% for recipient and 5% for subrecipient) based on updated calculations at the end of the application period or if the HMGP ceiling is adjusted, whichever is later.