Strategic Funds Management is FEMA’s process for obligating assistance in increments based on the recipient’s and/or subrecipient’s schedule to execute the work, including management costs. Strategic funds management does not change the activity eligibility process but is a method of approving work and providing assistance as needed.
Strategic funds management:
- Works as a tool that FEMA uses to manage funds more efficiently.
- Promotes fiscal responsibility and better project management by incrementally assisting activities as each project milestone is reached.
- Allows FEMA to reduce the number of unexpended obligations over time.
- Enhances FEMA’s grants management capabilities consistent with appropriations and the Budget Control Act of 2011.[220]
- Helps to avoid restrictions on hazard mitigation assistance that may occur under Immediate Needs Funding. Immediate Needs Funding is implemented to preserve assistance in the Disaster Relief Fund for the immediate needs of current or future disasters.
If a subaward is appropriate for strategic funds management, FEMA and the recipient/subrecipient will review the budget and work schedule to ensure the activity supports incremental obligation. Obligations are executed in increments, based on the activity meeting an established milestone schedule, until the scope of work is completed.
Strategic funds management should be used if one of the following is true:
- The federal share of a subapplication/subaward is greater than $1 million and the recipient/subrecipient does not need assistance for more than 180 calendar days from the time the subaward is ready for obligation.
- A recipient’s management costs application is greater than $500,000.
- A subrecipient’s management costs are greater than $25,000.
If strategic funds management is required, FEMA will obligate assistance for mitigation activities based on the schedule included with the subapplication unless contractual agreements require additional assistance. Management costs obligations will cover no more than one year unless contractual agreements require additional assistance. The recipient is responsible for notifying the subrecipient that assistance is available and for distributing the assistance to the appropriate subrecipient. Assistance that FEMA has obligated is available to the recipient to pass through to the appropriate subrecipient.