Recent evaluations have highlighted significant financial mismanagement within the Federal Emergency Management Agency (FEMA), leading to a series of policy reforms aimed at enhancing fiscal responsibility and operational efficiency. An internal document from May 2025 revealed that FEMA’s preparations for the upcoming hurricane season were severely hindered by staff reductions and low morale. Approximately one-third of the agency’s workforce—around 2,000 full-time employees—departed due to terminations and voluntary exits, aligning with the administration’s initiative to downsize federal operations. This reduction has disrupted training programs for local emergency managers and impeded coordination with state authorities. In response, the administration has proposed shifting more disaster response responsibilities to state governments, with discussions even considering the potential dissolution of FEMA. Acting FEMA Administrator David Richardson acknowledged these challenges and announced plans to narrow the agency’s operations to align strictly with legal mandates. He also indicated a forthcoming increase in the state’s cost burden for disaster response, transitioning from the current 75/25 federal-state split to a 50/50 arrangement. Richardson emphasized the need to inform governors of these impending changes and committed to assisting states financially when necessary, signaling a more stringent approach to implementing reforms within the agency.
Further scrutiny has uncovered that FEMA prematurely obligated $478 million in Public Assistance funds from fiscal years 2017 through 2019. The agency allocated funds for 83 projects without ensuring that subrecipients required the funding within 180 days, making them eligible for incremental obligation under the Strategic Funds Management (SFM) initiative. This oversight occurred because FEMA did not provide adequate supervision to its regional offices, relying on their decisions without sufficient supporting documentation. Consequently, there is an increased risk of over-obligation, undermining the intent of SFM to better manage resources in the Disaster Relief Fund for current and future disaster funding needs.
In Louisiana, inadequate FEMA oversight delayed the completion and closeout of Public Assistance projects. The state had a backlog of 600 incomplete projects beyond their approved completion dates, attributed to the state’s failure to conduct regular site visits to assess ongoing projects, identify and resolve issues promptly, or ensure timely project completion. Additionally, FEMA had a backlog of 2,150 completed grant projects it had not closed out due to insufficient oversight of its regional staff. As of the fourth quarter of 2018, this combined backlog represented nearly $6.6 billion in obligated funds. By May 2020, FEMA had reduced the backlog, but the significant number of remaining projects could lead to delays in reimbursing applicants and deobligating funds that could be better utilized.
The Department of Homeland Security’s Office of Inspector General (OIG) reported that FEMA’s insufficient oversight led to over $8.1 billion in questioned COVID-19 grant costs and at least $1.5 billion in over-obligations. The agency failed to validate cost estimates or determine the allowability of billions in expended funds. For instance, a $1.1 billion grant was supported by a single sheet of paper without itemized costs. FEMA’s streamlined reimbursement process during the pandemic, intended to expedite aid, resulted in less oversight and increased fraudulent spending. In a sample of 20 other FEMA grants, the OIG found approximately $32.8 million in improper payments. These findings underscore the need for stronger internal controls and stricter adherence to financial oversight protocols when managing disaster response funds.
In response to these issues, the administration has initiated a series of reforms aimed at enhancing FEMA’s fiscal responsibility and operational efficiency. These measures include increasing the state’s cost burden for disaster response, narrowing the agency’s operations to align strictly with legal mandates, and improving oversight of regional offices to ensure proper management of Public Assistance funds. Additionally, FEMA is working to strengthen internal controls and adhere more strictly to financial oversight protocols when managing disaster response funds. These reforms are expected to address the identified inefficiencies and ensure that FEMA can effectively fulfill its mission in the future.
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Deborah Cole reports on climate regulations, environmental mandates, and disaster response. She holds a degree in environmental studies from the University of Florida and worked in state-level emergency management before joining the press. Her reporting follows how policy meets practice across agencies, municipalities, and emergency zones.