FEMA Delays Reimbursement Payments to States for COVID-19-Related Expenses; Halts Emergency Preparedness Grants to “Account for Deportations”

By Oliver Porter, NLIHC DHR Intern and Noah Patton, NLIHC Director of Disaster Recovery 

In a sharp break from standard practice, Trump’s FEMA recently withheld $11 billion in reimbursements to states for expenses related to the pandemic, E&E News reports. This news was disclosed in a September 15 report about the status of the Disaster Relief Fund (DRF). Within one of the report’s many appendices, it states that the obligated funds in question will be “shifted to fiscal year 2026.” This withholding of $11 billion squeezes state budgets and potentially reduces their ability to effectively respond to disasters. FEMA is hoping to use future disaster funding allocations to meet this funding obligation, deepening the need for substantial allocations to the DRF over the next year.    

Under the first Trump Administration, FEMA was tasked with reimbursing states for emergency expenses related to the COVID-19 pandemic, including hotel sheltering for individuals experiencing homelessness and those with a chronic condition living in group settings. FEMA initially projected in 2020 that agency reimbursements would amount to over $17 billion. However, the total amount of reimbursements climbed to $140 billion. 

FEMA’s decision took place against the backdrop of Office of Management and Budget Director Russ Vought’s attempts to prevent the DRF from running out of money before the fiscal year ended on September 30. As it stands, the DRF had $7.18 billion at the end of September, per the report. However, if FEMA gets congressional approval for its proposed 2026 budget after the government reopens, then that $11 billion would reduce the agency’s budget to just $15.5 billion. FEMA has spent on average $50 billion annually on new disasters from 2020 to 2024, so this would severely limit their ability to provide disaster aid.

This is in addition to cancellations of other FEMA grant awards announced by the agency over the last several weeks. These specific delays dealt with immigration enforcement provisions in DHS’s terms and conditions. The agency recently halted distribution of Emergency Management Performance Grants to states (a significant sum of money—last year's grants amounted to over $300 million). FEMA requires states to first verify their population totals to account for any population decreases caused by ICE’s mass deportations. FEMA asserts that they will also be reviewing states’ methodologies for performing population recounts. Historically, FEMA relies on census data to determine allocation of population-based grants. Multiple FEMA officials explained that this policy is without precedent. 

These unusual funding decisions close out a fiscal year that saw incredible reductions in FEMA’s capabilities and historic delays in the disbursement of funds to state and local partners. While court cases will continue to challenge these decisions, bipartisan disaster policy reforms are more important than ever.