$11 Billion in FEMA Disaster Reimbursements Are Stuck in Limbo — and Communities Are Running Out of Time

In El Dorado County, California, a wildfire resilience officer has spent the past year telling residents to clear brush, harden their homes, and prepare for the next fire season. The federal grant that was supposed to fund the work — a FEMA Hazard Mitigation award for the Weber Creek corridor — has not moved in over 12 months. "We're educating our communities on the importance of this," she told NPR, "but then there's no resources for them."

She is not alone. Across 45 states, FEMA has delayed roughly $11 billion in disaster reimbursements that were supposed to flow in fiscal year 2025. The payments were shifted to fiscal year 2026 with no firm date for release — and the agency's Disaster Relief Fund, the account that pays for everything from hurricane cleanup to wildfire debris removal, is now approaching depletion.

As Granted News reported, the backlog now exceeds $10 billion in outstanding obligations. But the problem is deeper than a single number — it is a cascading failure across multiple FEMA programs that is leaving communities physically unprotected heading into hurricane and wildfire season.

How We Got Here

The reimbursement crisis has roots in three overlapping problems.

First, COVID-19 consumed far more FEMA money than anyone anticipated. The agency has spent approximately $140 billion on pandemic-related Public Assistance — orders of magnitude beyond original projections. Many of the delayed payments are the tail end of those pandemic obligations, owed to states that fronted the money years ago and are still waiting to be made whole.

Second, the Department of Homeland Security imposed a blanket review requirement in June 2025 under then-Secretary Kristi Noem, mandating that every grant over $100,000 be scrutinized for "waste, fraud, and abuse" before funds could move. The policy created a bottleneck that slowed disbursements across every FEMA program simultaneously. Although Noem's replacement revoked the review policy in March 2026, the backlog it created has not been cleared.

Third, FEMA cancelled the Building Resilient Infrastructure and Communities (BRIC) program outright, calling it "focused on 'climate change' initiatives and riddled with inefficiencies." A federal judge has since ordered BRIC reinstated, but the agency has not said when cancelled awards will be restored. Communities that had been counting on BRIC funding for mitigation projects are in the worst possible position — their grants were taken away, and the replacement timeline is unknown.

The Numbers Behind the Crisis

Internal FEMA documents obtained by NPR show the agency owes communities nearly $10 billion in outstanding Public Assistance obligations. Before the agency released approximately $5 billion in late February 2026, the backlog exceeded $14 billion.

The Disaster Relief Fund itself had an available balance of $9.29 billion at the end of January 2026, according to the Congressional Research Service. That sounds like a lot — until you consider that FEMA typically spends between $15 billion and $25 billion per year on disaster response, and hurricane season starts June 1.

If the fund is fully depleted before Congress acts, FEMA enters what it calls "Immediate Needs Funding" mode — a triage protocol where only life-saving and life-sustaining activities continue. Everything else stops: debris removal, infrastructure repair, hazard mitigation, housing assistance, and reimbursements to state and local governments. More than 4,000 FEMA employees have already missed multiple paychecks during the DHS funding gap.

The National Association of Counties has called for a supplemental appropriation to close out remaining COVID-era obligations and stabilize the DRF. So far, Congress has not acted.

What Is Actually Stuck

The backlog is not one program — it is hitting at least three distinct FEMA funding streams simultaneously.

Public Assistance (PA): The largest category. PA reimburses state and local governments for disaster response and recovery costs — repairing roads, restoring water treatment plants, removing debris. These are not discretionary awards; they are payments for work that has already been completed. States fronted the money and are waiting for the federal share, which typically covers 75 percent of eligible costs. The delayed $11 billion is overwhelmingly PA money.

Hazard Mitigation Grant Program (HMGP): Funds community resilience projects — wildfire defensible space, flood control, seismic retrofitting. In Plumas County, California, $2.5 million for vegetation clearing has been held up. In Shasta County, a project that would protect 500 homes is on hold, with the grant set to expire in August 2026. If FEMA does not release the money before the deadline, it simply disappears.

BRIC: The court-ordered reinstatement created a third category of frozen funds. Communities that received BRIC awards before the cancellation are in administrative limbo — the court says the program must continue, but FEMA has not restarted the disbursement machinery. FEMA recently announced $1 billion in new mitigation funding, but it is unclear how much of that will reach the communities whose existing awards were frozen.

The Expiration Problem

Here is the detail that does not make the headlines: many FEMA grants have fixed performance periods. If the money is not obligated or spent within that window, it vanishes — not back into a general pot for reallocation, but gone entirely.

Shasta County's 500-home mitigation project is a case study. The grant expires in August 2026. The county cannot start work without the federal funds. FEMA has not released the funds. If the clock runs out, the community loses both the money and the protection the project would have provided. The next wildfire season will not wait for a bureaucratic timeline.

This is not an isolated case. Across the country, communities with active FEMA awards are watching grant performance periods expire while their funds sit in the approval queue. The review policy may have been revoked, but the queue it created persists.

What State and Local Governments Should Do Now

The situation demands immediate defensive action from any entity with pending or active FEMA awards.

Document everything. Baker Donelson's FEMA compliance guide recommends photographing damage, maintaining daily recovery journals, and confirming all FEMA guidance in writing. If your disbursement is delayed, create a paper trail showing when you requested the funds, what responses you received, and what the delay has cost you. Documentation is your strongest asset in any future appeal or audit.

Apply for extensions before grants expire. If your FEMA award has a performance period that is running out while funds are frozen, file for a period-of-performance extension immediately. Do not wait until the last month. FEMA's staffing constraints mean processing times are measured in months, not weeks.

Complete your own damage assessments. FEMA may take months for site visits due to staffing shortfalls. Conduct independent assessments now and document them thoroughly — photographs, engineering reports, cost estimates. This positions you for faster reimbursement when the pipeline reopens.

Watch your procurement. The number-one audit finding in FEMA Public Assistance is improper procurement. Federal contracting rules apply even during emergencies. If you hired contractors under emergency circumstances, transition to competitive bidding as soon as possible and document the justification for any sole-source work.

Do not take no for an answer. FEMA denials are frequently errors, not final decisions. The appeals process exists for a reason — use it. Track every communication with FEMA representatives and follow up verbal guidance with written confirmation emails.

Coordinate with your congressional delegation. Senator Thom Tillis of North Carolina — hardly an administration critic — has publicly questioned whether the funding delays violate federal law. Congressional pressure has already moved the needle: the $5 billion February release came after sustained advocacy from state and local officials.

The Bigger Picture

What is happening at FEMA is not an isolated budget problem. It is a stress test of the federal disaster funding model — one that the model is failing. The Disaster Relief Fund was designed for a world where major disasters were relatively rare events requiring temporary surges of federal spending. In a world where billion-dollar disasters now happen routinely, and where a pandemic consumed $140 billion in FEMA money, the fund's annual appropriation cycle cannot keep up.

The combination of a depleting DRF, an $11 billion reimbursement backlog, frozen mitigation grants, and an approaching hurricane season creates the conditions for a genuine crisis. Communities that should be hardening infrastructure right now are instead waiting on hold.

For local governments, nonprofits, and tribal organizations navigating this moment, the task is clear: protect your existing awards, document your losses, and build relationships with your congressional offices. The money exists — it has been appropriated — but getting it out the door requires persistence.

If you are looking to identify alternative federal, state, and foundation funding to bridge the gap while FEMA sorts out its pipeline, Granted can help you find mitigation and resilience grants that are still flowing from agencies that are not caught in this backlog.