On May 7, 2026, the President's Council to Assess the Federal Emergency Management Agency (FEMA Review Council) released its final report to the President, outlining 10 sweeping recommendations to fundamentally restructure how the federal government prepares for, responds to, and recovers from disasters. While many of the recommendations would require congressional approval before taking effect, the report reflects a broader policy direction toward shifting more responsibility for disaster management from the federal government to states and local communities. 

Here is what local government managers need to know.

The Big Picture: More Responsibility Shifting to State and Local Governments

For city and county governments, the implications could be significant. The recommendations envision FEMA moving away from its current role as the primary coordinator and financier for a wide range of disasters and instead concentrating federal resources on catastrophic incidents that exceed state and local capacity. Under this approach, states and local governments would assume greater responsibility for preparedness, emergency management operations, recovery coordination and, in some cases, disaster financing. For local governments, this means the federal government will increasingly be a backstop rather than a first responder. The FEMA Review Council is explicit that this transition should occur over a two-to-three-year phased approach to allow communities time to build fiscal and operational capacity; however, if implemented, this would significantly change the role of cities and counties in disaster recovery.

Key Recommendations and Their Implications for Local Governments

1. Replacing Public Assistance with Parametric Block Grants
   The most consequential change for local government finances would be replacing FEMA's current seven-phase Public Assistance (PA) reimbursement program with a new "Reformed and Partnered Initiative for Disasters" (RAPID) direct funding model.

   Under RAPID, following a presidential disaster declaration, federal funds would flow directly to state treasuries within 30 days—triggered by a pre-defined parametric formula based on objective event data (wind speed, flood depth, earthquake magnitude) rather than project-by-project damage assessments. Federal cost share would range from 50% to 75% based on state performance metrics. States would then manage and distribute funds to local governments.

   What this would mean for local governments: Local governments could gain speed and flexibility in accessing recovery funds, but the tradeoff is significant. Cities and counties would lose the current federal project-by-project safety net and would have limited recourse if actual costs exceed the parametric payout. The responsibility for environmental reviews, procurement, and eligibility determinations would shift to the state level. Smaller and rural communities that rely heavily on FEMA's direct technical assistance and oversight may feel this most acutely.

2. Streamlining Individual Assistance into a Single Direct Payment 
   The current 15-category Individual Assistance program would be consolidated into a single "Framework for Accessible Individual Relief" (FAIR) payment—up to $150,000 for homeowners (capped at 15% of locally assessed home value) and up to six months of rent at HUD Fair Market Rate for renters. Emergency sheltering responsibilities would transfer from FEMA to states and territories.
   
   What this would mean for local governments: Cities and counties would likely be called upon to play a larger execution role in emergency sheltering and temporary housing operations, as these responsibilities move away from FEMA. Local governments would have to build capacity and partnerships to absorb these functions.
    
3. Replacing the Hazard Mitigation Grant Program (HMGP) with a Two-Phase Structure
   HMGP would be eliminated and replaced with a "Refined Risk Reduction Program" (R3P) structured around two allocations managed at the state level: a Rapid Mitigation Advance (up to 5% of the federal contribution, within 30 days) for immediate residential mitigation, and a Strategic Mitigation Allocation (up to 10%, within six months) focused on repetitive loss properties and critical infrastructure.
   
   What this would mean for local governments: Local governments would access mitigation funds through their states rather than directly through FEMA. Communities with strong state relationships and pre-approved hazard mitigation plans would be positioned to benefit from faster funding. Those without may find themselves further back in the queue.
    
4. Raising the Threshold for Federal Disaster Declarations
   The report recommends updating the per capita indicator used for Public Assistance declarations and establishing minimum annual expenditure thresholds that states must exhaust before requesting federal assistance. The Council estimates this would result in approximately 16 fewer major disaster declarations per year.
   
   What this would mean for local governments: If this recommendation is implemented, more moderate disasters will need to be fully absorbed by state and local governments without federal assistance. Local governments would need to revisit their emergency reserve funds, mutual aid agreements, and insurance coverage to sufficient capacity to cover these expenses.
    
5. Reforming the National Flood Insurance Program (NFIP)
   The NFIP—currently carrying over $20 billion in debt—would be gradually shifted toward the private market through continued implementation of Risk Rating 2.0, updated flood mapping, risk-based pricing, and a voluntary program to transfer policies to private insurers. The ultimate goal is to move the bulk of flood coverage into the private market.
   
   What this would mean for local governments: While any transition to the private market would take time and require congressional action, local government managers should be aware of what the shift could mean for residents and community planning. A significant concern is the Community Rating System (CRS), a voluntary FEMA program that rewards communities with strong floodplain management practices with discounts on NFIP premiums for all policyholders. Under a privatized model, those community-wide discounts would not automatically transfer to private policies, potentially increasing insurance costs for residents—including those in non-coastal areas who rely on relatively affordable coverage. Local government managers whose communities participate in the CRS program should monitor this closely and communicate proactively with residents about what a transition could mean for their insurance costs.
    
6. Transforming and Renaming FEMA
   The report recommends renaming and restructuring FEMA into a leaner agency focused on coordination and support rather than operational leadership, with a reduced Washington headquarters footprint and a formal role as "payer of last resort." Staffing reductions would be phased over two to three years. The report does preserve several programs local governments rely on, including Urban Search and Rescue task forces, the National Disaster Medical System, IPAWS, and the Emergency Management Performance Grant (EMPG)—with a potential one-time funding increase to EMPG to support the transition.

What's Next?
It is important to note that this report contains recommendations only. The most consequential changes, including replacing the Public Assistance and Individual Assistance Programs, require acts of Congress to take effect. Some elements of the report could be advanced through regulation or executive action, but the full vision cannot be realized without significant legislative action. FEMA's existing structure and programs remain in place until and unless Congress acts.

What Local Governments Should Be Doing Now
Even before any legislation moves forward, the report's direction carries important signals for local government preparedness:

• Assess your emergency reserves. Higher declaration thresholds would mean that more events will fall entirely on local budgets. Review whether your general fund reserves and any disaster relief funds are adequate.
• Review your insurance coverage. The report calls on communities to insure 100% of public infrastructure. Now is a good time to audit gaps in coverage for public facilities.
• Evaluate your NFIP and CRS participation. Understand what your community's current flood insurance profile looks like—how many residents hold NFIP policies, whether your community participates in the Community Rating System, and what a shift to private coverage might mean for residents' premiums. 
• Strengthen your state relationships. Under virtually every proposal in the report, states become the primary interface with the federal government. Strong working relationships with your state emergency management agency will be essential.
• Audit mutual aid agreements. The report places significant emphasis on state-coordinated mutual aid and the Emergency Management Assistance Compact (EMAC). Ensure your community is an active participant.
• Evaluate local emergency management capacity. The report envisions local governments taking on greater operational responsibilities. Identify gaps in staffing, training, and equipment and begin addressing them.
• Engage your congressional delegation. The most significant changes require legislation. ICMA is monitoring these developments, and member voices will matter as Congress considers reform proposals.

ICMA will continue to track legislative and regulatory developments stemming from this report and engage with federal policymakers to ensure the perspective of professional local government managers is reflected in any reforms and will provide updates as the situation evolves. Individuals with questions or who want to share their community's experience with FEMA programs can contact Amber Snowden, ICMA public policy and special projects advisor, asnowden@icma.org.