FEMA Expenditure Cuts: Analyzing Financial & Service Delivery Impact

This report provides a financial analysis of the Federal Emergency Management Agency (FEMA) and examines the impact of proposed expenditure reductions on its operations, service quality, and public image. It considers scenarios involving 5% and 10% budget cuts, detailing specific areas where reductions could be implemented, such as demo disaster practices, public awareness programs, and acquisition of non-essential equipment. The report emphasizes the importance of minimizing the impact on critical services like disaster response, rescue, and relief efforts. Furthermore, it discusses how effective management of cost-cutting measures can influence public trust, willingness to provide future support, and the overall image of both the agency and its governing body. The analysis highlights that maintaining service quality despite budget constraints is crucial for preserving FEMA's reputation and public confidence. Desklib offers a variety of resources, including solved assignments and past papers, to aid students in understanding complex topics like financial analysis and disaster management.

Running head: FINANCE
Finance
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Contents
Federal Emergency Management Agency and its operations:........................................................2
Reduction in expenditures and impact on services:.........................................................................2
Impact of proposed costs cuts on the image of the Agency:...........................................................6
Image of the governing body and trust and willingness to provide support in the future:..............7
References:......................................................................................................................................8

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Federal Emergency Management Agency and its operations:
An agency of Department of Homeland Security of United States of America, Federal
Emergency Management Agency (FEMA) is responsible for coordinating the response to
disasters in the United States that have overwhelmed the local and state authorities and their
resources to deal with such disasters. Thus, FEMA is mainly responsible for coordinating
response efforts to large scale disasters that the state and local authorities found impossible to
deal with. It is thus, certain that FEMA has significantly greater amount of resources in its
disposal compared to the resources in the state and local authorities (Selden 2015).
Rescue efforts and response to disasters that hit the country are the main responsibility of FEMA.
Thus, for such an agency to undertake cost cutting is a very delicate and complex proposition.
The management must take into consideration the impact of cost cutting on the quality of
agency’s services. It is desired to not have any budget cutting for such an organization. However,
if the Department of Homeland Security cuts the budgeted expenditures of the agency then it has
to take a call on the services of which necessary expenditures have to be cut to ensure that the
quality and quantity of services are badly hit.
Reduction in expenditures and impact on services:
It has been assumed that annual expenditures of the agency is generally $25 million.
However, due to cutting in costs, the agency is now forced to reduce its annual expenditures by
certain percentages (as reported below). Let us take look at the effects of such reduction in
expenditures of the agency on its operations (Schaefer, Goldman, Bartuska, Sutton-Grier &
Lubchenco 2015).

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Reduction in expenditures by 5%:
Particulars Amount ($)
Annual standard expenditures 25,000,000.
00
Less: Reduction in expenditures (25000000 x 5%) 1,250,000.
00
Revised expenditure after reduction 23,750,000.
00
Since the operations and functions of the agency is very essential at the time of disaster struck
the management has decided that there will no cut of costs for emergency services such as
response efforts immediately after a disaster struck. Similarly no expenditures will be cut for
rescue and relief efforts after any disaster. The agency has number of functions that it performs
throughout the year with its allocated budget. Such functions include demo disaster practices,
rescue and relief efforts demo, maintenance of equipment and machinery required for disaster
efforts, public awareness program expenditures, response efforts to a disaster, immediate rescue
and relief efforts subsequent to a disaster, acquisition of necessary equipment and machinery to
improve the quality and quantity of services to the public at the time of disasters (Olson & Wu
2015).
As already mentioned that considering the importance of response, rescue and relief efforts
subsequent to a disaster FEMA will not cut expenditures on these specific activities. However,

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since the expenditures have to be reduced by $1,250,000 the management of the agency has to
incorporate necessary cuts in the specific activities. Though all the activities are significant but
the agency should cut the costs on demo disaster practices and public awareness campaigns as
these are relatively less important activities compared to the other activities. Obviously, the
quality and quantity of service to the public will be impacted but the impact will not be severe as
the lease two important activities have been chosen to cut the costs. Reduction in these two
activities shall be made as following to reduce the expenditures by 5% (Khalid & Shafiai 2015).
Reduction in:
Demo Drilling practices (1250000 x 80%) 1,000,000
.00
Public awareness program 250,00
0.00
Total reduction 1,250,000
.00
Reduction of expenditures by 10%:
Particulars Amount ($)
Annual standard expenditures 25,000,000.
00
Less: Reduction in expenditures (25000000 x 10%) 2,500,000.

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00
Revised expenditure after reduction 22,500,000.
00
When the desired reduction is 10% of the standard expenditures of an agency or a department it
is generally quite difficult to incorporate cuts in various activities as the amount of reduction is
quite significant. In this case the reduction in the total expenditures of the agency is $2,500,000
accordingly, the cuts have to be on specific activities (Feather 2017). Since the reduction is quite
significant the management will have to apportion the cuts in such a way to ensure that the
impact on the quality and quantity of service to the public is minimized. In order to ensure that
the impact on the quality and quantity of services to be offered to the public is minimized the
following cuts shall be introduced to reduce the expenditures of the agency by 10% (Kapucu &
Hu 2016).
Reduction in:
Demo Drilling practices (250000 x 40%) 1,000,000
.00
Public awareness program 250,00
0.00
Reduction in acquisition of new not do emergency equipment 1,250,000
.00

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Total reduction 2,500,000
.00
Thus, as can be seen from the above that the most important and emergent services of the agency
such as response to a disaster, relief and rescue efforts immediately after a disaster. The cuts
have been introduced in public awareness program activities, demo drilling practice activities
and acquisition of not do emergency equipment activities. Though quality and quantity of
services to be offered to the public will certainly be influenced negatively subsequent to these
costs cutting decisions however, the choice of cost cutting decisions is expected to minimize the
impact on the quality and quantity of public services (Federal Emergency Management Agency
2017).
Impact of proposed costs cuts on the image of the Agency:
An agency such as FEMA which is responsible for the security of the people in the
Homeland at the time of disasters has huge amount of responsibility on its shoulder. Thus, the
decision of cutting expenditures of such Agency could have significant impact on the image of
the agency in the future. The agency’s image would be unblemished if it is able to make
optimum use of its resources despite the reduction in expenditures. Despite the cost cutting
decision if the agency is able to provide appropriate quality and quantity of services to the public
then the agency’s reputation will not be tarnished. However, the quality and quantity of services
must be in expected lines in the future to intact the goodwill of FEMA (Lindell, Prater, Perry, &
Nicholson 2017).

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Impact on trust on the agency and willingness to provide further support in the future:
The impact on public trust and willingness of provide further support in the future both will be
decided by the ability of the agency to manage the cost cutting effectively. If the agency is able
to manage the cost cutting effectively without any deteriorating impact on the quality and
quantity of services to be offered to the public then there would be no negative impact on public
trust and willingness to provide support in the future. Thus, it is important to maintain the quality
and quantity of services to the public by the agency (Haddow, Bullock & Coppola 2017).
Image of the governing body and trust and willingness to provide support in the future:
Governing body is the main organ of an agency. How an agency will function including
the cost cutting decisions are taken by the governing body of the agency. Thus, the quality and
quantity of services of the agency will be very much an endorsement of the governance
efficiency or lack of it of the governing body of the agency. Image of the governing body of
FEMA thus, will be hit badly if the quality and quantity of services to the public deteriorate in
the future due to the cost cutting (Zimmerman & Ford 2015). Thus, it is clear that cost cutting
will not determine the impact on the images of the agency and that of the governing body
however, the quality and quantity of services would definitely influenced the images of both. In
case the quality and quantity deteriorate the images of both will negatively influenced and
opposite will be the case if the quality and quantity improves despite the cost cutting.
The better the performance and services of the agency the more the trust of the public on the
agency and its governing body. Thus, even if the expenditures are expected to be reduced (5% or
10% as the case may be) if the governing body is able to manage these cost cutting effectively

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the image and as well as the trust on the agency and the governing body will not be impacted
negatively (Siddique 2018).
References:
Feather, J. (2017). Disaster management for libraries and archives. Routledge.
Federal Emergency Management Agency. (2017). National incident management system.
FEMA.
Haddow, G., Bullock, J., & Coppola, D. P. (2017). Introduction to emergency management.
Butterworth-Heinemann.
Kapucu, N., & Hu, Q. (2016). Understanding multiplexity of collaborative emergency
management networks. The American Review of Public Administration, 46(4), 399-417.
Khalid, M. S. B., & Shafiai, S. B. (2015). Flood disaster management in Malaysia: An evaluation
of the effectiveness flood delivery system. International Journal of Social Science and
Humanity, 5(4), 398.
Lindell, M. K., Prater, C. S., Perry, R. W., & Nicholson, W. C. (2017). Fundamentals of
emergency management. Federal Emergency Management Agency.
Olson, D. L., & Wu, D. D. (2015). Enterprise risk management(Vol. 3). World Scientific
Publishing Company.

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Schaefer, M., Goldman, E., Bartuska, A. M., Sutton-Grier, A., & Lubchenco, J. (2015). Nature as
capital: Advancing and incorporating ecosystem services in United States federal policies
and programs. Proceedings of the National Academy of Sciences, 201420500.
Selden, S. C. (2015). The Promise of Representative Bureaucracy: Diversity and Responsiveness
in a Government Agency: Diversity and Responsiveness in a Government Agency.
Routledge.
Siddique, S. T. (2018). Social Vulnerability and Earthquake Impact Modeling in Federal
Emergency Management Agency (FEMA) Region IV (Southeast of the US).
Zimmerman, E., & Ford, P. F. (2015). Letter from Charles D. Baker, Governor of
Massachusetts, to Elizabeth Zimmerman, Associate Administrator, Response and
Recovery Division, Federal Emergency Management Agency, through Paul F. Ford,
Acting Regional Administrator, Federal Emergency Management Agency, Region 1,
regarding formal appeal of the scope of the Major Disaster Declaration (FEMA-4214-
DR) issued by President Obama for severe winter weather and snow. Office of the
Governor, Commonwealth of Massachusetts.