Washington — With hurricane season just weeks away, FEMA has officially entered a financial danger zone — forcing the agency to limit spending to only the most urgent, life-saving needs amid the partial government shutdown.

The move, known as Imminent Needs Funding, is triggered when FEMA's Disaster Relief Fund drops below $3 billion. 

And the timing couldn't be worse.

"Disasters are unpredictable. They're very costly. We don't know what could happen between now and June 1," said FEMA Associate Administrator Victoria Barton.

FEMA hasn't stopped working outright, but the disaster agency must now sharply narrow how it spends federal disaster dollars — prioritizing immediate emergency response, direct aid to survivors and critical infrastructure protection, while delaying many reimbursements and longer-term recovery projects.

Spending tightens before trigger

Even before formally entering that status, officials had begun slowing or selectively approving some payments as they approached the cutoff.

Reimbursements tied to past disasters — including billions in outstanding pandemic-related aid — were increasingly handled on a case-by-case basis, rather than at normal speed.

"A lot of those reimbursements are for rural hospitals … but now that we're in immediate needs funding, those payments are going to be paused," Barton told CBS News. 

Uncharted territory during shutdown

FEMA has used Imminent Needs Funding nine times over the past two decades. But officials say entering that posture during an active government funding lapse would be unprecedented, adding new uncertainty about how long disaster operations could be sustained.

The risk grows if funding continues to fall. In an extreme scenario, officials acknowledge that a fully depleted disaster fund could eventually halt not only recovery payments but also affect staffing funded through the account.

If multiple disasters hit — or a major hurricane strikes — the system could be pushed to its limits.

"The potential response efforts … could be wiped out if there's no disaster relief funding," Barton warned.

Disaster costs can escalate quickly. Major disasters routinely run into the tens or even hundreds of billions of dollars — with Hurricane Katrina causing about $160 billion in damage and Hurricane Harvey about $125 billion.

FEMA itself does not cover all of those expenses, but it plays a central role in helping communities recover. Under federal law, the agency typically reimburses at least 75% of eligible disaster costs for state and local governments, including debris removal, emergency response and infrastructure repair — with the federal share sometimes rising even higher after the most catastrophic events.

Hurricane season raises stakes

The timing is particularly concerning with hurricane season beginning June 1.

The funding threshold FEMA uses is designed to ensure the agency can respond to at least one major catastrophic event. Dropping below that level increases the risk that multiple disasters — or overlapping national security events — could strain available resources.

Officials warn that entering hurricane season with reduced reserves could leave communities more exposed if major storms or other emergencies occur in quick succession.

Broader operational impacts

Beyond funding, the shutdown is disrupting FEMA's broader preparedness efforts.

Training programs for emergency managers and first responders have been curtailed, affecting tens of thousands of participants each week. The agency has also scaled back coordination with state and local partners and has already missed key preparedness events ahead of hurricane season.

FEMA has also been absent from key national coordination events ahead of hurricane season, including the National Hurricane Conference and National Emergency Management Association Midyear Forum. These gatherings, often overlooked outside emergency management circles, are where plans are refined and relationships forged before disasters strike.

Meanwhile, DHS officials say the National Flood Insurance Program is operating under severe limitations, delaying policy renewals and disrupting real estate markets in flood-prone regions.

Those disruptions are compounding financial pressures as officials race to maintain readiness while operating with limited resources and staffing uncertainty.

FEMA officials say the solution isn't just refilling the disaster fund — it's restoring full funding across the entire Department of Homeland Security.

"We really need to think about funding the entire organization so that we can properly serve the American people," Barton said.