(1) A disaster and emergency contingency fund is created and shall be administered by the director. An annual accounting of expenditures under this act shall be made to the legislature and the legislature shall annually appropriate sufficient funds to maintain the fund at a level not to exceed $10,000,000.00 and not less than $2,500,000.00. Unexpended and unencumbered funds remaining in the disaster and emergency contingency fund at the end of the fiscal year shall not lapse to the general fund and shall be carried forward and be available for expenditure in subsequent fiscal years.

    (2) The director may expend money from the disaster and emergency contingency fund upon appropriation for the purpose of paying necessary and reasonable overtime, travel, and subsistence expenses incurred by an employee of an agency of this state acting at the direction of the director in a disaster or emergency related operation, and, with the concurrence of the governor or the governor's designated representative, for other needs required for the mitigation of the effects of, or in response to, a disaster or emergency.

    (3) The director may place directly in the disaster and emergency contingency fund a reimbursement for expenditures out of the fund received from the federal government, or another source.

    (4) If a state of major disaster or emergency is declared by the President of the United States, and when authorized by the governor, an expenditure from the fund may be made by the director upon appropriation to pay the state's matching share of grants as provided by the disaster relief act of 1974, Public Law 93-288, 88 Stat 143.

    (5) The state treasurer shall direct the investment of the disaster and emergency contingency fund. The state treasurer shall credit to the disaster and emergency contingency fund interest and earnings from fund investments.