Speaking to Mississippi lawmakers, Gov. Haley Barbour pointed to major progress in a $3 billion grant program to help 29,000 coast homeowners who did not have flood insurance.
They may begin applying next month to receive $150,000, or the insured value of the home, whichever is less.
"Think of this in the nature of an insurance payment," said the governor.
The recipients must be insured homeowners who lived outside the flood zone and suffered water damage from Katrina.
Barbour also announced plans for the remaining $1 billion in community development block grants. They'll help pay to build public housing units for 10,000 low income storm victims.
"We're holding back this other billion for people that were in the flood zone, poor, rental housing," said Barbour.
Mississippi schools have begun seeing more than $230 million in federal aid. But Superintendent Hank Bounds says they're still waiting on the rest of the $80 million in displaced student funds that must be obligated by August.
"This year we'll be held harmless," said Bounds. "And next year districts on the coast will be in good shape financially. It's the third year out I'm concerned about."
Bounds and Gov. Barbour fielded questions from coast lawmakers, as so many details about the recovery are still uncertain.
"This is something unprecedented. We've never done this before," said Rep. Leonard Bentz of Biloxi. "There's going to be bugs in it, but we'll work it out the best we possibly can."
Barbour says Congress has been generous in giving the state the money it has requested, and Mississippi plans to ask for $9 million more next year.
"We have a tall mountain in front of us, but we're going to come back bigger and stronger," said Barbour.
Since Katrina, the federal government has allocated $25 billion to Mississippi's recovery.