PA ID# 053-43000-00; City of Minneapolis
PW ID# PW 56; City of Minneapolis Police Department Pension Fund
Kris Eide Governor’s Authorized Representative Homeland Security and Emergency Management Division of Minnesota Department of Public Safety 444 Cedar Street, Suite 223 St. Paul, Minnesota 55101-6223
Re: Second Appeal-City of Minneapolis, PA ID 053-43000-00, City of Minneapolis Police Department Pension Fund, FEMA-3278-EM-MN, Project Worksheet (PW) 56
Dear Ms. Eide:
This is in response to your letter dated September 26, 2008, which transmitted the referenced second appeal on behalf of the City of Minneapolis (Applicant). The Applicant is appealing the Department of Homeland Security's Federal Emergency Management Agency's (FEMA) denial of costs for increased contributions that it will have to make to the City of Minneapolis Police Relief Association (MPRA) pension fund. The Applicant asserts that $799,000 is required as a result of overtime worked by three police officers in response to the I-35W bridge collapse.
On August 1, 2007, the I-35W bridge crossing over the Mississippi River in the City of Minneapolis collapsed. FEMA reimbursed the Applicant for eligible Minneapolis Police Department overtime costs. This included a fringe benefit rate for retirement pay for the 12 officers belonging to the MPRA who performed eligible emergency work. The Applicant asserted that the overtime worked by three top grade police officers triggered a requirement for additional MPRA pension contributions totaling $780,908 over the next 13 years. FEMA prepared PW 56 for $0 because it determined the cost was not directly tied to the performance of eligible work.
In its first appeal dated February 14, 2008, the Applicant claimed that overtime hours worked during this emergency included a fringe benefit payment to the MPRA fund and reiterated its request for $780,908. In a letter dated July 10, 2008, the Regional Administrator denied the appeal stating that the additional pension cost included an increase in retirement payments for 868 retirees and their spouses based on an estimated contribution period of 13 years. Therefore, the increased costs to the MPRA pension plan had no connection to the emergency.
In its second appeal dated September 9, 2008, the Applicant asserts that increased payments to the MPRA pension fund were a direct result of the overtime worked responding to the bridge collapse. The Applicant claims that MPRA pension benefit levels for retirees are determined by a unit value calculation based on active top grade patrol officer salaries. The Applicant contends that it would not have to pay the increased contributions to the MPRA pension plan if the top grade patrol officers had not responded to the bridge collapse. The Applicant provided a schedule of anticipated annual contributions to the MPRA pension fund with an updated mortality table. Based on the new mortality table, the Applicant requests an additional $19,000 for a total $799,000.
FEMA provides Public Assistance funds for labor costs associated with conducting eligible work. FEMA reimburses force account labor costs based on hourly labor rates. Labor rates include actual wages paid plus fringe benefits that are paid or credited as part of an established policy. OMB Circular A-87 allows for pension costs calculated using an actuarial cost-based method for a given fiscal year. However, the Applicant provided a projection that it estimates for contributions to the MPRA pension fund over the next 13 years. Furthermore, the additional pension costs include increased pension payments for 868 retirees who had no connection to the emergency work performed by the three police officers. Therefore, the cost for increased contributions to the MPRA pension fund is not eligible. In addition, FEMA reimburses reasonable costs necessary to complete eligible work. Police officers belonging to the MPRA worked approximately 625.5 hours of overtime on this event. The requested funding of $799,000 equates to $1,277 per hour, which is not a reasonable cost for the fringe benefits for the amount of time worked. I have reviewed the information submitted with the appeal and have determined that the Regional Administrator's decision in the first appeal is consistent with Public Assistance regulations and policy. Accordingly, I am denying the second appeal.
Please inform the Applicant of my decision. This determination is the final decision on this matter pursuant to 44 CFR §206.206.
Sincerely, /s/ James A. Walke Acting Assistant Administrator Disaster Assistance Directorate
cc: Janet Odeshoo Acting Regional Administrator FEMA Region V