Premium Pay
Appeal Brief
Appeal Letter
Appeal Analysis
Citation: FEMA-1548-DR-LA; Louisiana Department of Social Services; Premium Pay
Cross-reference: Premium Pay; Uniformly Applied; Reasonable Costs
Summary: In preparation for and as a result of Hurricane Ivan, the Louisiana Department of Social Services (Applicant) opened and staffed 106 general population shelters and four special needs shelters. On March 1, 2005, FEMA prepared Project Worksheet 310 (PW 310) in the amount of $178,050 to fund the eligible Force Account labor and supply costs associated with the opening and staffing of the shelters. The Applicants request included premium pay in the amount of $15/hour in addition to overtime pay. All premium pay costs were deducted from the Applicants request. The Applicant submitted a first appeal stating that premium pay in the amount of $15.00 per hour was paid to its employees in accordance with its Human Resources Procedures for Shelter Operations policy. The Acting FEMA Regional Director denied the appeal, stating that there is no indication that the Applicants policy is applied uniformly in all situations and that the premium pay costs are not reasonable. The Applicant states in its second appeal that its policy was in effect at the time of the disaster and applies whenever employees of the department are required to serve in shelters opened in emergency situations. In support of this, the Applicant states that the personnel manning shelters for evacuees associated with Hurricane Dennis (a non-federally declared event which occurred subsequent to Hurricane Ivan) were paid premium pay in accordance with its policy. The Applicant states in its appeal that it acted in good faith and relied upon FEMAs past actions to its current detriment. It states that FEMA reimbursed the premium pay in a previous disaster and has provided no reason why the rate of premium pay is now considered unreasonable. Finally, the Applicant requests that FEMA reimburse all or a portion of the premium pay as equitable relief based upon the principles of detrimental reliance and equitable estoppel.
Issues: (1) Is the Applicants premium pay policy uniformly applied?
(2) Is the $15/hour premium pay rate a reasonable cost?
Findings: (1) No. The policy is selectively applied to those employees working in emergency shelters, not to other activities of the governmental unit.
(2) No. The Applicant provided no documentation with its appeal to support the reasonableness of the $15/hour rate.
Rationale: OMB A-87, Attachment A, subsections C.1 and C.2
In preparation for and as a result of Hurricane Ivan (FEMA-1548-DR-LA), the Louisiana Department of Social Services (Applicant) opened and staffed 106 general population shelters and 4 special needs shelters during the period of September 14-16, 2004. The Applicant requested funding for Force Account labor, supplies, and transportation costs, from the Federal Emergency Management Agency (FEMA).
On March 1, 2005, FEMA prepared Project Worksheet 310 (PW 310) in the amount of $178,050 to fund the eligible Force Account labor and supply costs associated with the opening and staffing of the shelters.
The Applicants request included Force Account regular time wages and premium pay in the amount of $15/hour in addition to overtime pay. Force account regular time is not eligible for funding for Emergency Protective Measures; therefore, the costs were not included in the amount approved. Further, all premium pay costs were deducted from the Applicants request. FEMA also determined that 23 of the general population shelters were located in 13 undeclared parishes. Accordingly, the costs associated with those 23 shelters were not included in the eligible amount of funding.
First Appeal
On March 10, 2005, the Applicant submitted a first appeal letter, which was forwarded by the State to FEMA Region VI on April 7, 2005. The Applicant appealed the denial of the reimbursement of premium pay expenses in the amount of $167,893.61, stating that premium pay in the amount of $15.00 per hour was paid to its employees in accordance with its Human Resources Procedures for Shelter Operations policy. The total amount that was appealed by the applicant was $170,374.63.
The States letter cited a FEMA memorandum to the Public Assistance staff dated January 26, 2005, that states Pay in addition to normal hourly pay that compensates an employee for actual eligible work performed, such as shift differential pay, is eligible for reimbursement. The State also maintained that the Applicants premium pay policy was in effect during a previous disaster (FEMA-1435/1437-DR-LA) and was honored by FEMA at that time.
The Acting Regional Director denied the appeal in a letter dated May 24, 2005, stating that there is no indication that the Applicants policy is applied uniformly in all situations, including non-Federal disasters. Further, the denial stated that the premium pay costs are not reasonable. Finally, the letter addressed the States issue regarding FEMAs past approval of the premium pay by stating it may have been an oversight or not fully evaluated against the reasonableness of such costs.
Second Appeal
The Applicant submitted a second appeal of FEMAs determination to the State on July 29, 2005, transmitted by the State in a letter dated August 8, 2005. The Applicant is requesting that FEMA reimburse the premium pay expenses in total or at least partially.
DISCUSSION
The Applicant states that its policy was in effect at the time of the disaster and applies whenever employees of the department are required to serve in shelters opened in emergency situations. In support of this, the Applicant states that the personnel manning shelters for evacuees associated with Hurricane Dennis (a non-federally declared event which occurred subsequent to Hurricane Ivan) were paid premium pay in accordance with their policy.
The Office of Management and Budget (OMB) Circular A-87, Cost Principles for State, Local and Indian Tribal Governments, Attachment A, subsection C.1 (e), states that, to be allowable under Federal awards, costs must be consistent with policies, regulations, and procedures that apply uniformly to both Federal awards and the other activities of the governmental unit (emphasis added). The Applicant has indicated that its policy is uniformly applied to both federally declared disasters and non-federally declared emergencies, although no documentation to support this was submitted with the appeal. However, the policy only applies to work in emergency shelters opened during disasters, not to all activities performed by the governmental unit. The Applicant has provided no basis to justify this selective application of its premium pay policy.
OMB Circular A-87, Attachment A, subsection C.1 (a), states that, to be allowable under federal awards, costs must be necessary and reasonable. Subsection C.2 discusses what to consider when determining reasonableness of a given cost, such as whether the cost is generally recognized as ordinary and necessary for the operation of the governmental agency or if it significantly deviates from the established practices of the governmental unit and may unjustifiably increase the Federal awards cost.
The Applicant has provided no basis to support the reasonableness of the $15/hour rate. It has provided no documentation to demonstrate how or why this rate was developed, nor has it provided information regarding the percentage increase over its employees base pay that the premium pay provides. Such documentation would be necessary to assess the reasonableness of the $15/hour premium pay rate.
The Applicant states in its appeal that it acted in good faith and relied upon FEMAs past actions to its current detriment. It states that FEMA reimbursed the premium pay in a previous disaster and has provided no reason why the rate of premium pay is now considered unreasonable. Finally, the Applicant requests that FEMA reimburse all or a portion of the premium pay as equitable relief based upon the principles of detrimental reliance and equitable estoppel.
Although FEMA reimbursed the premium pay in accordance with the Applicants policy in a previously declared event, FEMA will not continue a practice that has been determined to be ineligible under program guidelines. Only reasonable costs associated with uniformly applied policies are reimbursed in accordance with the laws and regulations that govern its programs.
CONCLUSION
Based on a review of the information provided in the Applicants second appeal, we have concluded that the Applicants premium pay policy is not applied uniformly to all activities performed by its employees. In addition, the Applicant has not provided sufficient documentation or justification to support that the rate of premium pay is reasonable. The Applicants appeal is denied.
Appeal Brief
| Disaster | FEMA-1548-DR |
| Applicant | Louisiana Department of Social Services |
| Appeal Type | Second |
| PA ID# | 000-UTY0F-00 |
| PW ID# | 310 |
| Date Signed | 2006-03-31T05:00:00 |
(2) Is the $15/hour premium pay rate a reasonable cost?
(2) No. The Applicant provided no documentation with its appeal to support the reasonableness of the $15/hour rate.
Appeal Letter
March 31, 2006
Mr. Arthur G. Jones
Disaster Recovery Division Chief
Office of Homeland Security and Emergency Preparedness
7667 Independence Boulevard,
Baton Rouge, Louisiana 70806
Re: Second Appeal Louisiana Department of Social Services
PA ID 000-UTY0F-00, Premium Pay, FEMA-1548-DR-LA,
Project Worksheet 310
Dear Mr. Jones:
This letter is in response to the referenced second appeal transmitted by your letter dated August 8, 2005. In its appeal, the Louisiana Department of Social Services (Applicant) requested that the Federal Emergency Management Agency reimburse all or a portion of the premium pay paid to its employees working in emergency shelters in response to Hurricane Ivan.
As explained in the enclosed analysis, based on a review of the appeal documentation, I have concluded that the Applicants premium pay policy is not applied uniformly to all activities performed by its employees. In addition, I have found the Applicant has not provided sufficient documentation or justification to support that the rate of premium pay is reasonable. The Applicants appeal is denied.
Please inform the Applicant of my decision. My determination constitutes a final decision of this matter pursuant to 44 CFR § 206.206.
Sincerely,
/S/
David Garratt
Acting Director of Recovery
Federal Emergency Management Agency
Enclosure
cc: Bill Peterson
Regional Director
FEMA, Region VI
Mr. Arthur G. Jones
Disaster Recovery Division Chief
Office of Homeland Security and Emergency Preparedness
7667 Independence Boulevard,
Baton Rouge, Louisiana 70806
Re: Second Appeal Louisiana Department of Social Services
PA ID 000-UTY0F-00, Premium Pay, FEMA-1548-DR-LA,
Project Worksheet 310
Dear Mr. Jones:
This letter is in response to the referenced second appeal transmitted by your letter dated August 8, 2005. In its appeal, the Louisiana Department of Social Services (Applicant) requested that the Federal Emergency Management Agency reimburse all or a portion of the premium pay paid to its employees working in emergency shelters in response to Hurricane Ivan.
As explained in the enclosed analysis, based on a review of the appeal documentation, I have concluded that the Applicants premium pay policy is not applied uniformly to all activities performed by its employees. In addition, I have found the Applicant has not provided sufficient documentation or justification to support that the rate of premium pay is reasonable. The Applicants appeal is denied.
Please inform the Applicant of my decision. My determination constitutes a final decision of this matter pursuant to 44 CFR § 206.206.
Sincerely,
/S/
David Garratt
Acting Director of Recovery
Federal Emergency Management Agency
Enclosure
cc: Bill Peterson
Regional Director
FEMA, Region VI
Appeal Analysis
BACKGROUNDIn preparation for and as a result of Hurricane Ivan (FEMA-1548-DR-LA), the Louisiana Department of Social Services (Applicant) opened and staffed 106 general population shelters and 4 special needs shelters during the period of September 14-16, 2004. The Applicant requested funding for Force Account labor, supplies, and transportation costs, from the Federal Emergency Management Agency (FEMA).
On March 1, 2005, FEMA prepared Project Worksheet 310 (PW 310) in the amount of $178,050 to fund the eligible Force Account labor and supply costs associated with the opening and staffing of the shelters.
The Applicants request included Force Account regular time wages and premium pay in the amount of $15/hour in addition to overtime pay. Force account regular time is not eligible for funding for Emergency Protective Measures; therefore, the costs were not included in the amount approved. Further, all premium pay costs were deducted from the Applicants request. FEMA also determined that 23 of the general population shelters were located in 13 undeclared parishes. Accordingly, the costs associated with those 23 shelters were not included in the eligible amount of funding.
First Appeal
On March 10, 2005, the Applicant submitted a first appeal letter, which was forwarded by the State to FEMA Region VI on April 7, 2005. The Applicant appealed the denial of the reimbursement of premium pay expenses in the amount of $167,893.61, stating that premium pay in the amount of $15.00 per hour was paid to its employees in accordance with its Human Resources Procedures for Shelter Operations policy. The total amount that was appealed by the applicant was $170,374.63.
The States letter cited a FEMA memorandum to the Public Assistance staff dated January 26, 2005, that states Pay in addition to normal hourly pay that compensates an employee for actual eligible work performed, such as shift differential pay, is eligible for reimbursement. The State also maintained that the Applicants premium pay policy was in effect during a previous disaster (FEMA-1435/1437-DR-LA) and was honored by FEMA at that time.
The Acting Regional Director denied the appeal in a letter dated May 24, 2005, stating that there is no indication that the Applicants policy is applied uniformly in all situations, including non-Federal disasters. Further, the denial stated that the premium pay costs are not reasonable. Finally, the letter addressed the States issue regarding FEMAs past approval of the premium pay by stating it may have been an oversight or not fully evaluated against the reasonableness of such costs.
Second Appeal
The Applicant submitted a second appeal of FEMAs determination to the State on July 29, 2005, transmitted by the State in a letter dated August 8, 2005. The Applicant is requesting that FEMA reimburse the premium pay expenses in total or at least partially.
DISCUSSION
The Applicant states that its policy was in effect at the time of the disaster and applies whenever employees of the department are required to serve in shelters opened in emergency situations. In support of this, the Applicant states that the personnel manning shelters for evacuees associated with Hurricane Dennis (a non-federally declared event which occurred subsequent to Hurricane Ivan) were paid premium pay in accordance with their policy.
The Office of Management and Budget (OMB) Circular A-87, Cost Principles for State, Local and Indian Tribal Governments, Attachment A, subsection C.1 (e), states that, to be allowable under Federal awards, costs must be consistent with policies, regulations, and procedures that apply uniformly to both Federal awards and the other activities of the governmental unit (emphasis added). The Applicant has indicated that its policy is uniformly applied to both federally declared disasters and non-federally declared emergencies, although no documentation to support this was submitted with the appeal. However, the policy only applies to work in emergency shelters opened during disasters, not to all activities performed by the governmental unit. The Applicant has provided no basis to justify this selective application of its premium pay policy.
OMB Circular A-87, Attachment A, subsection C.1 (a), states that, to be allowable under federal awards, costs must be necessary and reasonable. Subsection C.2 discusses what to consider when determining reasonableness of a given cost, such as whether the cost is generally recognized as ordinary and necessary for the operation of the governmental agency or if it significantly deviates from the established practices of the governmental unit and may unjustifiably increase the Federal awards cost.
The Applicant has provided no basis to support the reasonableness of the $15/hour rate. It has provided no documentation to demonstrate how or why this rate was developed, nor has it provided information regarding the percentage increase over its employees base pay that the premium pay provides. Such documentation would be necessary to assess the reasonableness of the $15/hour premium pay rate.
The Applicant states in its appeal that it acted in good faith and relied upon FEMAs past actions to its current detriment. It states that FEMA reimbursed the premium pay in a previous disaster and has provided no reason why the rate of premium pay is now considered unreasonable. Finally, the Applicant requests that FEMA reimburse all or a portion of the premium pay as equitable relief based upon the principles of detrimental reliance and equitable estoppel.
Although FEMA reimbursed the premium pay in accordance with the Applicants policy in a previously declared event, FEMA will not continue a practice that has been determined to be ineligible under program guidelines. Only reasonable costs associated with uniformly applied policies are reimbursed in accordance with the laws and regulations that govern its programs.
CONCLUSION
Based on a review of the information provided in the Applicants second appeal, we have concluded that the Applicants premium pay policy is not applied uniformly to all activities performed by its employees. In addition, the Applicant has not provided sufficient documentation or justification to support that the rate of premium pay is reasonable. The Applicants appeal is denied.
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