Increased Operating Costs

Appeal Brief

Summary Paragraph

From September 1-3, 2021, Hurricane Ida impacted areas in New Jersey. The disaster severely damaged a school facility owned and operated by the Cresskill Board of Education (Applicant). Due to the damage, the Applicant relocated operations and incurred costs to transport students to a temporary facility. The Applicant requested funding for the transportation costs. FEMA developed Grants Manager Project 661383 to document the Applicant’s claim. The Applicant stated that: (1) the temporary facility was 4.5 miles from its administrative boundary; (2) under state law it was required to provide transportation for any student living more than 2.5 miles from their assigned school; and (3) that it had not provided busing services to its students prior to the disaster. In a Determination Memorandum, FEMA denied funding for the Applicant’s claim. FEMA found that the transportation costs were not associated with an eligible emergency protective measure and that costs to transport students to temporary facilities were considered ineligible increased operating costs. The Applicant submitted a first appeal, reiterating previous statements and asserting that providing student transportation ensured public safety and thus was associated with an eligible emergency protective measure. The FEMA Region 2 Regional Administrator denied the appeal, finding that the Applicant’s costs to provide student transportation were ineligible increased operating costs. The Applicant submitted a second appeal, reiterating its previous statements and requesting FEMA approve $371,331.50.

Authorities and Second Appeals

• Stafford Act § 403.
• 44 C.F.R. §§ 206.223(a)(1), 206.225(a).
• PAPPG, at 51, 96, 114.
• V.I. Housing Auth./St. Thomas, FEMA-4335-DR-VI, at 4.

Headnotes

• Increased costs of operating a facility or providing a service are generally not eligible, even when directly related to the incident. Increased operating costs that are ineligible, even for a limited time, include the provision of school bus service including fuel or mileage for transporting students from alternate locations or to alternate schools or temporary facilities.
  • The Applicant incurred the costs at issue in order to continue providing the education services that it provided prior to the disaster. FEMA considers the costs to be increased operating costs associated with providing education services to students in the Applicant’s community.
  • Under FEMA policy, increased costs related to operating a facility or providing a service are generally ineligible, even when directly related to the incident and the specific costs the Applicant incurred are explicitly noted to be ineligible in the PAPPG.

Conclusion

The costs claimed by the Applicant for student transportation services are ineligible increased operating costs.

Appeal Letter

Appeal Analysis

Background

From September 1-3, 2021, Hurricane Ida impacted areas in New Jersey.[1] The disaster severely damaged a school facility owned and operated by the Cresskill Board of Education (Applicant). Due to the damage, the Applicant relocated its operations to an off-campus temporary facility. From January 1 to June 30, 2022, the Applicant incurred costs to transport students to the temporary facility. It requested Public Assistance (PA) funding for the transportation costs. FEMA developed Grants Manager Project 661383 as a Category B (emergency protective measures) project to document the Applicant’s claim.

The Applicant submitted a letter dated May 11, 2022, explaining that the temporary facility was located approximately 4.5 miles from its administrative boundary, and that under state law it was required to provide transportation for any student living more than 2.5 miles from their assigned school. It subsequently submitted a letter dated June 16, 2022, further explaining that due to the small size of the community, it had not previously been required to provide busing services for its students, and that the costs claimed were due solely to the damage caused by the disaster.

In a Determination Memorandum signed October 18, 2022, FEMA denied funding for the Applicant’s claim. FEMA determined that the claimed work and costs for student transportation were not associated with eligible emergency protective measures identified in the PA Program and Policy Guide (PAPPG). FEMA noted that the PAPPG explicitly stated that the provision of school bus services to transport students to temporary facilities was an ineligible increased operating cost.[2]

First Appeal

The Applicant submitted a first appeal dated December 16, 2022, reiterating information from its earlier letters, and requesting $371,331.50 for costs associated with transporting students to the temporary facility. The Applicant asserted that the claimed work and costs could be tied to an eligible emergency protective measure, as providing transportation to students reduced the “overall danger to the motoring and pedestrian public” by limiting traffic during morning and afternoon rush hours.[3] Among other information, the Applicant included a map of the bus route, an excerpt from the New Jersey Revised Statutes, and cost documentation with the appeal. In a transmittal letter dated January 19, 2023, the New Jersey Office of Emergency Management (Recipient) expressed support for the appeal.

On April 11, 2023, the FEMA Region 2 Regional Administrator denied the appeal. FEMA found that the Applicant’s transportation costs were not associated with measures taken to address an immediate threat. Rather, FEMA stated that the costs were associated with normal school operations. FEMA noted that the PAPPG states explicitly that the cost of transporting students to temporary facilities is ineligible. Therefore, FEMA determined that the Applicant’s claimed costs for student transportation were an ineligible increased operating cost.

Second Appeal

The Applicant submitted a second appeal dated June 5, 2023, both reiterating its previous statements and requesting FEMA approve $371,331.50 for costs associated with transporting students to the temporary facility. In a transmittal letter dated June 30, 2023, the Recipient expresses support for the appeal.

Discussion

FEMA is authorized to provide assistance for emergency protective measures to save lives or to protect public health and safety.[4] For emergency protective measures to be eligible, the applicant is responsible for showing the work is required due to an immediate threat resulting from the declared incident.[5] Increased costs of operating a facility or providing a service are generally not eligible, even when directly related to the incident.[6] Increased operating costs that are ineligible, even for a limited time, include the provision of school bus service for transporting students from alternate locations or to alternate schools or temporary facilities.[7]

The Applicant incurred costs for student transportation when it relocated operations to the temporary facility. The relocation to the temporary facility was due to disaster-related damage to its existing school. However, the Applicant incurred the costs at issue to continue providing a service (i.e., education) that it provided prior to the disaster. FEMA considers the costs to be increased operating costs associated with providing education services to students in the Applicant’s community. Under FEMA policy, increased costs for operating a facility or providing a service are generally ineligible, even when directly related to the incident. Moreover, the specific costs the Applicant incurred are explicitly listed as ineligible in the PAPPG.[8]

Conclusion

The costs claimed by the Applicant for student transportation services are ineligible increased operating costs. Therefore, this appeal is denied.[9]