Increased Operating Expenses
Appeal Brief
Appeal Letter
Appeal Analysis
Appeal Brief
| Disaster | FEMA-4241 |
| Applicant | South Carolina Department of Disabilities and Special Needs |
| Appeal Type | Second |
| PA ID# | 000-UH8QO-00 |
| PW ID# | (PW) 103 |
| Date Signed | 2018-01-11T00:00:00 |
Conclusion: The costs for overtime and meals were increased operating expenses, and therefore were ineligible for Public Assistance (PA) funding. Additionally, the costs for purchasing bottled water were also an increased operating expense and fell below the $3,000 minimum project threshold, and should not have been approved.
Summary Paragraph
From October 1 through October 23, 2015, the state of South Carolina suffered severe storms, heavy rainfall, and flooding. The South Carolina Department of Disabilities and Special Needs’ (Applicant) staff at residential facilities worked overtime to provide care for individuals with intellectual and other disabilities and perform work to address flood related repairs. The Applicant provided meals for these employees. It also purchased water bottles for consumption and bathing of residents because there was an active advisory to boil water. FEMA prepared Project Worksheet (PW) 103 to capture costs of $39,998.34 for overtime and meals, and $1,098.25 for bottled water. FEMA later determined that these costs were ineligible because they did not meet the requirements for emergency protective measures. The Applicant appealed, arguing that these costs were necessary to protect the health and safety of residents under its care. The Regional Administrator (RA) determined that the costs for overtime and meals were ineligible because they were increased operating expenses. The bottled water was eligible because of the active advisory to boil water, but the Applicant had only documented $936.91 in costs. Accordingly, the RA partially granted the appeal. The Applicant has now filed a second appeal, arguing that the costs for overtime and meals were eligible as emergency protective measures. It does not raise any argument regarding the RA’s decision with respect to the bottled water.
Authorities and Second Appeals
- Stafford Act § 403.
- 44 C.F.R. §§ 206.225, 206.202(d)(2).
- PA Guide, at 54-55.
- Memorial Hospital at Gulfport, FEMA-4081-DR-MS, at 2-3.
Headnotes
- Under the PA Guide, increased operating expenses are ineligible for PA funding.
- The Applicant’s increased costs for feeding staff, caring for residents of its facilities, and obtaining water from an alternate source were increased operating expenses and ineligible for PA funding.
- Under 44 C.F.R. § 206.202(d)(2), if the estimated cost of a project is less than $3,000.00, the project is not eligible.
- PW 103 Version 1 was improperly obligated for $936.91 because it was below the minimum threshold for project eligibility.
Appeal Letter
Mr. Kim Stenson
Director
South Carolina Emergency Management Division
2779 Fish Hatchery Road
West Columbia, SC 29172
Re: Second Appeal – South Carolina Department of Disabilities and Special Needs, PA ID: 000-UH8QO-00, FEMA-4241-DR-SC, Project Worksheet (PW) 103 – Increased Operating Expenses
Dear Mr. Stenson:
This is in response to a letter from your office dated November 8, 2017, which transmitted the referenced second appeal on behalf of the South Carolina Department of Disabilities and Special Needs (Applicant). The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $39,998.34 in costs pertaining to overtime and meals for employees providing care for individuals with intellectual and other disabilities in residential facilities.
As explained in the enclosed analysis, I have determined that the requested costs were ineligible for Public Assistance funding because they were increased operating expenses. Accordingly, I am denying this appeal. I have also determined that the costs associated with buying bottled water were also ineligible for funding because they too were increased operating expenses, and the costs fell below the $3,000.00 regulatory threshold for eligible projects. Therefore I am instructing the Regional Administrator to deobligate these funds.
Please inform the Applicant of my decision. This determination is the final decision on this matter pursuant to 44 C.F.R. § 206.206, Appeals.
Sincerely,
/S/
Christopher Logan
Director
Public Assistance Division
Enclosure
cc: Gracia Szczech
Regional Administrator
FEMA Region IV
Appeal Analysis
Background
From October 1 through October 23, 2015, the state of South Carolina suffered severe storms, heavy rainfall, and flooding. The South Carolina Department of Disabilities and Special Needs (Applicant) operates residential facilities to provide care for individuals with intellectual and other disabilities. Because the disaster made traveling dangerous, between October 2 and October 8, 2015, there were times when the Applicant’s employees who had finished their shift could not go home, and other employees could not travel to work to begin their shift. In order to ensure continuity of care for residents, the Applicant held employees over and provided food for them. During this time, there was also an advisory in effect to boil water, so the Applicant purchased bottles of water for consumption and bathing of residents.
The Applicant requested Public Assistance (PA) funding for overtime pay and food for staff held over during the disaster in the amount of $39,998.34. It also requested $1,098.25 for the purchase of bottled water. FEMA prepared project worksheet (PW) 103 to capture these costs. On January 6, 2016, FEMA prepared a determination memorandum, identifying the requested costs as increased operating expenses, and stating that they did not meet the definition of emergency protective measures, and so were ineligible for PA funding. The Applicant received notice of FEMA’s determination on February 1, 2016.
First Appeal
The Applicant submitted its first appeal in a letter dated March 30, 2016. It stated that the work performed by the Applicant’s employees consisted of bathing residents, providing and serving meals, administering medications, and securing property from damage by creating drainage swales and responding to roof leaks. It argued that these activities were critical to ensure the health and safety of its residents, and therefore met the definition of emergency protective measures. The South Carolina Emergency Management Division (Recipient) forwarded the Applicant’s appeal on May 26, 2016, arguing that the Applicant’s actions were necessary and prudent to meet the immediate threat posed by the disaster.
On March 15, 2017, FEMA issued a final request for information, stating that the record was insufficient to support the Applicant’s appeal, and requesting any additional documents that the Applicant wanted FEMA to consider. In response to a follow up email from the Recipient, FEMA specified that it needed the Applicant’s pay policy and receipts for the purchase of bottled water. The Applicant responded, providing the requested documentation.
FEMA issued its first appeal decision on July 10, 2017, in which the Regional Administrator (RA) determined that that overtime pay and meals were increased operating expenses, and were ineligible for reimbursement. The RA also found that the meals were ineligible because the Applicant did not have a prior requirement or policy in place specifying that meals would be provided in such circumstances at no cost to its employees. The RA also determined, however, that the costs for purchasing bottled water were eligible because of the advisory to boil water. The RA determined that the Applicant’s documentation substantiated $936.91 for the bottled water, and so the RA partially granted the appeal, and PW 103 Version 1 was obligated in that amount.
Second Appeal
In its Second Appeal, dated September 11, 2017, the Applicant first emphasizes the severity and unprecedented nature of the disaster and the necessity of ensuring continuity of care for its residents. It states that direct care employees faced flood related duties beyond their normal work due to the lack of water, including making special arrangements for bathing, administering medications, preparing meals, meal cleanup, and arranging bathroom use. It explains that, in addition, maintenance staff were also held over to address roof leaks, flooding, and other flood related emergency response and repairs. It argues that the decision to pay overtime and provide food for employees was necessary to preserve health and safety, and was reasonable given the circumstances. It argues that this meets the definition of emergency protective measures. It does not challenge the RA’s determination that its documentation substantiated $936.91 in costs for bottled water. The Recipient forwarded the Applicant’s appeal on November 8, 2017, along with a letter of support.[1]
Discussion
FEMA is authorized to provide assistance essential to meeting immediate threats to life and property resulting from a major disaster.[2] Work to implement such emergency protective measures may be eligible if it eliminates or lessons immediate threats to life, public health or safety, or improved property.[3] However, the costs of operating a facility or providing a service may increase due to a disaster.[4] Generally, these increased operating costs are not eligible for PA funding.[5] FEMA’s Public Assistance Guide gives examples of ineligible expenses, including increased costs for feeding residents and staff of critical facilities, increased costs for care and feeding of people in residential facilities, and increased costs of obtaining water from an alternate source.[6] Additionally, when the estimated cost of work on a project is less than $3,000.00, the work is not eligible.[7]
Here, the $39,998.34 in funding that the Applicant requested was for overtime and meals for staff at its facilities. While the conditions of the disaster made it more difficult for staff to perform their duties, these were increased costs for feeding staff and caring for people in residential facilities. As such, these costs are increased operating expenses and are ineligible.[8] While the Applicant also argues that staff performed work to address flood-related repairs, the record does not detail this work or the costs that were associated with it.[9] Finally, the Applicant argues that it was unreasonable for FEMA to expect it to have a written policy in place requiring it to provide complimentary meals to employees, given the unprecedented nature of the disaster. As the first appeal determination correctly found, such a policy is required because, in order to be eligible for funding, an item of work must be the legal responsibility of the applicant.[10] Moreover, even if the Applicant did have such a policy in place, it would not change the outcome of this second appeal because the associated costs are still increased operating expenses, and therefore ineligible for funding.
Following partial approval of the first appeal, PW 103 Version 1 obligated $936.91 to reimburse the Applicant’s purchase of bottled water. This was improper because, first, this was an increased cost for obtaining water from an alternate source.[11] Additionally, this fell below the $3,000.00 minimum threshold for projects established by FEMA’s governing regulations.[12] Accordingly, these costs are also ineligible.
Conclusion
The costs associated with overtime and providing food for employees were ineligible for PA funding. Additionally, the $936.91 approved in the first appeal was also ineligible for reimbursement. Therefore, this appeal is denied and the RA is instructed to deobligate the $936.91 that was obligated in Version 1 of PW 103.
[1] The Recipient’s second appeal letter lists the amount in dispute as $39,997.94. This is presumably simply a typographical error, as the Applicant’s second appeal letter clearly intends to appeal the full $39,998.34.
[2] The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, § 403, 42 U.S.C. § 5170b (2012).
[3] Title 44 Code of Federal Regulations (44 C.F.R.) § 206.225(a)(3)(i)-(ii) (2015).
[4] Public Assistance Guide, FEMA 322, at 54 (June 2007) [hereinafter PA Guide].
[5] Id.; see also FEMA Second Appeal Analysis, Memorial Hospital at Gulfport, FEMA-4081-DR-MS, at 2-3 (May 11, 2015) (finding that costs associated with overtime and meals for employees were increased operating expenses even though there was an imposed curfew).
[6] PA Guide at 54-55.
[7] 44 C.F.R. § 206.202(d)(2).
[8] Memorial Hospital at Gulfport, FEMA-4081-DR-MS, at 2-3.
[9] FEMA Second Appeal Analysis, Village of Waterford, FEMA-4020-DR-NY, at 4 (Sep. 4, 2014) (stating the applicant has the burden of substantiating its claims).
[10] 44 C.F.R. § 206.223(a)(3)
[11] PA Guide, at 55.
[12] 44 C.F.R. § 206.202(d)(2).
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