o FEMA Headquarters notified FEMA Region X in July 2011 that NEMIS was inaccurately calculating the 4/3 rule, resulting in an overpayment of subgrantee administrative (SGA) funding for projects with less than a 75% Federal cost share. Region X sent a Notice of Debt letter in June 2013, requesting OEM to repay the overpayment of $38,907.88 in SGA funds that had already been paid out to the subgrantees. OEM appealed and Region X denied the appeal.
• Reason for Denial
o The denial by Region X stated that it is not within FEMA’s purview or legal authority to forgive debt imposed by Federal regulations.
o 44 CFR 206.440 Appeals; 44 CFR 13.51 Later disallowances and adjustments; 44 CFR 13.52 Collection of amounts due; 44 C.F.R. 206 § 439 Allowable costs
o OEM restated arguments in the 1st appeal that the three subgrants did not exceed the 75% federal cost share, the subgrantees had already paid more than their fair share, and the debt should be forgiven due to the federal system error, adding that forcing grantees to cover the cost of an error in a federal system represents an unfair burden. The relevant issues identified by FEMA HQ are: 1) Whether the Grantee must repay excess funds due to a miscalculation error from a Federal system and; 2) Whether the subgrantee is entitled to additional funds based on the funding of the subgrants below the 75% maximum Federal Cost Share.
• FEMA Findings
o FEMA HQ denied the 2nd appeal, upholding Region X’s decision to deny the 1st appeal.
o Rationale: FEMA is required to recoup excess funds in accordance with 44 CFR 13.51 and 44 CFR 13.52, stating respectively:
“The closeout of a grant does not affect: (a) The Federal agency’s right to disallow costs and recover funds on the basis of a later audit or review; (b) The grantee’s obligation to return any funds due as a result of later refunds, corrections, or other transactions.”; and, “Any funds paid to a Grantee in excess of the amount to which the grantee is finally determined to be entitled under the terms of the award constitute a debt to the Federal Government.” .
o Reference(s): 44 CFR 206.440 Appeals; 44 CFR 13.51 Later disallowances and adjustments; 44 CFR 13.52 Collection of amounts due; 44 C.F.R. 206 § 439 Allowable costs.