Disaster Relief: Who’s Paying, and How Much?

TAKEAWAYS:
● Federal-state agreement on cleanup costs not available to public.
● Key officials in relief effort not accountable to any statewide official.
● State-federal assistance system is a dizzying web of bureaucracies.
● S.C. taxpayers will have to pay 25 percent of all government relief effort.
● South Carolina has money on hand for disaster relief and road repair.

Many South Carolinians have volunteered their efforts to help in the recovery effort after the disastrous floods of early October; state and local governments have also contributed labor and resources. The largest player by far, however, is the federal government.

Before the rain had fully stopped the President had declared a state of disaster in much of South Carolina, thereby making the state eligible for millions, potentially billions, in federal disaster relief funds. While citizens and state officials are no doubt genuinely grateful for this assistance, media reports have left unclear the process by which these funds are drawn down and the conditions tied to their acceptance.

How does the state become eligible for these funds? Through what programs are these funds distributed? And what must the state provide in return for this federal largesse?

How does the state become eligible for federal disaster relief funds?  

To be eligible for federal disaster funding, the governor must make a request to the president via the regional Federal Emergency Management Agency (FEMA) office, and the president must issue a Presidential Disaster Declaration. The governor’s request is supposed to contain a preliminary damage assessment carried out by state and federal officials to estimate the extent of the disaster and its impact. The request is also supposed to provide information on the amount of state and local resources that have been or will be committed to disaster relief, and provide an estimate of the type and amount of federal assistance needed. Finally, the governor must certify that state and local governments will comply with any federal cost sharing requirements attached to federal disaster funds.

In the event of an imminent or actual catastrophic emergency, the governor is permitted to make an expedited request that may not include specific estimates of damage or the amount needed, but should still outline the anticipated impacts, and categories of needs resulting from the emergency.

Gov. Nikki Haley appears to have made an expedited request. News reports have indicated Gov. Haley made a verbal request for the president to declare a Major Disaster in South Carolina, a request that was granted in just around seven hours.

The president’s Disaster Declaration will stipulate just what forms of federal assistance the affected areas are eligible to receive. President Obama’s recent Disaster Declaration for South Carolina has made affected areas of the state eligible for all three major categories of federal disaster assistance: individual assistance, public assistance, and hazard mitigation.

Once the president has declared a Major Disaster or Emergency, the governor and the FEMA region IV (southeast office) director are supposed to negotiate a federal/state agreement on federal assistance. The agreement should:

  • Identify areas eligible for assistance.
  • Stipulate the federal and non-federal cost shares.
  • Specify the time period in which assistance will be made available.
  • Identify any other conditions for receiving assistance, including procedures for adding counties to the disaster declaration.

If this federal-state agreement exists for South Carolina’s recent disaster, it does not appear to be publicly available.

*Update: According to officials from SCEMD because the declaration was expedited there is no new agreement. Instead the federal assistance process is governed by the Robert T. Stafford Disaster Relief and Emergency Assistance Act

Federal assistance programs: individual assistance

As the name suggests, individual assistance programs are available, upon application, to individual citizens in declared disaster areas. Forms of public assistance currently available in South Carolina include:

  • Rental payments for temporary housing (FEMA funded and administered).
  • Grants for home repairs and replacement of essential household items (FEMA funded and administered)
  • Grants to replace personal property and help meet medical, dental, funeral, transportation, and other serious disaster-related needs (FEMA funded at 75 percent of total eligible costs; 25 percent funded by the state).
  • Unemployment payments up to 26 weeks for workers who temporarily lost jobs because of the disaster and who do not qualify for state benefits (FEMA funded and administered).
  • Low-interest loans to cover residential losses not fully compensated by insurance. Loans available of up to $200,000 for primary residence; $40,000 for personal property, including renter losses, and up to $2 million for business property losses (U.S. Small Business Administration).
  • Loans of up to $2 million for small businesses, small agricultural cooperatives and most private, non-profit organizations of all sizes that have suffered disaster-related cash flow problems and need funds for working capital to recover from the disaster’s adverse economic impact (U.S. Small Business Administration).
  • Loans up to $500,000 for farmers, ranchers and aquaculture operators to cover production and property losses, excluding primary residence. (Farm Service Agency, U.S. Dept. of Agriculture.)
  • Temporary Disaster Supplemental Nutrition Assistance Program (D-SNAP) benefits for households which experienced an adverse effect as a result of a natural disaster (U.S. Dept. of Agriculture funded, South Carolina Department of Social Services Administered).

The majority of these programs are federally funded, but as indicated above some require a state cost share. One such program is grants to replace personal property and help meet medical, dental, funeral, transportation and other serious disaster-related needs, also termed “other needs assistance” by FEMA. Twenty-five percent of other needs assistance payments must be funded by the state.

FEMA provides a running total of approved spending for housing and other needs assistance. As of December 1 the totals were as follows:

  • Total approved individual assistance applications: 23,702
  • Total Housing Assistance – dollars approved $59,830,402.24
  • Total Other Needs Assistance – dollars approved: $9,013,227.99

At a Dec 1 press conference Governor Haley claimed  FEMA individual assistance dollars totaled $67.7 million, but she noted that individuals could still apply for FEMA assistance until midnight January 3.

The Governor also stated that the Small Business Administration had made available $82 million in loans, and that the Department of Housing and Urban Development (HUD) was estimated another $140 million would be needed to get people back into their homes. Haley said she would be asking South Carolina’s congressional delegation to help come up with the $140 million need estimated by HUD. 

Who administers individual assistance programs?

All of the individual assistance programs available in South Carolina are administered by the federal agencies (indicated above: FEMA, the U.S. Small Business Administration, the Farm Service Agency, and the U.S. Dept. of Agriculture) that receive, and approve/reject applications for assistance. State assistance with these programs is provided by the State Individual Assistance Officer/Coordinator (IAO), an employee of the State Emergency Management Division (SCEMD), itself a division of the Office of the Adjutant General.

A note about the adjutant general’s office under which the IAO operates. The adjutant general’s office was recently made a non-elected position. Beginning in 2018, the office will be appointed by the governor, although the adjutant general’s term will be non-coterminous with the governor’s, making the position quasi-autonomous from the chief executive, and the General Assembly has not yet set the position’s terms of office. Thus the adjutant general is presently accountable to no one but the General Assembly, meaning in effect to no one at all.

*Update 2: SCEMD officials claim that state regulation mandates that during an emergency SCEMD answer to the Governor’s Office.

 

The State IAO helps coordinate the implementation of individual assistance programs with the agencies responsible for administering the programs. The State IAO is also responsible for coordinating with local and federal officials to establish and operate Disaster Recovery Centers (or DRCs, where individuals can apply for assistance) in the impacted areas, and reducing duplication of efforts by state and federal agencies and private disaster relief organizations.

Finally, the State IAO is tasked with maintaining and providing daily reports of assistance to the State Coordinating Officer (SCO) and Governor’s Authorized Representative (GAR). The SCO and GAR are each appointed by the governor to act as the governor’s representative/assistant in matters of state and federal disaster assistance respectively.

Federal assistance programs: public assistance

Public assistance programs are available to state agencies, local governments, Indian tribes, and certain Private Non-Profit (PNP) organizations (e.g. medical facilities, custodial care facilities, educational facilities, and emergency facilities). These programs provide reimbursements for emergency and permanent work, two categories that are themselves divided into sub-categories.

Emergency work – which must be completed within six months of the disaster declaration, subject to extensions of up to 6 months being granted by the GAR – includes:

  • Category A (debris removal): Removal of debris from publicly owned lands or waters.
  • Category B (emergency protective measures): Measures undertaken to preserve public health and safety and to eliminate threats to public or private property (includes search and rescue, demolition of unsafe structures, public information on health and safety issues, and actions necessary to remove or reduce immediate threats to public health and safety and property).

Permanent work – which must be completed within 18 months of the disaster declaration, subject to extensions of up to 30 months being granted by the GAR – includes:

  • Category C (roads, signs, and bridges): Repair or replacement of existing public signs, roads, streets, and bridges.
  • Category D (water control facilities): Repair, restoration, or replacement of flood control, drainage, irrigation works, and facilities operated and maintained by an eligible applicant, and which do not come under the provisions of another statutory authority.
  • Category E (buildings and equipment): Repair or replacement of existing buildings, except for inactive or abandoned ones.
  • Category F (utilities): Repair, restoration, or replacement of water, power, and sewage facilities.
  • Category G (parks, recreational, and other facilities): Repair, restoration, or replacement of parks and other recreational facilities, district roads and access facilities, costs associated with temporary facilities, and other costs approved by the Federal Coordinating Officer (FCO).

Typically state and local governments are responsible for 25 percent of the costs associated with projects approved for public assistance. Private non-profits that receive public assistance are responsible for the cost share associated with their specific projects. Small projects (cost estimates under $120,000) are eligible to receive public assistance payments based on estimated costs as soon as their project is federally approved. Large projects (cost estimates over $120,000) are funded on actual documented costs. On large projects, reimbursement payments are made as costs are incurred and documented. Federal assistance payments do not flow directly to applicants but are held in a federal account until the state (grantee) is ready to award the grants to the applicants (sub grantees) along with the state’s portion of the cost-share.

As of December 1, FEMA reports obligated dollars to South Carolina under the public assistance program are as follows:

  • Emergency Work (Categories A-B) – dollars obligated: $13,451,935.57
  • Permanent Work (Categories C-G) – dollars obligated: N/A

In contrast to these rather minimal numbers at her December 1 press conference Governor Haley gave total FEMA public assistance as $300 million, $37 million of which went towards roads and bridges. 

Note: Although no data on funds currently obligated for permanent work projects is available, as of October 21 the federal government had approved at least six South Carolina counties for all forms of public assistance including permanent work projects.

Who administers public assistance programs?

To repeat, public assistance programs are administered by a combination of state and federal officials and employees. The Governor’s Authorized Representative (GAR) is tasked with developing a Public Assistance Grant Agreement that governs the request for and use of federal public assistance funds in a specific disaster.

It’s the responsibility of the state Public Assistance Officer (PAO) – another employee of the SCEMD – to coordinate all infrastructure matters with the Federal Infrastructure Branch Chief and the federal PAO, and to further establish the State Public Assistance Office. The State Public Assistance Office is staffed with officials and employees tasked with providing assistance to public assistance applicants; acting as liaisons with FEMA and the federal Public Assistance Coordinator; coordinating federal reimbursement to eligible applicants; and maintaining accurate accounting of all financial transactions.

The Public Assistance Office is to administer all public assistance grants, agreements, and contracts.

Officials of FEMA, particularly the federal Public Assistance Officer and the Public Assistance Coordinator approve or reject public assistance applications.

Federal assistance programs: hazard mitigation

The hazard mitigation grant program (HMGP) is another form of public assistance offered by FEMA in presidentially declared disaster states. Like other forms of public assistance, eligible applicants for HMGP funds include state agencies, local governments, Indian tribes and certain Private Non-Profit (PNP) organizations.

HMGP funds can be used on projects that will reduce or eliminate losses from future disasters. The projected savings provided by an HMGP project should outweigh its implementation costs. Some examples of potential HMGP projects provided by FEMA include:

  • Acquisition of real property for willing sellers and demolition or relocation of buildings to convert the property to open space use.
  • Retrofitting structures and facilities to minimize damages from high winds, earthquake, flood, wildfire, or other natural hazards.
  • Elevation of flood prone structures.
  • Development and initial implementation of vegetative management programs.
  • Minor flood control projects that do not duplicate the flood prevention activities of other federal agencies Localized flood control projects, such as certain ring levees and floodwall systems, that are designed specifically to protect critical facilities.
  • Post-disaster building code related activities that support building code officials during the reconstruction process.

Again, the state is responsible for 25 percent of the eligible costs of each project funded by hazard mitigation payments. Overall hazard mitigation funds are capped by the federal government based on the amount of other forms of federal assistance received by a disaster state. HMGP funds are based on a percentage (15 percent of the first $2 billion and 10 percent from $2 to $4 billion) of the total federal share of funds received by the state as a result of a presidential disaster declaration.

It’s unclear just how much South Carolina has received in hazard mitigation funds so far.

Who administers the hazard mitigation grant program?

The South Carolina Emergency Management Division (SCEMD) is responsible for the application, award, grant management, and closeout of the HMGP. More specifically, the State Hazard Mitigation Officer (SHMO) appointed by the governor but who works as a part of SCEMD, is responsible for implementation and management of the HMGP. The federal side of the program is managed by the Federal Hazard Mitigation Officer, the SHMO’s federal counterpart.

SCEMD and the SHMO review and prioritize HMGP project applications before sending them to FEMA for review and approval. Similar to public assistance project funding, once a project is approved FEMA will award the HMGP funds to the applicant (typically the state), which will then disburse the funds to sub-applicants (generally local governments). Any work begun prior to FEMA approval is ineligible for funding.

Transportation specific assistance

In addition to funds from FEMA’s public assistance program South Carolina roads are eligible for disaster funding from the Federal Highway Administration’s (FHWA) Emergency Relief Program (ERP). In order to be eligible for the program, disaster damage to highways must be “severe, occur over a wide area, and result in unusually high expenses to the highway agency.” Federal funding from the ERP will cover 100 percent of the costs of emergency repair work accomplished in the first 180 days after the disaster occurs. After this period, permanent repair work funded through the program is funded at a 90 percent federal cost share for interstate highways, and 80 percent federal cost share for all other highways.

Funding for this program is limited, since the regular federal appropriation for the ERP is $100 million annually. However, Congress has periodically provided additional funds for the ERP through supplemental appropriations.

The South Carolina Department of Transportation (SCDOT) has already received $5 million in funding from the ERP. As with most other federal assistance programs, costs are first incurred on the state level and then reimbursed by the federal government.

Again, at her December 1 press conference Governor Haley stated that $71 million had been received for South Carolina roads at the 90 percent federal cost share rate. The Governor also said there was $28.4 million in road damage that was not covered under any federal program. 

Who administers the emergency relief program?

SCDOT must file a notice of intent to request ER funds with the FHWA Division Office located in the state. A full application including a comprehensive list of all eligible project sites and repair costs must be filed by SCDOT with the FHWA within two years of the date of the disaster. Officials with the FHWA approve or reject SCDOT’s application.

How will the state come up with its match?

Between all the federal aid programs South Carolina and its citizens are eligible to receive and the 25 percent state cost share for most of these programs, the state could amass a massive tab quickly.

On December 1 Governor Haley said the total state cost (including all match requirements) was estimated to be $114.4 million. However, she also noted that South Carolinians would still be able to apply for FEMA assistance until January 3, and that HUD had estimated another $140 million would be needed to return people to their homes (which she hoped to receive from the federal government with the help of the State’s federal congressional delegation). 

So: what state funds are currently available to either meet federal matching requirements or for the state to pay damage costs on its own?

The first source is the surplus left over after the state ended its fiscal year on June 30. State newspapers and the Comptroller General reported $87 million in surplus revenues available after the state closed its books for Fiscal Year 2015. According to the Comptroller General’s reports this surplus total includes $19.7 million carried over from the Contingency Reserve Fund.

Beyond this influx, the Comptroller General reports that, as of the start of fiscal year 2016 (July 1, 2015), state government has $319 million in the General Reserve Fund, the state’s one true rainy day fund. The Comptroller General also informs us that state agencies carried forward $415 million in unspent appropriations into fiscal year 2016.

For transportation specifically, the state might consider transferring some of the $255 million currently budgeted for the State Transportation Infrastructure Bank (STIB) – which only funds road expansions – to SCDOT where they can be used for repair work.

Further, every year SCDOT uses state funds to draw down federal highway dollars for expansionary projects. This year, the department might consider using some of this money to match federal emergency funds, or to fund repairs by itself instead. The Policy Council estimates SCDOT used roughly $180 million in the just completed fiscal year to draw down federal funds – funds that cannot be used for maintenance, and that are ineligible for use on half of South Carolina’s roads.

It is also worth noting that $31 million of the $415 million in General Fund revenue carried over by state agencies belongs to SCDOT. And these reserves do not include Other Fund revenue, which makes up the majority of SCDOT’s budget. The Nerve reports that going into fiscal year 2013 – the last year for which records were publicly available – SCDOT carried over $93 million in other funds.

The bottom line: Rather than rack up an enormous obligation with federal matching funds that can only be used according to strict federal guidelines – and that may well be misallocated by a structurally bewildering web of bureaucracies – South Carolina lawmakers ought to begin pursuing options to fund emergency needs with state dollars.

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