        
        
        
        
        
                  FEDERAL EMERGENCY MANAGEMENT AGENCY
        
        
        
                     Management Costs Interim Rule
                             Public Meeting
        
        
        
                           December 10, 2008
                           800 K Street, N.W.
                            Washington, D.C.
        
        
        
        
                                   A T T E N D E E S
        
                  JOHN ALLEN, FEMA, GPD, GMD
                  RUBEN ALMAGUER, SERT (Florida)
                  RAYMOND F.Y. BLAS, Governor's
        Representative (Guam)
                  MARKO BOURNE, FEMA
                  DOUGLAS CAMPBELL, Senate Homeland
        Security & Government Affairs
                  ELISSA CARLETON, FEMA
                  SHIRLEY COLLINS, SERT (Florida)
                  MOISES DUGAN, DHS-OIG
                  RAMSEY GREEN, Recovery School District
        (New Orleans)
                  LARA ILAO, FEMA Law Association
                  HONG KIM, FEMA
                  FRANK LaCOURSE, Consultant
                  NICOLE LaROSA, DHS, FEMA
                  TOM LEWIS, Louis Berger Group, Inc.
                  JONNA LONG, FEMA
        
        (Attendees continued on the next page.)        ATTENDEES (continued):
        
                  LAURA McCLURE, FEMA
                  ERIN McMUNIGAL, FEMA
                  VAN PACE, DHS, CFO, GPO
                  CYNTHIA POLIT, DHS HQ
                  KRISTIN ROBINSON, NEMA
                  DAVID SHAPIRO, Consultant, Disaster
        Planning & Recovery
                  ALAN SNYDER, New York Governor's Office
                  ROSEMARY SPRINGER, DHS, CFO, GPO
                  HOWARD STRONACH, FEMA
                  KEITH TURI, FEMA
                  DENISE YANDLE, FEMA
                  BETH ZIMMERMAN, DEM (Arizona)
        
        
        
        
        
        
                                 P R O C E E D I N G S
                         -    -    -    -    -
                  MR. BOURNE:  Good afternoon, everybody.
        My name is Marko Bourne.  I'm the director of
        Policy for the Federal Emergency Management
        Agency, and this is a public hearing, meeting
        really, on the management costs rule, FEMA's
        management costs rule.
                  There are a couple of rules of the road
        and notes for how we will proceed.  We do have
        folks from FEMA here from our Office of General
        Counsel, the policy office, some program folks,
        et cetera.
                  However, under the rules of rule-making,
        we will not be able to respond or answer
        questions.  We're here to take input from you,
        information on comments that you have on the
        pending rule, any information that you care to
        provide to us on the rule.
                  We will take all of that information,
        make it part of the record.  We'll adjudicate our
        response to that in the formal rule-making        process, and you'll be able to see exactly what
        was done with the information that you provided to
        us and what decisions were made through that
        process.
                  As a result, it can't be a dialogue that
        we can have here today.  All we can do is take
        input from you and then proceed to finishing out
        the rule-making process and the adjudication of
        all the comments from the various public comment
        periods that have happened over the last several
        months and several years.
                  FEMA is sympathetic to the comments of
        the states and locals and others to the rule.  We
        are looking for your input.  The more detailed
        input you can provide us, the better information
        we will have in order to make final determinations
        on the text of the rule and the issues that have
        been raised through the comment period.
                  That said, in order to try to make it an
        orderly process to give everybody an opportunity
        to provide their information on the record, what
        we will do is go around the table.  To those that        are not at the table, if you intend to speak,
        please come to the table; that's where the
        microphones are.
                  Once we've done at least one circuit, we
        will provide an opportunity for anybody who wishes
        to provide follow-on information that they may not
        have provided in their first opportunity to do so,
        and we'll provide everybody an adequate time to do
        that.
                  I do ask, just for the care and feeding
        of the folks to follow you, to try to keep your
        information -- certainly get it to us in a concise
        manner and certainly provide us all that you wish
        to, so we can make sure that everybody has an
        opportunity to speak today in the time that's
        allotted to us.
                  With that, we've got some housekeeping
        items for those that need copies of things.
                  MS. McMUNIGAL:  First off, I'm Erin
        McMunigal.  I'm FEMA's regulatory counsel.  I have
        here copies of the management costs rule as well
        as the notice of this meeting.  So in case you        want to refer to the text of the regulation or any
        of the data that was provided in the meeting
        notice while you speak, feel free to take one.  If
        there aren't enough, come on up and grab.
                  When you speak, for the interest of the
        court reporter, we need you to either come and sit
        at the chair here to my right or over to the chair
        on the left side so that -- the other thing, too,
        is that she can't understand what people say when
        there are multiple people speaking.  So we just
        ask that you respect your --
                  MR. BOURNE:  We'll do it one at a time.
                  MS. McMUNIGAL:  -- so that everybody does
        not speak at once.
                  MR. BOURNE:  Okay.  With that, we'll
        begin.  I'll just make an arbitrary decision, and
        we'll go over to this side of the table.
                  Do you have comments you'd like to make?
                  MR. ALLEN:  I don't have any comments,
        but I'm John Allen.  I'm the section chief of
        Policy for the Grants Management Division.
                  MR. BOURNE:  Oh, okay.  If it's FEMA        staff or DHS staff, we've got to make sure that,
        one, you probably shouldn't be at the table.  And
        that way, just so everybody knows that nobody will
        say anything.  Sorry about that.
                  Okay.  So we'll start over here.  And if
        you could, could move to the mic, that'd be great.
                  We need you to move to the mic.  Thank
        you.
                  MS. McMUNIGAL:  There's no requirement to
        speak.  If you just want to listen, you can
        listen.  You don't have to speak.
                  MR. BOURNE:  But if you had something to
        offer, we're offering that opportunity.  Okay. 
        We'll start.
                  MR. BLAS:  Good afternoon today from
        Guam.  I'm Raymond Y. Blas.  I'm the governor's
        authorized representative.  I have a written
        testimony, but on our letter it says that we're
        supposed to just listen, but I'll just read out my
        written testimony.
                  "State Management Costs Interim Final
        Rule written testimony:  The decrease in public        assistance grant program management costs to 3.34
        percent and 4.89 for the hazard mitigation grant
        program will present an ever increasing burden to
        the Territory of Guam.
                  "The reduction to program costs will
        result in reduction to our staffing patterns and
        overall effectiveness of the program's
        administration.
                  "Decreased staffing will certainly result
        in reduced coordination of the pre-application and
        application processes; reduce technical assistance
        to applicants; reduce outreach; delays of
        monitoring projects; quarterly reports, appeals
        and closeouts.
                  "It will also become necessary to
        eliminate training programs for sub-grantees. 
        This will ultimately result in increased
        de-obligations of funding, additional appeals and
        negative audit findings, which would in long term
        greatly impact the costs to the Federal Emergency
        Management Agency.
                  "It will also impact our community which        has already suffered loss in the disaster, who
        depends entirely upon assistance from their local
        government and federal assistance.
                  "Also, Guam does not feel it is cost
        effective to provide management costs funding to
        sub-grantees.  If the grantee has to process,
        review and maintain documentation for this cost,
        the overall cost for sub-grantees to document the
        costs and the time for FEMA to review the
        documentation and process a payment will be
        substantial.
                  "This amount of overhead cost seems fine
        for a large project, but not for the small amount
        of management costs funding we would provide for a
        small project considering the grantee can advance
        an applicant up to $64,200 for a small project
        without documentation."
                  That's all, ladies and gentlemen.
                  MR. BOURNE:  Thank you very much.
                  MR. BLAS:  And thanks for giving us the
        opportunity.
                  MR. BOURNE:  Thank you.                  Next?
                  MR. BLAS:  Can I go ahead and --
                  MR. BOURNE:  Yes, you can leave that for
        the record.
                  MS. ZIMMERMAN:  Good afternoon.  I'm Beth
        Zimmerman from the State of Arizona Emergency
        Management, and I appreciate the opportunity to be
        here to comment once again on the Management Costs
        Interim Final Rule.
                  We've calculated the actual public
        assistance management costs incurred in three of
        our seven federal declarations, 1347, 1422 and
        1581, using the requested methodology to determine
        the percentage rate for each of them.  Our rate
        was 9.06, 19.18 percent and 7.94 percent,
        respectively.
                  This is exclusive of the sub-grantee
        administrative allowance.  If the sub-grantee
        administrative allowance is included in the rate,
        it increases them to 11.81 percent, 22.12 percent
        and 10.71 percent, respectively.
                  Our management costs data, I have that        attached to this letter.  Our actual rates far
        exceed, as you can see, the 3.34 percent proposed
        initially, or currently.
                  As the grantee for the PA grants to the
        State of Arizona, we do not support the federal
        government dictating the percentage or any set
        amount of management costs that should be passed
        along to the sub-grantees.
                  The grantees should be able to determine
        the percentage, if any, should be passed on to
        them.  This process to receive the management
        costs must also be streamlined and expedited in
        the future.
                  Arizona is one of three states that was
        approved by FEMA and has successively managed the
        public assistance program for FEMA through the
        State Management of Disasters program.  This has
        equated to less FEMA resources and financial
        impacts to the federal government.
                  FEMA calculated the cost savings to the
        federal government by the state managing program
        to be in excess of $400,000 from the date of the        declaration through the closure of a JFO we had
        back in 2002 for eight weeks.
                  So in eight weeks, we saved over $400,000
        to the taxpayers by the state accepting this
        responsibility.  The state's acceptance of this
        and the participation in the grant process, we
        must be compensated for our efforts.
                  It appears that FEMA is once again caught
        up in the policy shift disconnect.  On one hand
        historically, FEMA has articulated the policy to
        encourage states to manage more of the disasters
        and to have more responsibility for the disaster
        recovery process.
                  And now FEMA is providing less incentive
        for states to participate in disaster recovery
        operations.  We can only infer that the immediate
        steps must be taken to reduce the administrative
        costs by cutting funding and forcing a decrement
        in services.
                  We are not opposed to saving money as
        long as the states are fully integrated into the
        creation of such policies and procedures.         Short-term cost savings this year and next may
        have a long-term impact on total disaster recovery
        for large-scale, multi-year events that may result
        in increased costs to taxpayers in the out years.
                  Another option for the PA management
        costs is to structure them in line with how much
        participation the state is willing to commit to
        before, during and after a disaster, such as the
        FEMA Individual Assistance Program offers states
        three choices for administering the individual
        assistance program:  FEMA-only, jointly or
        state-only.
                  And why not offer incentives for states
        that accept the responsibility and are accountable
        for the public assistance program?
                  Arizona supports the recommendation
        provided by the National Emergency Management
        Association, NEMA, for the Management Costs
        Interim Final Rule for a flat rate of 10 percent
        for the PA program.  This percentage is consistent
        with other federal grants that are less complex
        and require less management oversight.                  Once again, thank you for this
        opportunity to present to you.  This was filed to
        the docket on Monday, and we have our cost data.
                  Do you all also want a copy of this or
        what's the proper --
                  MR. BOURNE:  You can leave it here. 
        That'd be great.
                  MS. ZIMMERMAN:  Okay.  Thank you.
                  MR. BOURNE:  Thank you.
                  Okay.  I guess we'll go over to this side
        of the table.
                  Who'd like to begin?  We'll start at that
        end.  Anybody?
                  MR. SHAPIRO:  I can make some comments.
                  MR. BOURNE:  Okay.  Well, there you go.
                  MR. SHAPIRO:  My name is David Shapiro. 
        I'm a consultant.  I'm speaking for myself, but my
        clients do include the State of Louisiana and some
        very other large FEMA participants.
                  My feeling is that FEMA is being penny
        wise and dollar foolish in these regulations.  The
        states need to be able to effectively and        adequately staff up when there is a disaster.
                  They need to get people out very, very
        fast to assist the sub-grantees who very often
        have very little knowledge of the program, and
        they will be influenced by factors which may
        create a large amount of ineligibility or future
        costs.
                  I have worked with FEMA.  I've worked in
        the PA program for both FEMA, for the states, as
        an independent consultant for about 14 years.  And
        the program at one time was a relatively simple
        program.  It's become much more complicated.
                  And the way that FEMA looks at
        eligibility has taken the length of a project from
        going from a couple of weeks in many instances to
        a couple of years before you can get your final
        eligibility determination.
                  This all costs money.  It costs
        administrative money.  The applicants get worn
        out.  The states don't have adequate staff to be
        able to support the applicants.  FEMA very often
        will drop in literally hundreds of people when the        states have only a small fraction of those people. 
        And it's important that the states perform their
        role as a grantee.
                  FEMA is taking too much of a
        micro-analysis of what goes on.  FEMA should be in
        there reviewing the eligibility, reviewing the
        project worksheets, reviewing reasonable costs but
        not in there micro-analyzing, which means the
        state has to go in there and micro-analyze, and
        the applicant has to go in there and
        micro-analyze.  And this all costs a lot of money.
                  So if the states are better prepared, if
        they can better prepare the applicants, the whole
        process is going to be a lot simpler and a lot
        cheaper to administer in the long run.
                  MR. BOURNE:  Thank you.
                  Next?
                  MR. LaCOURSE:  My name is Frank LaCourse,
        also a consultant.  We are working in multiple
        states.  The issue with the management costs being
        set at 3.34 percent, the effect on the state is
        they have less staff and less ability to react to        the large number of applicants, sub-grantees, that
        they have to deal with.  They're getting out in
        the field too late; too many things have happened.
                  There are instances where it's a real
        issue when sub-grantees don't understand the
        rules.  They make mistakes in contracting and how
        they procure their services that eventually end up
        being ruled ineligible.  It's costing them
        millions of dollars.
                  And some of that is not only in the
        3.34 percent that's being given to the states;
        there's also a no-mandated pass-through.  I know
        that the states don't necessarily agree with the
        pass-through to the sub-grantees because they need
        that to do their job and to perform their
        responsibilities.
                  But at the applicant level, they have
        gone through now what was once a sliding scale
        from 3 percent to half a percent on the direct
        administrative costs, which was once more of an
        allowance based on a sliding scale.  And now it's
        been reduced to unofficial direction in the field        as to how that's being implemented.
                  We're seeing cases where there are
        $10 million projects that result in not a half a
        percent as it was in the once sliding scale. 
        What's actually being estimated for their
        administrative costs then becomes one-tenth of
        your half a percent.
                  It becomes 5/100ths of a percent.  It
        becomes a minuscule number that they can't
        function with.  We're talking $5,000 no matter how
        large a project is for an applicant's direct
        administrative costs.  They're being limited to an
        estimate of $5,000 no matter how large.
                  With them being limited to that and no or
        very little state pass-through on the management
        costs, there's no way that they can effectively
        manage their grants at the grantee level or at the
        sub-grantee level.
                  There's no way they can manage those
        grants and stay in compliance with the plethora of
        regulations that they're required to follow. 
        They're going to be so far out of compliance        because they can't afford to actually staff it to
        be in compliance.
                  At this point, we're giving them
        virtually nothing.  We're giving them no
        availability for resources, yet we're putting a
        huge amount of requirements on them to stay in
        compliance or they end up with the obligations
        later.
                  They're going to have major issues in the
        audit process.  They're having issues on the
        front-end of a disaster, with proper procurement
        and understanding what those rules are.
                  And they're being limited to not only not
        being able to provide their own staff, with very
        limited state staff.  They're having issues with
        hiring a consultant to come in to help them to do
        that.  That's being all but ruled out at the field
        level.
                  Within FEMA, there's unofficial guidance
        to cap direct administrative costs at $44 an hour
        in the field no matter if that's force account
        labor or if they've hired a consultant to help        them to stay in compliance so that they don't
        issue $12 million worth of contracts that are all
        going to be ineligible because of improper
        procurement, because they didn't know and they
        were being told not to hire a contractor directly.
                  This has happened where they've been told
        directly not to hire a contractor because you're
        going to be capped at $44 an hour.  And it's
        unofficial guidance that's been distributed and
        used.
                  Two documents, one in draft form and one
        that is literally just a Word document that have
        been used in every disaster since Iowa.  These
        documents are actually being circulated in the
        field as direction.
                  They are not policy and they're not
        disaster-specific guidance anywhere but yet
        they're being used, as part of this without any
        mandated pass-through.  In Texas, half a percent
        is what the state is passing through, but in many
        states, that pass-through is zero.
                  That doesn't allow for the sub-grantees        to have any chance of surviving this process
        without taking -- they're taking considerable risk
        on the front-end without understanding the rules. 
        And they're really being handcuffed and not
        allowed to hire someone to help them that does
        understand the rules to keep them out of trouble.
                  MR. BOURNE:  I'm told I can ask you one
        question.
                  What region are those things going on in?
                  MR. LaCOURSE:  It's happening in Region
        6.
                  MR. BOURNE:  Okay.  Thank you.
                  MR. LaCOURSE:  That would be all I have
        to say.  Thank you for the opportunity to speak.
                  MR. BOURNE:  Thank you.  I appreciate you
        being here.
                  I guess we'll head to the back.
                  Anybody else around the other side of the
        post?
                  Seeing no other, are there any follow-on
        comments that anybody would like to provide?
                  Okay, given that, we certainly weren't        sure how long the meeting would certainly go on. 
        But I appreciate all of your attendance and any
        input that you've provided to us, both written and
        verbal.
                  We will adjudicate all the comments.  You
        will see the results of our decisions on the
        comments that you've made individually as part of
        the docket.  It'll all be posted.
                  It is FEMA's intention to close out this
        rule-making fairly quickly, given how quickly
        anything is in the federal rule-making process,
        and address all the issues that have been raised
        both here and in prior public hearings and prior
        open forums of the rule.
                  Again, thank you all for attending.
                  How long is the docket?  We'll keep the
        meeting open here for another half an hour or so
        just in case anybody comes in late.
                  MS. McMUNIGAL:  The written docket is
        open until midnight tomorrow, if you'd like to
        submit additional written comments or data.
                  MR. BOURNE:  Okay.  Thank you very much        everybody.  I appreciate you being with us.
                  (A recess was taken.)
                  MS. McMUNIGAL:  Identify yourself.
                  MR. LaCOURSE:  Frank LaCourse.  An
        additional question being, when the final rule is
        published, whether it will be retroactive back to
        the original date of the interim final rule so
        that it'll be retroactive back to all the
        disasters that this has been applied to.
                  In addition to that, I also ask why there
        have been no decisions made on any appeals on the
        direct administrative costs that is associated
        with this.  This is all part of the change; why
        there's been no answer to any of those appeals
        dating back to Iowa.
                  Appeals had to have been filed for at
        least six months, and there's not been a single
        ruling made.  And everyone nationwide is waiting
        and watching to see what those responses are.
                  MS. McMUNIGAL:  We are unable to answer
        those questions right now at this time.
                  MR. LaCOURSE:  I understand.                  MS. McMUNIGAL:  As for the question of
        retroactivity, you asked a question but did not
        state your position or justification for whatever
        position you would like; if you would like to
        state that.
                  MR. LaCOURSE:  Well, obviously, if
        there's a change to -- between the -- if the
        percentage is increased or how it's applied is
        changed in the final rule, of course, it --
        obviously, if it's in the favor, especially from
        my point of view, for the sub-grantees -- in this,
        they have virtually no guarantees of any help.
                  And they've seen what help they had from
        the original administrative sliding scale being
        taken away.  They've seen that money eroded, and
        yet there's no guarantees or protection for them
        in this rule to guarantee them some amount of
        pass-through if that's the change in this.
                  Obviously, all of the sub-grantees would
        like to see this then applied retroactively back
        to their disasters.  They've incurred -- almost
        all have incurred much more costs than they're        ever going to be reimbursed, whether it's direct
        administrative or grants management.  They're not
        being reimbursed for half of what they're being
        forced to spend.
                  MS. McMUNIGAL:  With this new additional
        comment, is there anyone who would like to add or
        discuss additional comments?
                  MR. SNYDER:  Good afternoon.  Alan
        Snyder.  I'm with Governor David Patterson's
        office.
                  Governor Patterson, along with the
        governors of Texas, Florida and California, in
        September sent a letter as part of the iteration
        of rule-making that closed in September to
        Secretary Chertoff, asking FEMA to hold a public
        meeting.
                  And the reason we did that is we felt
        that it was important there was a dialogue with
        the emergency management community before new
        management costs rules went into effect.
                  I think our preference would have been
        for this dialogue to have occurred before last        November because what we're faced with is sort of
        a one-way conversation, where we can tell you our
        concerns with the interim final rule but you can't
        really respond to those concerns.  And we
        understand that's how the rule-making works.
                  With that said, New York State has
        estimated using our past previous nine federal
        disaster declarations that in total would have
        cost us about $33 million for the past nine.  And
        all of this has been submitted to the docket
        several times.  And our emergency management
        director submitted new comments last night to the
        docket.
                  A couple of observations.  As was
        suggested earlier, no guidance -- at least in our
        region, we haven't seen any guidance in the field
        for how this is being implemented.
                  So in effect, when our emergency
        management officers contact the region, what
        they're told as well, it's still under
        rule-making; we can't really tell you how we're
        putting this interim final rule into effect, which        is frustrating for us.
                  I think, too, the larger question is we
        haven't seen any evidence since the interim rule
        went into place that it's had its intended effect
        of enhancing states' ability to manage and respond
        and recover from disasters.  And we hope that as
        the rule-making moves forward that FEMA does offer
        some sort of evidence, some tangible proof that
        the rule's had its intended effect.
                  More broadly, our emergency management
        counsel -- and I'm not a lawyer, but echoing what
        their comments are is that DMA 2K is sort of the
        impetus -- or FEMA's drawing the authority from
        DMA 2K to push this interim final rule forward. 
        And our counsel's office doesn't see where in DMA
        2K it permits FEMA to cut the management costs to
        the extent that they're doing.
                  Again, to sum up, from the governor's
        perspective, it's curious that the interim final
        rule was -- or the rule was first put forward in
        '02 and then there was a five-year period where
        the emergency management community heard nothing        from FEMA, and then all of a sudden, an interim
        final rule went into place without the benefit of
        having a dialogue with the emergency management
        community.
                  But we do again thank you for responding
        to the governor's request for this public meeting
        and appreciate you taking our comments down for
        the record.
                  MR. BOURNE:  Thank you.
                  MS. McMUNIGAL:  Thank you.
                  MR. BOURNE:  Anybody else?
                  Thank you very much.  All right.  I think
        we can close the record.
                  (A recess was taken.)
                  MR. BOURNE:  We have had an additional
        commenter come forward, and we want to offer you
        the opportunity to speak on the record.  I'd be
        happy to take any comments that you have.  And
        again, the written comments can be posted to the
        docket until --
                  MS. McMUNIGAL:  Midnight.
                  MR. BOURNE:  -- midnight tomorrow night.         So if you have anything additional beyond what
        you'll say here now, you can certainly post it to
        the docket in written form.
                  That said, please identify yourself and
        go right ahead with your comments.
                  MR. GREEN:  Sure.  Thank you for having
        me.  My name is Ramsey Green.  I'm the deputy
        chief operating officer of the Recovery School
        District of New Orleans.  We are the second
        largest applicant in all of Louisiana due to
        Hurricanes Katrina and Rita.  And our
        responsibility is to rebuild the public schools in
        the City of New Orleans.
                  We were created shortly after Katrina. 
        We're responsible for running 107 school
        facilities out of 128 in what was known as the New
        Orleans public school system.  Our state came in
        and took over the local schools of New Orleans.
                  In November, I guess about three weeks
        ago, we came out with our master school facilities
        plan.  It's a six-phase plan, about $1.6 billion. 
        It accounts for a lot of the deferred maintenance.                  The school system in New Orleans was in a
        terrible condition prior to Katrina.  We suffered,
        due to our estimates, about a billion dollars in
        Katrina and Rita-related damage.  We had some due
        to Gustav, but we actually protected our assets
        this time.  Katrina, we had no opportunity to do
        that.
                  My only reaction -- Frank LaCourse, who
        did speak, is a contractor of ours.  I happened to
        be in town today.  I got lost on the way here, but
        felt I should say something.
                  Our current administrative percent, I
        believe, is .5 percent, which at $630 million
        obligated amounts to roughly 3.5 to $4 million
        total, and our costs are extremely higher than
        that.  We would love to see a sub-applicant
        separate percent, when we have a percent that's
        set.
                  Our applicant for the state in Louisiana,
        it's called GOHSEP, the Governor's Office of
        Homeland Security and Emergency Preparedness. It
        takes a long time for that money to funnel down to        us.
                  I can tell you from the program
        management and construction management side, we
        probably spend far north of that.  In a given
        three-year period, we have a contract that will in
        the end probably be in excess of 8 to $10 million.
                  We're a school district.  We're not
        professional construction managers, which is why
        we have no choice but to call those kinds of
        people in.  We have a capital improvements
        director who's spent her career building oil
        refineries.
                  So we've gone out and we've built the
        horsepower to build schools.  But we need the
        money to make sure that we can do so using the
        federal taxpayer dollar appropriately.
                  We recognize that we will never have a
        school system in the same condition that the
        school system was in pre-Katrina, which is why
        we're going from a footprint of 128 schools to 85
        schools.
                  But we want to make sure that we're        taking all of the FEMA money that we have.  We're
        again obligated at $630 million.  We've got
        aspirations to go even higher, but we want to
        spend that money appropriately to make sure that
        those 85 schools are good schools.
                  And we recognize that we can't ask FEMA
        for everything, but we want to make sure that the
        money that we do get is pliable enough to rebuild
        schools appropriately and that the administrative
        costs reflects that ability to do so.  That's all
        I have.  Thank you.
                  MR. BOURNE:  Thank you very much for your
        comments.  I appreciate it, and I appreciate your
        traveling.
                  MR. GREEN:  Oh, yeah, I didn't come out
        here just for this.  I have, like, four other
        things, but Frank told me to be here and put me on
        the spot. Thanks for having me.
                  MR. BOURNE:  Thank you very much.
                  Okay.  I guess we're now back off the
        record.
                  (A recess was taken.)                  MR. BOURNE:  We are reopening the record. 
        And just to refresh since we're reopening it,
        we're willing to listen and take comments from all
        of those that wish to do so.  So we cannot respond
        or answer questions, but we can take your
        information.  It'll all be entered into the
        record.
                  We will actually address each and every
        item that you've addressed in your comments, and
        the public docket will reflect the results of that
        adjudication once the final rule is done and
        posted.  So you will see an action based on what
        you've provided us.
                  So with that, who would like to go first?
                  MR. ALMAGUER:  I will.  First of all,
        thank you for --
                  MR. BOURNE:  Please identify yourself for
        the record.
                  MR. ALMAGUER:  My name is Ruben Almaguer. 
        I'm the deputy director for the Division of
        Emergency Management for the State of Florida. 
        And also with me today is my recovery staff        Shirley Collins.  She's also with Florida.
                  First of all, let me sort of share with
        you the thank you for giving us the opportunity to
        sort of reopen the public comment period.
                  I know this has been a debatable issue
        that's been out there for quite a while, and I
        think Department of Homeland Security, FEMA
        specifically, did the right thing to provide more
        opportunity for a debate and discussion based on
        some hard facts and to review this interim rule
        from our perspective.
                  Again, I apologize, not that we're from
        Florida but that we're late.  But we did almost
        have breakfast in Atlanta and head back to
        Tallahassee because it wasn't looking good.  But
        God was watching over us, and so we made it here. 
        So thank you for staying a little longer.
                  First of all, let me share with you a
        little bit about Florida and disasters, not that
        many of you don't know the unfortunate reputation
        that Florida has.
                  Of the top ten most costly disasters in        the nation per FEMA, six of them have affected
        Florida.  And also out of all the presidential
        declarations that have ever happened in the
        history of FEMA, unfortunately, Florida is not
        proud to say that we're third behind Texas and
        California.
                  So we come to you and share with you the
        importance of why we're here and why we submitted
        our recommendations to FEMA on the management
        costs is because we've seen it, we've done it and
        we're doing it.
                  Currently, we have 18 open disasters in
        the State of Florida.  We still have a Florida
        recovery office or some may call a long-term
        recovery office.  It's probably much longer than
        we want it to be because we'd like to close these
        disasters out.
                  So based on the request that you had in
        your advertisement, you'd asked that we identify
        at least two disasters, and as factual as we
        could, to compare the current rule of 3.34 to
        actually true disasters and sort of try to        correlate and provide some factual findings.
                  I would say most people would come into
        this room and share with you give me more.  I want
        more money to do more things.  And that's not the
        intent of Florida regardless that Florida, as well
        as most other states in this nation, is going
        through tough economic times at the state level
        and the local level.
                  We've had the opportunity, and we've
        submitted in our public record what we'll call our
        SMC findings for actually ten disasters.  I share
        with you we had -- actually, it's 14 disasters. 
        We went back ten years.  We could have put all of
        them in, but we pretty much stopped at ten and
        said let's look at those disasters.
                  Let's identify what the costs of those
        disasters were and let's identify if we used a
        current formula of 3.34 percent for those events,
        how would they look today?  Would, in theory, we
        receive more money, less money and how would it
        impact the ability to manage these disasters?
                  We probably can't go much further than        always emphasizing that disasters we all say are
        local.  So when we talk about these management
        costs -- and I know we intentionally left out the
        sub-grantee dollars that would go to locals to
        manage these disasters.
                  We believe that still should be in place,
        and we support that recommendation because we do
        not want to manage disasters in Tallahassee nor
        Orlando.
                  We want to make sure locals that are well
        trained and have limited staff in Florida, and
        have the ability in a disaster to increase their
        staff capabilities or contract out, whatever they
        choose to do so, to be able to effectively partner
        with the state and the federal government to
        manage those disasters.
                  I'm not going to go and literally read
        any notes here or the official document, but we
        found some interesting findings.  I'm not sure if
        you had the opportunity to look at it.  So it's
        not opinion; it's fact.  And like anything else,
        there could be some scrivener errors in this        thing.
                  But we looked at the small disasters, and
        if there is a definition of a small disaster for
        today's purpose, let's call it a less than a
        half-a-billion-dollar disaster, $500 million
        disaster.
                  Most people wouldn't call it a small
        disaster; at least the public wouldn't call it a
        small disaster.  We just went through this little
        Tropical Storm Fay that is over a $300 million
        disaster today that barely got declared.  So I
        think it's important to note that these are big
        events and people are people and business and
        business and economic loss is economic loss.
                  So these disasters when we looked at
        them, we pretty much identified that a 3.34 rule
        would devastate the ability of Florida to have
        enough money to actually cover the costs for these
        disasters.
                  But if you took an average, sort of
        between 5 and 7 percent, we would recommend 4
        being the management costs for disasters that are        less than $500 million.  And those findings are in
        our report.
                  So I think we've identified one, two,
        three, four, five, six, seven, eight -- I think
        actually nine identifiable disasters that we felt
        that those numbers between 5 and 7 percent would
        be more than reasonable to cover the costs, for
        management costs.
                  Now let me make a clear point here.  I
        don't care if it's 2 percent, 100 percent of
        whatever management costs out there, but Florida
        believes that we should be reimbursed for those
        documented, true, approved costs.  So if final
        ruling says it's 50 percent we'll give you, if
        Florida only comes in with 3 percent of documented
        costs, it's 3 percent.
                  So I think it's sort of a flawed concept,
        but yet if I share with you that our costs were
        17 percent, actual documented state and federal
        approved costs, and you have a rule that is
        anything less than that, I think it's a travesty
        to our state and any other state that has that        limited dollar figure attached to it.
                  So we're only asking for the actual costs
        that are documented real towards those disasters.
        There is nothing else to gain in federal dollars
        to be given to the state that the state is not
        getting reimbursed for.
                  Also, let me tell you an interesting
        finding as well that was a surprise to myself and
        Director Fugate as we went through this disaster. 
        We had this little event, 1609, which is Hurricane
        Wilma, which is actually a $1.6 billion disaster
        in Florida.
                  And also that -- and I wouldn't call it a
        catastrophic disaster because I would sort of lean
        much towards a Katrina or other future events.
                  A great minor Hurricane, the 1928 that
        would hit South Florida today, next to Tampa,
        St. Pete, in its actual track with no changes,
        80 years later, would be a catastrophic disaster,
        three times the cost of Katrina.
                  With that being said, I think it's
        important to note with the current rules that you        have in place, you would limit Florida's -- you
        would cap us and every other state at $20 million. 
        Today that actual expense for SMC costs right now
        is $107 million.  So we think it's unfair, and I
        wouldn't even call that a catastrophic disaster.
                  So I think there needs to be some
        flexibility in the rules.  I think there needs to
        be some flexibility for the small disasters, and
        there needs to be some flexibility for the large
        catastrophic disasters.  But more importantly, I
        would think that the capping of 20 million would
        be inappropriate for our state or any other
        states.
                  These are numbers and discussions that,
        remember, I still have not discussed pushing out
        dollars to the sub-grantees.
                  So when we say 5 to 7 percent for those
        smaller disasters and probably 10 percent for
        catastrophic disaster, we're talking those numbers
        would be higher if we supported and you guys
        supported, meaning the federal government, to
        authorize the states to still have the dollars to        push out to sub-grantees.
                  In closing, I would like to have Shirley
        maybe make a couple comments that I haven't had
        the opportunity to elaborate on.  I think FEMA's
        doing the right thing.  I think you're willing to
        look at what's happened in the past and disasters
        that actually have happened today, and in good
        faith ask states is it working or is it not
        working.
                  I don't want to say you had it a
        causative pilot project on the 3.34 rule, but
        there's plenty of opportunity to look at real
        disasters that have happened in the last year that
        have applied to that rule, not only in Florida but
        in other states including Texas.
                  But you can see historically the factual
        impacts of future disasters.  And I don't come
        here on behalf of my state asking for something
        that we don't deserve because, remember, we're in
        it together with the federal government.
                  If you recall, there's something about
        the Stafford Act that reminds us all that there's        at least a minimum of 75 percent federal share. 
        The state has a nickel in these disasters.  We
        believe we should have a cost share in these
        disasters, and we already do that with our 25
        percent cost share for most disasters.
                  Also, there are many disasters that never
        get declared, who never meet the magical threshold
        of the federal government.  And Ike is one recent
        one that we're appealing, that the state is eating
        those costs and there are no federal costs
        associated with that, as well as wildfires and
        other significant events that the parameters are
        much different.
                  So we're not asking for the federal
        government to come into Florida and give us
        everything and the state to be clean of no costs
        associated with managing disasters.
                  Our governor and our director believe
        that this is truly a partnership.  We believe it's
        worked well.  He has the greatest support for both
        the secretary as well as the FEMA administrator,
        and we appreciate your opportunity for giving us        this time to sort of share how these future
        changes may affect or may not have changed
        Florida.
                  Shirley?
                  MS. COLLINS:  Right.  I would like to
        deal programmatically with the regulations as it
        relates to some of the guidance that have come out
        as to how we're going to enforce 3.4 so far as the
        lock-in is concerned.
                  Well, the lock-in is a good idea;
        however, it causes the state and local governments
        to operate in a deficit for three to four months
        until such time as that lock-in is provided.
                  And if the lock-in is going to be
        provided based on the flat rate, we think that it
        should not be given in increments, that you should
        just go on and provide the actual, whatever grant
        amount, put it on the state's letter of credit so
        that they will have the opportunity to draw the
        money down to provide for staffing and the other
        requirements based on the federal regulations.
                  In accordance with the new regulation you        have, the sub-grantees are able to write separate
        PWs to get administrative costs as a separate. 
        That's time intensive, labor intensive; it's going
        to cause additional workload.
                  Therefore, it's no way that the state or
        local government will be able to comply with your
        eight-year requirement when you're putting double
        duty on the state and on the locals and not
        providing ample funding for the local government
        to be able to contract out, also, in large
        catastrophic or even medium-type disasters as was
        with Hurricane Wilma.
                  Local contractors were provided for the
        larger cities and counties that had to contract
        out because they didn't have the wherewithal or
        the expertise to administer or manage the FEMA
        program.
                  If you're dealing with cost containment,
        maybe we need to go back and look at additional
        specific guidance that you've added, so far as
        every project worksheet is a separate grant and
        has to be accounted for and it has to be audited        whether it's $55,000 or whether it's $555,000.
                  It takes the same amount of manpower to
        review it and close it out wherein the funding is
        not being provided.
                  We have some concerns about all of the
        regulations that are tied into the specific
        grants.  For instance, the director feels that the
        Single Audit Act is no longer any use to states
        because each grant PW project worksheet is a
        separate grant and it's being audited by FEMA
        regulations, and that is additional costs to the
        state of which the rate will not cover.
                  So there's a lot to look at, the program
        delivery and the state's capabilities and the
        local's, if we're dealing with cost containment.
                  We're only asking for the flat rate up to
        10 percent; provide the funding to the state in
        order to administer the program; give the state
        the latitude to administer the program in
        accordance with the FEMA regulations; and provide
        the funding for us to do so.
                  MR. ALMAGUER:  Any questions for us?                  MR. BOURNE:  We actually can't ask you
        any.  I'm sorry.
                  MR. ALMAGUER:  Okay.
                  MR. BOURNE:  I don't think.
                  MR. ALMAGUER:  Why were you late? 
        Anything?
                  MR. BOURNE:  No, that we've got.
                  MR. ALMAGUER:  That's all we have.
                  MS. McMUNIGAL:  We just appreciate that
        you're here.
                  MS. COLLINS:  Well, can you all identify
        who you all are?
                  MR. BOURNE:  Oh, I'm sorry.  Yes.  I'm
        Marko Bourne.  I'm the director of Policy and
        Program Analysis for FEMA.
                  MS. McMUNIGAL:  My name is Erin
        McMunigal.  I'm FEMA's regulatory counsel.
                  MS. McCLURE:  Laura McClure, director of
        the Policy Division of FEMA.
                  MS. LONG:  Jonna Long in the chief
        financial officer's office.  We've actually met.
                  MS. COLLINS:  Yes, we have.                  MR. BOURNE:  Just so everybody knows, the
        reason we can't have a dialogue is because the
        rule-making process doesn't allow us to actually
        do that.  It only allows us to take input.
                  MR. ALMAGUER:  I understand.
                  MS. COLLINS:  Well, we do appreciate the
        opportunity for you to reopen it and give us an
        opportunity to voice our concerns and the
        rationale behind it.
                  Florida, as he says, is number three in
        the nation with disasters, and as of now, we have
        18 that we are dealing with.  And that is a
        problem because we're having to deal with the open
        disasters with the same staff and to close them
        out with the same staff.
                  We're six months from hurricane season
        again, and to put us into a box to say, you know,
        maximum $20 million, this is all you're going to
        get, it's causing some undue pressure on the state
        with the economic situation we're all facing at
        this particular time.
                  MR. ALMAGUER:  Thank you again.                  MS. LONG:  We also had an additional
        gentleman and a woman who joined.  You want to ask
        for comments?
                  Did you have anything you'd like to add?
                  MR. ALMAGUER:  He's with the governor's
        office.
                  MR. BOURNE:  Anybody else that may have
        come in?  Okay.
                  Oh, an additional comment?  If you could
        come around.
                  MR. SHAPIRO:  David Shapiro.  Just to
        comment that it's also cost effective for FEMA to
        fund the states, that if the states are not
        funded, the costs to FEMA for administering these
        disasters is going to be more than the costs of
        properly reimbursing the states to be able to be
        proactive and not reactive in the disaster
        process.
                  MR. ALMAGUER:  And Florida agrees.  Thank
        you.
                  MR. BOURNE:  Thank you very much.  And so
        we will close the record again.  Thank you.                  (Whereupon, the meeting at 2:13 p.m. was
        adjourned.)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
