FOLLOWING PUSH, SCHUMER ANNOUNCES FEMA HAS DECIDED NOT TO CLAWBACK MILLIONS IN ALREADY-SPENT SANDY AID FROM TOWN OF NORTH HEMPSTEAD; SENATOR MADE CASE FOR TOWN, SAYING CLAWBACK WOULD BE GUT PUNCH TO LOCAL TAXPAYERS

Schumer Went to Bat for Town of North Hempstead Following a 2016 Fed Report Recommending That LI Communities Return Money Used To Remove Dangerous Debris, Make Repairs & Do Other Emergency Work After Hurricane Sandy

Without Schumer’s Intervention, Town Of North Hempstead Could Have Been On The Hook To Return Millions In Storm Funds That Helped Town And Residents Recover

U.S. Senator Charles E. Schumer today announced that, following his push, the Federal Emergency Management Agency (FEMA) has decided to not claw back millions in federal Sandy funds Schumer helped secure for the Town of North Hempstead, following a September Inspector General report recommending that these funds be disallowed.

“It’s good news that FEMA has heeded the call and recommended to the OIG that already-spent federal funds not be clawed back from the town," said U.S. Senator Charles Schumer. “The Town of North Hempstead worked in good faith, around the clock, to recover quickly after Superstorm Sandy. Had FEMA approved the Inspector General’s recommendations, local taxpayers would have been on the hook for millions and millions of dollars. Residents in the Town of North Hempstead can now breathe a sigh of relief because FEMA has heard our case loud and clear and made a decision that was in Long Island’s best interest.”  

“We thank Senator Schumer and the Town’s other federal representatives who helped the Town explain to FEMA that after Sandy we followed the necessary procedures, complied with contract rules and served as careful custodians of federal disaster relief funds,” said Judi Bosworth, the Town of North Hempstead Supervisor.

After Superstorm Sandy, FEMA provided millions of dollars in public assistance grants—much of which has been spent but some remains—to The Town of North Hempstead for debris removal efforts, repairs, and other emergency work as a result of the storm. As part of its obligation to reduce fraud and waste, the Department of Homeland Security (DHS) Office of Inspector General (OIG) conducts audits to identify improper payments made to municipalities. Specifically, OIG released a report that deemed $9.9 million in approved funds for the Town of North Hempstead ineligible, unsupported, or unused. The OIG audited $36.6 million in Public Assistance grants awarded to the Town of North Hempstead as a result of Superstorm Sandy. However, only about $5.5 million in funds was at risk of being clawed back, because, according to DHSES, the rest of the $9.9 million was never actually disbursed to the town.

The OIG said that the Town did not follow Federal procurement standards in awarding $4.9 million in debris removal contracts. In October, Schumer explained that, following the storm, the Town was out of power for approximately ten days and Town officials made the decision that immediate debris removal was urgent as a matter of public health and safety. According to DHSES, FEMA determined these costs to be reasonable. Moreover, the OIG recommended that FEMA disallow $3.2 million in duplicate costs for debris removal; the duplicate costs were found and corrected during FEMA’s standard reconciliation process and therefore, Schumer explained that this recommendation was unnecessary. The OIG also claimed that North Hempstead did not provide adequate documentation to support $562,387 in costs, however, Schumer explained that the documentation provided contained a level of detail that DHSES described as routinely accepted by FEMA. Finally, the OIG recommended that $405,158 for costs related to wind damage be disallowed as a duplication of benefits that was covered by the Town’s insurance; they also recommended that $791,175 in costs be disallowed because the Town came in under budget on a project. Schumer, in October, said that instead of commending North Hempstead for completing work under budget, the OIG said these funds should be disallowed.

In October, Schumer made his full case to FEMA on why the money should not be clawed back. Schumer said that local taxpayers should not be forced to bear the burden of costs that, according to the New York State Department of Homeland Security and Emergency Services (DHSES), were previously deemed reasonable by FEMA. Unless blatant fraud was uncovered, Schumer said that these funds should not be recouped.

Schumer’s October letter to FEMA administrator Craig Fugate appears below:

Dear Administrator Fugate and Regional Administrator Hatfield:

I write in regards to the recent Department of Homeland Security (DHS) Office of Inspector General (OIG) reports on Federal Emergency Management Agency (FEMA) grants to the Town of North Hempstead and the Long Beach School District in the aftermath of Superstorm Sandy. The reports recommended that FEMA disallow millions of dollars in funding from the Town and the District. Superstorm Sandy was an unprecedented disaster for the State of New York, and in the aftermath of the storm, communities mobilized quickly to protect public health and safety. I thank you for the attention that you have already given to these two reports, and for engaging the state and the communities in an effort to determine which costs were eligible; I urge you to fully consider all of the facts and circumstances before making a final decision, and not to disallow the millions in funding from these two communities.

The OIG audited Public Assistance grants totaling $36.6 million for the Town of North Hempstead after Superstorm Sandy. The OIG recommended that FEMA disallow $9.9 million in funds that the OIG deemed ineligible, unsupported, or unused. Specifically, the OIG stated that the Town did not follow Federal procurement standards in awarding contracts totaling nearly $4.9 million for debris removal. However, the Town was operating under emergency conditions, as North Hempstead lacked power for ten days following the storm and needed to remove debris from roads and rights of way as expeditiously as possible as a matter of public health and safety. According to DHSES, FEMA also determined the costs to be reasonable. The OIG also recommended that FEMA disallow $3.2 million in duplicate costs for debris removal; the duplicate costs were found and corrected during FEMA’s standard reconciliation process, so it is unnecessary for the OIG to recommend that FEMA disallow the funds.

The OIG claimed that North Hempstead did not provide adequate documentation to support $562,387 in costs; DHSES has stated that the supporting documentation provided contained a level of detail routinely accepted by FEMA, and that the town agency in question should not be penalized because they did not account for their equipment usage in the same way that another town department did. Finally, the OIG recommends that $405,158 for costs related to wind damage be disallowed as a duplication of benefits that was covered by the Town’s insurance; they also recommend that $791,175 in costs be disallowed because the Town came in under budget on a project. Both DHSES and the Town agree about the insurance proceeds and the unneeded funds, but since those projects have not gone through final reconciliation and close out, it is unnecessary for the OIG to recommend that FEMA disallow the funds. Instead of commending North Hempstead for completing work under budget, the OIG characterized the funds, which DHSES states have not actually been disbursed to the Town, as funds that should be disallowed.

The OIG audited Public Assistance grants, with a total estimated value of $35.5 million, for the Long Beach School District. The OIG determined that the School District generally accounted for and expended FEMA funds properly, but stated that Long Beach did not follow federal procurement standards for certain contract costs and recommended that FEMA disallow $668,430 in what they deemed ineligible contract costs. While FEMA regulations disallow the use of cost plus percentage of cost contracts, like the one the School District used for some emergency work, FEMA guidance indicates that the use of such contracts may result in FEMA limiting the PA grant to an amount deemed to be reasonable based on the work performed. According to the school district, FEMA deemed the total costs as reasonable. Therefore, I urge FEMA not to claw back $668,000 more than $680,000 in costs from the School District.

Thank you in advance for your consideration of this important requests. While I appreciate the OIG’s work and mission of reducing fraud and waste, local taxpayers should not be forced to bear the burden of costs that were previously deemed reasonable by FEMA or that otherwise do not violate specific requirements. FEMA should set aside the OIG’s recommendations, and not claw back millions in costs from North Hempstead and the Long Beach School District.

Sincerely,

Charles E. Schumer

United States Senator

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