Why Minnesota and other states are worried about FEMA COVID relief payments

As Minnesota state government begins to see the bottom of the more than $1.87  billion pool of money it received from the federal coronavirus relief package, the CARES Act, it has begun looking to other federal sources to pay for pandemic response.

One of those is disaster relief funds administered by the Federal Emergency Management Agency. Reimbursements from FEMA require a 25 percent state match, but they also cover reimbursement for many of the supplies and emergency responses the state has already paid for with state dollars and CARES Act funds.

But while Minnesota has already begun to make formal applications for reimbursements, it and other states are being told that one expensive item — personal protective equipment such as face masks, gloves and gowns — might be removed from the list of what FEMA will pay for.

That has triggered a formal complaint from the National Governors Association along with organizations representing cities, counties, state legislatures and local emergency management agencies.

“This proposed change to PPE coverage continues a troubling pattern of shifting costs and responsibilities onto states and localities when they can least afford it,” states the letter to FEMA Administrator Pete Gaynor. “PPE is a fundamental need for all COVID-19 related operations and is the definition of ‘emergency protective measure.”

The same letter asks for FEMA to waive the 25 percent match requirement by state and local governments and worries that the recent executive order by President Trump to use $44 billion in disaster funds to pay for a $300 per week unemployment insurance addition has led to the change.

“We hope that the decision to shift the cost of providing PPE to states and localities is not due to the recent strain on the Disaster Relief Fund by the Lost Wages Assistance program,” the governors’ letter states. 

No change has been announced, and FEMA issued a statement denying any intention to do so. “FEMA has not issued any policy changes related to the reimbursement of personal protective equipment (PPE),” the statement says. “Supporting PPE has been and continues to be an essential part of FEMA’s support to state, local, tribal, and territorial partners in response to COVID-19 pandemic. Any reports to the contrary are not accurate and misinformed. FEMA regularly reviews program policies and guidance to ensure that state, local, tribal and territorial partners have the best guidance available and to ensure the appropriate use of federal funding. If and when FEMA issues updated policies we will ensure we communicate that clearly to all our partners and stakeholders.”

Minnesota Management and Budget Commissioner Myron Frans said this Thursday: “We need clear guidance from our federal partners as we manage both a global health crisis and an economic crises. PPE is vital to our efforts to slow the spread of COVID-19 and we will continue to work with FEMA to reimburse these expenses.”

The state has already applied for FEMA money for PPE purchases,  COVID-19 mobile testing, support for the state Emergency Operations Center and for the $5.5 million spent to purchase a cold storage building in St. Paul that was considered needed as an emergency morgue. So far, the building has not been used.

The first batch of applications to FEMA is for a relatively small amount of money — just $456,070 for PPE, for example, and $240,243 for testing — and Frans has said he thinks the state could eventually ask for reimbursements in the hundreds of milli0ns of dollars. All of that money could then go back into the CARES Act or to the state general fund if it came out of a special $200 million COVID-19 Minnesota Fund.

That fund was created by the Legislature in March, but all but $9.1 million has already been allocated. Still, that fund alone has been used to purchase 2.4 million N95 masks, 10 million surgical masks, 400,000 cloth masks, 353,000 face shields, 60 million gloves, 7 million gowns and 75,000 bottles of hand sanitizer.

The first allocation made from the state’s CARES Act grant was $19,5 million for critical care supplies on May 18. Other allocations have gone to testing, tracing and emergence services as well as for food programs, housing assistance and child care. Of the $1.87 billion received in the spring, the state has allocated all but $161 million.

But under regular FEMA processes, a state has to purchase and use supplies and use them in a way that FEMA determines is eligible under disaster relief.

“We have a lot of our expenses that qualify for FEMA reimbursement that are related to COVID-19 responses, in particular a lot of work at the state Emergency Operations Center,” said Frans earlier this month. 

But he said FEMA reimbursement is a slow process. “That’s why there’s a lag, because some of the money we appropriated in March and April for these tasks are now being spent,” Frans said. “So we’re now getting these applications in.” 

States are just now seeing how FEMA is responding to certain requests.

“We’ll know in the next month or so,” Frans continued. “But we frankly hope that there could be a lot of reimbursement for the expenses we’ve done, both the money we spent at the state level and also some of the money we spent with CRF (COVID Relief Funds). That’s a very important function we’re engaged in right now, seeking FEMA reimbursement.”

He estimated the possible reimbursement at “tens of millions and we hope hundreds of millions. We just don’t know.”

Gov. Tim Walz said he thinks the federal government promised the states that if they carried out PPE purchases and testing, the federal government would help pay for it. 

“When they told us they weren’t going to supply PPE and they weren’t going to do the testing, that that was a state responsibility, they said would support us in those efforts,” Walz said. “In fact that has not happened. Every state is in the same boat but some are in real crisis situations.”