DATE: September 9, 2014 TO: Governor Mark Dayton

Representative Paul Thissen, Speaker of the House Senator Thomas M. Bakk, Senate Majority Leader Representative Kurt Daudt, House Minority Leader Senator David W. Hann, Senate Minority Leader

cc: Jaime Tincher, Chief of Staff Jenn O’Rourke, Deputy Chief of Staff FROM: Jim Schowalter, Commissioner, Minnesota Management and Budget Kris Eide, Director, Homeland Security and Emergency Management SUBJECT: Managing Disaster Expenses Governor Dayton: This memo proposes our agreed-upon strategy to address the needs created by this summer’s severe storms and flooding. It integrates the experience Minnesota Management and Budget (MMB) and Homeland Security and Emergency Management (HSEM) have gained from recent disaster responses, along with the most up-to-date information available on FEMA-4182-DR-MN. FEMA’s preliminary damage assessments are complete and 37 Minnesota counties and three tribal governmentsi qualify under the President’s Disaster Declaration. This means each county has incurred damages totaling at least $3.50 per capita. Cumulatively, statewide damages for this disaster total over $40.8 million. The State of Minnesota partners with the federal government to assure disaster costs are fully recognized in a federal disaster designation. FEMA covers 75% of those costs; thus the 25% non-federal match requirement is $10.2 million. FEMA determined the disaster-related damages in two counties, Dakota and Morrison, did not meet the federal threshold. However, thanks to the new state law passed last spring by the Minnesota Legislature, those two counties will qualify for state assistance. Morrison County sustained storm damages; however, FEMA determined they occurred outside of the incident period. Morrison County does qualify for assistance under Minnesota’s new disaster fund law, as they met the state threshold of $1.75 per capita. Their damage totals $206,000. According to the formula written in the statute, the state’s share of Morrison County’s damages is $155,600.

MEMORANDUM

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Governor Mark Dayton Managing Disaster Expenses Sept. 9, 2014 Page 2 Dakota County sustained $1.7 million in damages to public infrastructure; however, FEMA denied the County’s inclusion in the Declaration. HSEM and Dakota County are appealing that decision. If the appeal is successful, Minnesota’s share will be approximately $427,000. Otherwise, Dakota County will qualify for disaster assistance under the new state law, and the state’s share will be $1.28 million. Resources are currently available for a portion of the State’s share. The 2014 Legislature passed Chapter 312 (HF 3172, Articles 7 and 8), which established a state Disaster Contingency Fund with $3 million of funding to the Department of Public Safety, HSEM. Since county reimbursements must go through a rigorous FEMA review before any federal payments are made, draws on the existing state funds will occur over many months. We anticipate the existing appropriation will be sufficient to reimburse communities for the 25% non-federal share of the FEMA Public Assistance (PA) payments, due between now and January 2015. In addition to these resources, local governments have the option, under Minn. Statutes 477A.015, to advance their December Aid payments from the Department of Revenue. Those advances do not create new state obligations and may ease cash flow problems for some. Advanced Aid payments have already been made to those local governments requesting them. As of Monday, September 8th a total of $70.4 million will have been advanced to 16 counties, 32 cities and 88 townships. We do not have the statutory authority to move other funds to pay for costs of the 2014 storms and flooding. Appropriations for prior disasters, even if unused, cannot be applied to new storm damage. Furthermore, the new Disaster Contingency Fund law did not provide any deficiency spending authority to DPS or HSEM. Looking ahead, our plan is to maximize the use of the $3 million Disaster Contingency Fund and present a comprehensive disaster budget to the Legislature, when it returns in January. This comprehensive disaster budget would also include funding to address state agency needs stemming from this disaster. The current funding is proving extremely helpful in making normal and complete payments on FEMA approved expenses, and will allow additional time to assess total state needs. HSEM will closely monitor payments and will give priority to those local jurisdictions with hardships, particularly townships and small cities. Emergency work will also take priority for current resources. HSEM will further monitor situations where state aid might be needed more quickly and will bring that information forward as it occurs.

i Counties: Beltrami, Blue Earth, Brown, Carver, Chippewa, Dodge, Faribault, Freeborn, Hennepin, Jackson, Koochiching, Lac Qui Parle, Lake of the Woods, Le Sueur, Lyon, Marshall, Martin, McLeod, Murray, Nicollet, Nobles, Pipestone, Redwood, Ramsey, Renville, Rice, Rock, Roseau, Scott, Sibley, Steele, Todd, Wadena, Waseca, Watonwan, Wright and Yellow Medicine; as well as the tribal governments of Bois Forte Band of Chippewa, Prairie Island Indian Community, Red Lake Band of Chippewa.