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Authored by Travis Gillmore via The Epoch Times,

With the state and some local governments facing significant budget shortfalls this year, finances could become even tighter after the Federal Emergency Management Agency, better known as FEMA, informed California officials that it will deny some pandemic-related reimbursement claims.

At issue is money spent on unoccupied hotel rooms and housing homeless individuals for lengthy stays between June 11, 2021, and May 11, 2023, as part of the state’s Project Roomkey program.

The governor’s Office of Emergency Services said it is working to reverse the agency’s decision.

More than $300 million is at stake, according to a Jan. 31 letter sent to FEMA by Nancy Ward, director of the emergency services office.

The change represents a retroactive revision that failed to meet the emergency management agency’s self-declared notification policies that require a 30-day notice to the state, according to the letter.

Such will result in some counties across California experiencing “financial burdens, budgetary shortfalls,” and a diminished ability to provide essential services, Ms. Ward wrote.

A Project Roomkey participant stands outside her door at The Stanton Inn in Stanton, Calif., on October 8, 2020. (John Fredricks/The Epoch Times)

Documents attached to the letter detail costs that some counties would incur, including $22 million for Ventura, $32 million for Sonoma, and up to $34 million for San Diego. San Francisco submitted claims for approximately $881 million, with $190 million ineligible based on the federal government’s recent decision.

Additionally, the state is alleging that FEMA is inconsistently applying its policies for other states. Officials point to the agency’s April 2023 announcement that Vermont would receive nearly $22 million to reimburse costs for hotel lodging and services to homeless populations through July 2022.

The guidelines presented to California in a letter sent by FEMA in October 2023 represent a reimbursement period of a full year less than is being provided to Vermont, according to the letter.

Disputing the state’s allegations, the agency claimed all states are held to the same standards—with guidance coming from the Centers for Disease Control, also known as the CDC.

The agency is reviewing thousands of applications from across the country and is focused on finalizing reimbursement for eligible applicants while maintaining fiscal responsibility, according to the spokesperson.

In the letter informing the state of the agency’s decision to deny claims, Robert J. Fenton, regional administrator for FEMA Region 9—encompassing California—noted the efforts made to reduce COVID transmission by July 1, 2021, as a reason guidance was adjusted at the time.

The agency is willing to cover costs incurred or stays of up to 20 days, the timeline recommended by the CDC said at the time. However, the bill submitted by California includes longer stays that make the claims ineligible, Mr. Fenton wrote.

Additionally, stays of any length for homeless individuals qualify for reimbursement only if they tested positive for COVID-19, had been exposed—with documentation from health officials or medical professionals—or were at high-risk, including those over 65 or with specific underlying health conditions.

With the state and federal agency at odds over the interpretation of policy guidelines, several counties are working with a disaster recovery attorney to seek compensation.

The lawyer representing the counties, Wendy Huff Ellard of the national law firm Baker Donelson headquartered in Houston, Texas, told The Epoch Times the process could be lengthy and might ultimately result in arbitration.

She said counties are hopeful that FEMA will reverse its decision once its impact on local governments is better understood.

“The counties were under the impression that these costs would be covered,” Ms. Ellard said. “They’re relying on FEMA to reimburse these funds.”