Representative Jake Johnson: “I think it is extremely troubling that the General Counsel of an Independent state agency, and the Chief of Staff of a sitting Governor would be discussing personnel and who knows what other issues behind the back of the sitting SBI Director. This testimony raises more questions than answers and certainly merits a follow up.”

Representative Harry Warren: “Interference in personnel matters is much more fundamental than interference in any specific case at the SBI. lt’s extremely unfortunate that the governor’s office chose not to answer committee members’ pertinent questions. Hopefully, they will be more forthcoming as the committee continues to investigate Director Schurmeier’s allegations. North Carolinians  are entitled to the truth.”

Tuesday’s hearing will address allegations previously made by SBI Director Bob Schurmeier during the Committee’s hearing on March 28. 

SBI General Counsel Angel Gray will address Director Bob Schurmeier’s testimony that he lacked confidence in her advice due to her conflicted loyalties between the SBI and Governor Cooper.

Chief of Staff Kristi Jones and General Counsel Eric Fletcher from Governor Cooper’s office will answer questions regarding Schurmeier’s allegations of interference and intimidation in their call on him to resign as director.

In their responses to Schurmeier’s testimony and the Committee’s invitation to appear, Jones and Fletcher emphasized the culture of the SBI and focused on an ongoing EEOC complaint. However, with Governor Cooper’s nomination of Chip Hawley to be the next SBI Director, the culture issues they claim have only existed under Schurmeier may continue. The governor’s staff will be called upon to account for the fact that the issues were prevalent prior to Schurmeier’s term when the SBI was housed in the Department of Justice, under then Attorney General Roy Cooper.

The transcript from the March 28 hearing can be found here.

The House Oversight and Reform Committee hearing scheduled for Tuesday; April 18 has been postponed. In a letter to the Committee chairs late Friday afternoon, the governor’s Chief of Staff Kristi Jones stated that she and general counsel Eric Fletcher were declining to appear. After a follow-up letter from the co-chairs Saturday night, citing state statues that compel them to appear under the potential of contempt, the governor’s staff requested alternate dates to appear before the House Oversight and Reform Committee. The Committee worked with Jones and Fletcher, and the hearing has been rescheduled for Tuesday, May 2.

SBI general counsel Angel Gray is also slated to testify.

“As long as it leads to true and forthright testimony regarding the content of the meetings that took place between the Director and Governor’s staff, we are more than willing to accommodate a new date,” Rep. Jake Johnson said. “We look forward to hearing from both Ms. Jones and Mr. Fletcher. We appreciate their cooperation.” 

The Charlotte Observer ran an oped by House Oversight and Reform Committee chairs Rep. Jake Johnson and Rep. Harry Warren explaining the need for an independent SBI and why the committee’s investigation into allegations of interference and intimidation is crucial.

“Who could have guessed that staff for Cooper, now governor, would be the ones accused of trying to intimidate the SBI director and interfere with the Bureau’s staffing decisions? This is precisely what SBI Director Bob Schurmeier alleged in sworn testimony to the House Oversight and Reform Committee, which we chair. If people are policy, as the adage says, such actions could have even broader implications than direct intervention in any specific case.”

March 29, 2023

“Things can be bad, and getting better,” wrote Hans Rosling. The Swedish physician became a TED Talks staple with his vivid presentations of how the world is not as bad as we think, even if it is not as good as we would like.

Something of that came through in the March 29 hearing of the Joint Legislative Commission on Governmental Operations Subcommittee on Hurricane Response and Recovery. Laura Hogshead, who manages the Rebuild NC program as director of the North Carolina Office of Recovery and Resiliency (NCORR), testified. She was followed by Richard Trumper, newly appointed senior advisor for disaster recovery at the Department of Public Safety. The subcommittee was established in 2022 to oversee assistance to homeowners affected by Hurricane Matthew in 2016 and Hurricane Florence in 2018.

Hogshead echoed Rosling in her testimony. “We have made progress, but we are not satisfied with that progress,” she said. “We will continue to improve wherever we can.”

Bad

Although the agency has completed 278 projects since the subcommittee’s first hearing in September 2022, just about everyone involved has been frustrated with the inefficiencies, complicated rules, and communication breakdowns that have marked the Rebuild NC effort. Although NCORR and counties have completed projects for 1,067 families, the program still had 3,399 homes in in process, with many more families likely to enroll before the program stops taking applications April 21. The pace of completions has accelerated, but it would take five years to complete the remaining projects at the rate of 57 homes per month; at 40 per month, it would take another eight years to complete all the projects.

NCORR received nearly $1 billion for hurricane recovery, including $250 million set aside for other programs. The agency has spent or obligated $430 million to repair and replace homes, including $20 million on temporary relocation assistance, and $285 million on other programs. It has until August 2026 to complete its work or forfeit the remainder of the Community Development Block Grant for Disaster Recovery (CDBG-DR) and Community Development Block Grant for Mitigation (CDBG-MIT) it received.

Hogshead has cited permitting issues with local governments and weather delays. Legislators challenged Hogshead’s assertions based on their site visits and communication with local officials.

Sen. Steve Jarvis (R-Davidson, Davie) told Hogshead, “It’s disingenuous to blame counties for delays in permits when other contractors in the private sector have it figured out, and they can navigate the system.”

“Part of the problem and the reason we’re here today is government bureaucracy.”

Rep. John Bell

Hogshead acknowledged that contractors have been unprepared at times and that NCORR had not offered them much guidance. She said that NCORR’s hands-off approach was recommended by SBP’s J.R. Sanderson to let contractors deal with contractor problems and that it is the contractor’s responsibility to know how to perform the roles that they were contracted to do. Hogshead added that NCORR has advised contractors to hire employees dedicated solely to handling permits. Some counties and cities do not know which projects are Rebuild NC homes, receive incomplete applications, and find sites unprepared for inspections. What has come through most clearly is an incomplete flow of information.

But better

During the December 2022 hearing, Hogshead noted that DPS’s 30-day wait time to pay vendors (which she said was a broader state policy) led contractors to withdraw from the program because they could not pay employees or meet expenses with the delay. DPS leadership then allowed NCORR to pay bills in as little as two weeks. Contractors appreciate the faster payment schedule and NCORR will soon be able to pay with bank transfers instead of checks.

Hogshead expressed thanks for House Bill 119, currently in the Senate, which would allow NCORR to assign projects up to $250,000 to contractors, consistent with a recommendation from disaster recovery consultants at SBP. She also highlighted changes in case management and volunteer organization assistance.

NCORR has begun to impose “liquidated damage” penalties for contractor delays and reworked its contractor scorecard so that strong performers receive more work. In December, Hogshead said her office had been constrained in its ability to enforce contracts.

Hogshead also reiterated that the regulations, requirements, and risks that come with federal funding create obstacles to meet the needs of program applicants.

“We are working on implementing a process where we make sure that the folks that need the help the most are getting it, without violating HUD fair housing laws,” she said.

Organizational change

Trumper’s role seemed to be a response to the lack of communication mentioned in the December hearing. He brought one person with him from OSBM-DR and is building out a staff of five rather than utilizing existing NCORR employees. Rep. John Bell (R-Wayne) questioned the wisdom of building another office when “part of the problem and the reason we’re here today is government bureaucracy.” Both he and Hogshead emphasized their good working relationship, with his knowledge of construction and her expertise on HUD. He has spent more time in the field building ties to local governments, checking on projects, and recruiting contractors.

Next steps

While progress has been made, processes have improved, communication among leadership and applicants has improved, and the rate at which homes are completed has increased, still more must be done.

Representative Mark Pless (R-Haywood, Madison) suggested a starting point. “I think it would be worthwhile to bring NCORR, local governments, the Department of Insurance, and contractors together to make sure everybody can be ‘level set’ for the next 3,000 homes.”

The subcommittee will continue to track progress until its next meeting, which is not yet scheduled.

Sonya Black and her family live in an RV behind their house. They boil water for cooking and bathing. Their power comes from drop cords connected to a breaker box on a specially installed power pole in their backyard.

Black and her family of five lived in a hotel for eight months after Hurricane Florence. When that became infeasible financially and logistically, the family moved into an RV that friends donated to them. They have been living there ever since. “We were preparing to go to a homeless shelter because we ran out of money,” she said. “It’s like camping. We’re living out of suitcases.”

“We’re going to see what we can do to get things moving ahead,” Rep. Phil Shepard said as he listened to the Blacks’ experience in the storm and since. “Sometimes it’s just people realizing that people are watching what’s going on.”

The Blacks had evacuated before the storm, but its evidence was abundant. Sonya said, “We came back two weeks later, and everything had already mildewed and molded over.”

Sonya and her husband together described the damage from the storm. “It rained hard for a complete week,” she said. “The shingles never blew off, but the rain went under the shingles, saturated everything inside.”

“It never broke the shingles; they laid back down,” her husband James added. “There was no physical or visual damage you could see to the roof.”

“Then the ceilings fell,” Sonya continued. “Ceilings fell in the sewing/craft room, the living room, and the kitchen. The den had gotten wet from where the water had permeated through, and it flooded five feet in the basement. The sump pump went out because the power went out. “

They tore down walls themselves and hired a rapid-response disaster company to dry out the home.

A contractor they hired to do repairs took the money and left the house unfinished. The Blacks learned that the contractors were fraudulent, but they ultimately decided not to sue. Instead, Sonya and James started a GoFundMe page to replace the insulation and the floors in their home and simultaneously applied to the ReBuild NC program. Once approved, they were told they had to stop working on their home. Now, almost three years later, they are still waiting for their repair work to go to bid.

The (now) six members of the family are doing what they can to manage until work begins on their home and they are eligible for Temporary Relocation Assistance. Two sons live with Sonya and James in the RV, and one of them took a job at Chick-fil-A to help with finances. Their daughter and grandson are living in Virginia because there’s no room in the RV. Sonya is operating her soap-making business out of a shed on their property. “It’s half the size of the basement I used to work in,” she said. “Plus, I lost the room in the house I used as a store.”

Sonya is clearly exasperated. “There needs to be better organization when it comes to ReBuild NC,” she said. “We kept calling, and we would only get ‘waiting on approval.’ Give me something better than that. What are you waiting on? It’s things like that that have us frustrated and have lost trust because we’re a family of six doing everything that we can, and it’s hard.”

She added: “I’m ready for it to be over. All we’re waiting on is sheetrock. Why is it taking so long? They have floors and materials from their GoFundMe, all we need is help to make it happen.”

“There needs to be better organization

when it comes to Rebuild NC”

Sonya Black

North Carolina State Bureau of Investigation (SBI) director Bob Schurmeier testified before the NC House Oversight and Reform Committee Tuesday that Governor Roy Cooper’s staff repeatedly interfered with the independence of his agency. An independent SBI is necessary for its role investigating allegations of misuse of state property, public corruption, and election law violations.

Schurmeier said tensions with the governor culminated in Kristi Jones, the governor’s chief of staff, asking for his resignation and the governor’s general counsel, Eric Fletcher, threatening him with an investigation for which the SBI would need to hire its own outside counsel to defend itself.

Cooper’s staff interfered with his hiring authority, Schurmeier said. He explained that they delayed his hiring of key positions and inserted themselves into his decision to fill a vacant deputy director position. He added that he had lost trust in his general counsel Angel Gray and earlier sought Jones’ assistance to find her another job within state government.

“It’s been difficult. This is tough job, but when you have someone who is there to support you legally and be there at tense meetings and have your back,” Schurmeier said. “We actually talked about that, whether she had my back or not, and I just didn’t think she did.”

Gov. Pat McCrory appointed Schurmeier to head the bureau in 2016 after state law made it an independent agency, separate from the Department of Justice. Many senior SBI staff had a long history with Cooper, when, as attorney general, he oversaw the Bureau.

Schurmeier described the culture at SBI when he took over as a “good old boys” club that lacked diversity. He described the questionable practice of “draft day.” He also explained his attempt to expand diversity and inclusion in the ranks of agents, including his promotion of minority agents.

“New agent selection, I observed that, and they called it ‘draft day,’ which was basically horse trading of positions,” he said. “There was a lack of diversity at the executive levels of both the SBI and ALE (Alcohol Law Enforcement). Nominal efforts at best were made to innovate and lean into the future.

“When I took over, the executive staff that reported to me wasn’t very diverse,” he said. “I reduced people in rank and allowed others to retire and filled those with one white male, one white female, two black males, including the first black male to head ALE, and in 2018, I promoted a white male and a white female and in 2020, to an assistant director, I promoted a black female to assistant, and in 2021, a white male and black male to assistant director.

“During my term, I have promoted 48 white females, 15 black males, 21 black females, 1 Asian male, 2 Hispanic males, and 5 Hispanic females. I also drafted on my own a diversity and inclusion plan in 2020 and shared it with the governor’s office. That program is now led by an African American female.”

Schurmeier testified that these issues of interference began with a personnel dispute in 2018.  An agent alleged the director discriminated based on race in a hiring decision. Jones held a meeting in 2020 to address the issue.

“The chief [Jones] was very upset. I would say she was very mad at me.  She was so mad, I was certain that if she could have fired me, she would have.”

Schurmeier found himself in trouble with the governor’s office again last fall. In October 2022, Jones called him to the governor’s office and asked him to resign after she learned of these allegations. Fletcher added that if the director doesn’t resign, they would need to have aa big investigation of the SBI. He further indicated that two other agencies had been investigated and that it wasn’t good.  Jones and Fletcher both repeated their threats to Schurmeier in a follow-up meeting in November 2022.

“I know I had done nothing for her to fire me, and I strongly believe nothing for which I should have been asked to resign,” he said.

Schurmeier stressed the importance of an independent and autonomous SBI, especially in hiring decisions.

“What I’m attempting to do here is set this up for the future of the SBI,” he said. “You can’t remove politics from law enforcement, but to the extent that you can, you ought to. The SBI director ought to autonomy. They ought to have the authority and permission to hire their direct reports, their top executive staff and shouldn’t have to negotiate with the governor’s staff.”

Oversight and Reform Committee co-chair Jake Johnson (R-Henderson, McDowell, Polk, Rutherford) reiterated the gravity of Schurmeier’s testimony.

“State Bureau of Investigation Director Bob Schurmeier made concerning allegations about involvement in personnel matters as well as attempted intimidation tactics with no basis to force his resignation, from top staff in Governor Cooper’s Office,” he said. “Appointed leadership positions have inherent split loyalties between the Governor’s office and Department leadership, especially when politics do not align. Director Schurmeier made a clear case for a completely independent SBI.  Committee members on both sides of the aisle made clear that we need to bring in the governor’s staff and others to better understand this matter in the interest of full transparency. We would like to thank Director Schurmeier for his bravery in cooperating with this inquiry. It is a true act of public service to the State of North Carolina.”

The transcript from the hearing can be found here.

“I kept believing, kept believing. But they never did what they said they were supposed to do. It’s been promises and promises and lies and lies.”

Marcy Bea’s frustration is evident.

Pender County had 217 households active in the ReBuild NC program as of March 9, but just 14 of them had work completed and 12 others have work underway.

“It’s been promises and promises and lies and lies.”

Marcy Bea

Bea, Alverda Holmes, Willie Northern, and Robert Sault, along with their families, are among those 191 still waiting for actual renovation or rebuilding to begin.

Applicants for assistance go through eight steps in the ReBuild process: intake, eligibility review, duplication of benefits review, inspection and environmental, award determination, contract and bid work, construction, and completion.

The Northerns and the Holmeses are still in their hurricane-damaged homes, like most applicants. Unless they stay with family, pay for their own rental, or have been granted an emergency move-out designation, most families are not eligible for ReBuild’s Temporary Relocation Assistance (TRA) until the contract has been awarded and construction is set to begin. The Beas have been approved for emergency move-out status and are beginning the process. Sault has made it to contract and construction stage and is living in a hotel paid through TRA.

Their homes have been damaged by wind and water and often have compromised roofs, ceilings, walls, and floors. Mold often infests the homes.

Bea and her husband live in a mobile home outside of Burgaw that will be demolished and replaced with a newly constructed home. Her son, a freshman at Methodist University, lived there growing up and still stays there when home from college.

Rain penetrated the home through windowsills and the wind- and rain-damaged roof, ruining the ceiling, walls, and floor. Through the years of waiting for construction to begin, the home has deteriorated. There are holes in the floor. Bea covers them with rugs. She hides holes in the walls and crumbling sheetrock with posters. Mold is prevalent.

Bea is waiting for the work to go out to bid.

Alverda Holmes’ Maple Hill home also suffered water and wind damage in Hurricane Florence. Issues with her home include roof leaks, cracks in the ceiling, and soft floors. The roof still leaks, causing further damage.  Her home, too, is infested with mold. She was denied an emergency move-out and is still living in the home.

“I’m staying here with the mold. My husband and I do what we can until we get out of here,” she said. “I’ve been waiting almost three years now.”

They are waiting for their project to go out for bidding. The home will be demolished and replaced with an elevated stick-built home. Holmes and her husband will move to a hotel when work begins.

Willie and Carolyn Northern are dealing with similar issues, including floors damaged by water and mold. They used their own resources to repair the roof and make other minor repairs before applying for assistance from ReBuild. Their home is considered a rehab—the floors are to be replaced, and the bathroom and kitchen are to be repaired.

“We would get a call every 30 days or two months saying they didn’t have an update,” Willie Northern said. “The main thing is the communication— not being communicated with.”

The Northerns are still living in their home in Atkinson. A contractor recently conducted the walk-through evaluation of the home, so they are waiting for word that they can start packing their belongings into a PODS portable storage unit and move to a hotel.

Unlike the wind-and-rain damaged houses, Robert Sault’s home, which sits on the banks of the Northeast Cape Fear River, flooded as the river rose from Hurricane Florence. Sault had experienced hurricane flooding before. Fran’s waters reached the bottom of the house, Floyd’s were higher up to the windows, and finally, with Florence, the river level topped the windows of the small bungalow.

He lived in the screened-in porch on the back of the house until construction was slated to begin. Sault entered the construction phase in January 2022 and has been living in a hotel while waiting for his modular home to arrive and placed on an elevated base to protect it from future flooding.

Another issue that strains ReBuild applicants is that the damage to their homes often worsens over time as they aren’t allowed to make repairs while they are in the program.

“If you repair the house, you’ll go backward in the program,” Bea said of what she was told if she made repairs to her home when the ceiling fell. “You’re stuck in a house you can’t repair.”

A Rebuild representative explained, ”There are some repairs that would be too costly or difficult for the homeowner to make. That is one of the many reasons why we have the emergency move out policy so that homeowners do not have to live in unsafe conditions. Sometimes, depending on the needs our inspectors see when they visit, they might make an internal referral for a National Volunteer Organization Active in Disaster (VOAD) partner to come out and fix items so that the home can be safe for the homeowner.”

Pender County residents who have been waiting for four-plus years to have their homes repaired or rebuilt are ready to move forward.

“I’m 70 years of age,” Sault said. “I’d really like to get back in my house.”

March 2 2023 House Oversight and Reform Committee Hearing

For much of what it does, government is a monopoly, operating without competition, and often compelling citizens to use its services. Government provides its services free at the time of use, which removes the ability to learn from customer’s decisions on price and value. Without these natural feedback mechanisms, the General Assembly and government agencies need other ways to evaluate the results they get for roughly $30 billion in state taxpayer dollars each fiscal year.

Legislative oversight plays an important role, as does the state auditor. Each of these has practical limits in what they can examine, particularly as the scope of government has grown. Oversight staff and auditors must also rely on the ability of state agencies to provide answers they may not have themselves. State agency leadership and staff often have the same questions and no good way to get answers.

Academic research provides another way to learn more about the value of government services. North Carolina is blessed with a vibrant public university system and excellent private universities. Scholars in these institutions can look ahead to future needs and back at past performance. University researchers combine broad subject matter expertise comparable to agency staff and greater specific methodological expertise than oversight, audit, or agency staff.

The North Carolina Department of Transportation (NCDOT) has had a partially funded mandate from the federal government for twenty-five years to conduct research and development with universities. More recently, the Office of Strategic Partnerships (OSP) in the Office of State Budget and Management (OSBM) has tried to bridge the gap between agencies and academia with mixed success since 2019. Federal funds made possible the creation of an Office of Learning Recovery and Acceleration in the Department of Public Instruction (DPI), which recently launched a sweeping series of university research projects on Covid’s impact on public school students with assistance from OSP and the NC Policy Collaboratory.

On March 2, 2023, the House Oversight and Reform Committee heard testimony on four efforts to connect government programs and academic experts at the Department of Transportation, the Office of State Budget and Management, the NC Collaboratory, and the Department of Public Instruction.

NCDOT Research and Development Office
Federal law has long required state transportation departments to dedicate a portion of their funding to research and development a twenty percent state match. In North Carolina, NCDOT’s Research and Development Office contracts around thirty studies per year with roughly $7.5 million in combined state and federal funds and studies dating back to 1997. The Research and Development team refines ideas for projects with subject-matter experts throughout the department. Curtis Bradley, Research Implementation Manager for NCDOT, told the committee that it is hard to measure the return on investment because it could include direct improvements, canceled spending, and systemic changes that affect multiple programs and projects. As long as Congress requires a portion of federal funds go to research, the General Assembly will likely provide the state match.

OSBM Office of Strategic Partnerships
Governor Cooper created the Director of Strategic Partnerships position in 2018. The primary purpose was and continues to be increasing the use of evidence in government decision making. The endeavor has expanded into the North Carolina Office of Strategic Partnerships, housed within OSBM. Funding comes from lapsed salaries and philanthropic grants. Agencies provide submit topics for researchers. It has a small, full-time staff who connect government agencies with researchers and philanthropy. OSP staff “speak the same language” as academic researchers and help agencies translate operational needs into research topics that can provide evidence.

DPI Office of Learning Recovery and Acceleration
DPI’s Office of Learning Recovery and Acceleration is one place with a core of academic experts. It is funded with about one-tenth of one percent of the $5.5 billion in one-time federal money North Carolina received to help move schooling online and back again to in-person instruction. Director of Research and Evaluation Jeni Corn said they have $6.7 million in American Rescue Plan Act (ARPA) funding to conduct a suite of twenty research projects through the Collaboratory. She advocated for a permanent establish a permanent Office of Innovation and Research with a $1.3 million recurring appropriation to examine already implemented reforms and plan for future changes.

North Carolina Collaboratory
The Collaboratory was established in the summer of 2016 by the General Assembly. It distributes state funding to researchers in universities and colleges across the state. The work of the Collaboratory covers many research areas and projects, including hog farms, testing for GenX and other PFAS “forever chemicals,” Covid testing, specific funds for historically minority-serving institutions, and the DPI studies. Executive Director Jeff Warren told the Committee that every dollar his organization receives from the General Assembly goes directly to research because UNC-Chapel Hill covers its operating costs, and it does not allow other universities to charge traditional overhead costs for research projects. Warren also described a fellowship program that placed UNC scholars at the Department of Environmental Quality (DEQ).

Conclusion and Options

Contrasting the apparent successes of NCDOT and DPI with the challenges Owen cited in OSP’s work with other agencies, a key factor appears to be having staff in the agency with academic experience. Bradley and NCDOT’s research and development team can translate the organization’s priorities into tractable research questions. Corn and her team provide the same ability at DPI. Most agencies do not have a research team.

Coordination: Owen testified that her office has no direct appropriation and has relied on a combination of lapsed salary and private grants to fund its operations. It also has not received any appropriations specifically for research projects. Despite this, OSP has hired a strong team who provides research assistance to staff in other agencies. The Collaboratory, in contrast, has distributed millions in appropriations for scientific research projects. Although NCDOT’s experience shows that agencies may not need a coordination partner, DPI’s experience shows the value of assistance from OSP and the Collaboratory.

Permanent Funding: DPI has requested recurring funding to make its Office of Learning Recovery and Acceleration permanent. Internal staff with academic expertise does seem to have been a key factor in the agency’s ability to improve its post-Covid response. NCDOT provides a precedent for a permanent research section. The General Assembly could fund a similar staff at other agencies or, following the federal example in transportation, require the agency to dedicate a portion of its funding to research staff and projects.

Fellowships: The applied research fellowship program that DEQ and the Collaboratory launched to host scholars, may be a way to bridge the gap in academic research on a temporary basis at some agencies.

The transcript from the hearing can be found here.