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.

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.