‘We were not watching closely,’ Cooper’s staff admits as NCORR deficit grows to $221 million

Officials with the North Carolina Office of Recovery and Resiliency, the state agency tasked with assisting victims of natural disasters, admitted during a committee meeting on Monday that it actually faces a $221 million shortfall rather than the $175 million budget deficit previously reported.

The agency recently admitted to a massive hole in the disaster recovery budget, even though North Carolinians impacted by Hurricane Florence are still without permanent housing. Victims have stayed in hotels for over six months at a time and waited years to return to a permanent home. The NCORR, which employs over 200 staff under Gov. Roy Cooper’s management, has faced legislative scrutiny for years because of its operational issues dating back to Hurricanes Matthew and Florence in 2017. NCORR was created one year later to oversee federal recovery funds in response to the disasters.

The Joint Legislative Commission on Governmental Operations and Subcommittee on Hurricane Response and Recovery slammed the NCORR on Monday during a two-hour committee meeting, during which Cooper staffers were questioned about financial mismanagement.

NCORR Director Laura Hogshead admitted that her team was going fast and “was not watching carefully enough” over budget lines. Pryor Gibson, deputy legislative counsel for the governor’s office, noted that the estimated deficit may be even larger, potentially reaching $221 million. Gibson said the estimated $175 million is an operational review, but an accounting review would estimate $221 million, nearly $50 million more than what NCORR previously said. 

SEE ALSO: NC Senate slams $175 million hole in disaster recovery budget as a ‘financial catastrophe’

Rep. Brenden Jones, R-Robeson, asked if Hogshead would turn in her resignation today after she admitted the responsibility fell on her.  

“That is for the governor to decide,” said Hogshead. “No, sir. I will not resign today.”

Despite having a nearly $1 billion budget, the agency still has 1,400 homes pending construction, with 766 families currently in the rebuilding process. On top of paying $2.1 million per month on temporary relocation assistance for displaced individuals, NCORR is behind on contractor payments due to encumbered funds. It owes $37.6 million in outstanding invoices and is currently paying $5 million per week.

NCORR has explored several funding options to address funding shortfalls, but none were deemed accessible, so efforts continue to secure the necessary funds through the General Assembly, though legislators expressed deep distrust for the agency.

“Right now we’ve got folks admitting fault for this being mismanaged. It doesn’t give us a whole lot of confidence and doesn’t give my people confidence back home that it’s going to be handled right the next time,” said Rep. Jake Johnson, R-Henderson. “I really do hope we’ve learned from this, and going forward, we’ve got to look at some major reforms to this and how it’s administered.”

Hogshead suggested closing the program application months before Cooper’s office finally did so in April 2023, resulting in an additional 700 application submissions in the last two months. Sen. Steve Jarvis, R-Davidson, questioned the extended application window, noting that in other states a typical processing period would have been 6-9 months, not several years, as these applications were opened during COVID.

“I do not know exactly who made the decision. I was told that I was not allowed to close the application period,” Hogshead stated.

Gibson said he guaranteed the governor’s approval of keeping it open was because he cared about getting North Carolinians the help they needed.

“The governor has also promised 100 homes in 100 days out west,” explained Sen. Buck Newton, R-Wilson, pointing to Hurricane Helene’s response. “That’s certainly not the standard that we’ve had in the east. And that’s certainly not the standard we’ve had in the east, where it should be easier, as we’ve heard testimony after testimony after testimony from various people. So I just want to put that out there for your ears, for Ms. Hogshead’s ears, and for the public’s ears. Talk is cheap.”

If the General Assembly fully funds NCORR, which entails $40 million a month for three months plus additional allotments, Hogshead reassured lawmakers that NCORR will still make cost-saving measures.

However, some legislators questioned “why in the world” the legislature would fund NCORR after its past record, especially for future recovery efforts in the western part of the state. In wrapping up the meeting, Rep. Jones said he would fire the officials for the “comedy of errors” and for spending like a teenager with mom’s credit card. He said even though those are his people requesting assistance, NCORR failed miserably and has proven its inability to work for North Carolinians.