DAB Decision 67
October 17, 1979 Harambee Child Development Council, Inc.; Docket No.
77-17; Decision No. 67 DeGeorge, Francis; Dukes, David Wilner, Irving
SUMMARY
(The following summary is prepared on the responsibility of tie
Executive Secretary of the Board as a convenience to the interested
public. It is not an official part of the decision and has not been
reviewed by the panel. Similar official summaries of earlier cases
appear in 45 CFR Part 16 - Appendix.)
Grantee, a recipient of successive Head Start grants, made repeated
requests to the Office of Child 3evelopment during the years 1973-77 to
expend grant funds in varying amounts to increase the salary of its
program coordinator. grantee appealed OCD's failure or refusal to
approve these requests. he Board Chairman having ruled that grantee 's
appeal as to requests for salary raises made prior to June 2O, 1977 had
not been timely filed, the Panel considered only grantee's request of
June 20, 1977 to raise the salary of the program coordinator from
$14,999 to $21,000 for the 1970-77 grant year.
The Head Start grant contained a special condition, based on a provision
of the Economic Opportunity Act of 1964, as amended, that prohibited
grantee from expending more than $14,399 per year in grant funds for any
salary unless waiver was obtained. Grantee argued this limitation was
superseded by the 1974 Economic Opportunity Amendments which directed
that persons employed in Head Start programs should not receive
compensation in excess of the average salary received by persons
performing comparable work in the area where the program was operating.
The panel noted that neither the prior Act nor the 1974 Amendments
created an entitlement to any particular salary. In either case, a
grantee must demonstrate reasons for a salary above the statutory limit.
The Panel found that grantee had failed to demonstrate adequate
Justification for its request in view of the circumstances, and
sustained OCD's disapproval of grantee's request to incur an
expenditure.
DECISION
This is an appeal from the disapproval by the Office of Child
Development, (OCD), Department of Health, Education and Welfare, of
grantee's written request for permission to incur an expenditure during
the term of the grant.
Since 1966, the Harambee Child Development Council ("grantee") of
Albany, Ga., has been a recipient of successive Head Start grants
authorized by the Economic Opportunity Act of 1964. P.L. 88-452, Tit.
II, Part B (42 USC Sec. 2809). During the years 1973-77 grantee has
endeavored repeatedly to be permitted to expend grant funds in varying
amounts to increase the salary of its program coordinator. The failure
of OCD to approve such requests is deemed a determination of disapproval
appealable to this Board. 45 CFR 16.5(a) (3).
Preliminary to the designation of the appeal panel the Chairman of this
Board, conformably to the provision in 45 CFR 16.6(b)(2), has ruled,
upon consideration of the record in its entirety, that grantee's appeal
had not been timely filed as to the requests for raise in salary made
prior to June 20, 1977. This ruling leaves for our consideration OCD's
disapproval of the request made in grantee's letter of June 20, 1977,
for permission to raise the salary of its program director from $14,999
to $21,000 for the 1976-77 grant year.
The amount of $14,999 received by the program director in 1976-77--as
during the two previous years--reflected a special condition in the
grant to the effect that "the grantee is prohibited from using Head
Start grant funds to pay any salary in excess of $14,999 per year unless
a waiver is obtained during the program year in accordance with OHD/OCD
(Office of Human Development/Office of Child Development) Instruction
#30".
This special condition had its genesis in the Economic Opportunity Act,
P.L. 88-452, Tit. II, Sec. 244(2), as added P.L. 90-222, Dec. 23, 1967,
42 USC Sec. 2836(2), which provided that the Director of OEO "shall
issue rules or regulations to insure that no employee engaged in
carrying out community action program activities receiving financial
assistance under this title is compensated from funds so provided at a
rate in excess of $15,000 per annum."
'(Page 02 - 67 - 10/17/79)'
A further provision in the above statute authorized the Director to
Provide for exceptions to this monetary limitation.
It is the grantee's position that, at least insofar as the 1976-77
budget year is concerned, the annual $15,000 limitation is inapplicable
for the reason that the 1974 Economic Opportunity Amendments do not
contain such limitation. Instead, they contain a direction to the
Secretary of the Department of HEW - successor to the OEO in the
administration of Head Start programs - to insure that Persons employed
in such Programs receiving Federal assistance shall not receive
compensation at a rate which is (i) in excess of the average rate of
compensation paid in the area where the Program is carried out to a
Substantial number of Persons providing substantially comparable
services..." P.L. 93-644, Sec. 573(a), 42 USC Sec. 2930b. Grantee
further argues that in view of the non-applicability of the $15,000
limitation to the 1976-77 budget year, OHD/OCD Instruction #30,
promulgated February 20, 1976, which contains guidelines governing a
waiver of this limitation, is likewise without applicabi1ity
The technical inappropriateness of keeping the $15,000 limitation
nominally alive in agency Instructions and grant Conditions years after
it ceased to be effective is quite clear. It is a practice which is
confusing and even misleading. However, in the interest of our purpose
to reach a decision addressed to the merits, we are inclined to treat
these erroneous references as harmless error.
Descriptive citations notwithstanding, the voluminous record on appeal
leaves no doubt that both the grantee and the agency have framed their
presentations in terms of the Comparability criterion found in the 1974
legis1ation. It does not even appear that either of the parties regards
the question of "waiver" to constitute the crucial issue. 0CD has
disclosed to the grantee its willingness to waive the $15,000 limitation
in its letter of October 6, 1976. Contrary to grantee's argument that
it had met the requirements for establishing comparability as a
justification for the requested raise in salary, OCD maintains that the
submitted documentation was inadequate to establish comparability
warranting an upward adjustment in salary in any particular amount.
Viewed in this aspect, it can not be said that OHD/0CD Instruction 7130,
or earlier issuances under the OE0 label, and geared to the flat amount
limitation on allowable compensation became irrelevant as administrative
guides upon the substitution of the comparabil1ty standard effective
January 4, 1975. It is useful to observe that the 1964 Act, besides
mandating that the Director of OE0 insure that compensation did not
exceed $15,000 per annum, also vested him with discretionary authority
to adopt exceptions on the ground, inter alia, of "Prevailing local
salary levels." The Director did Provide for this exception by
prescribing the criteria
'(Page 03 - 67 - 10/17/79)'
for determining comparability with prevailing local salary levels in the
regulations invoked by OCD in opposing the grantee's claim. No reason
suggests itself why the regulations, to the extent that they are
addressed to the exceptions in the 1964 Act, could not have been treated
by the OEO as valid and subsisting independently of the abandonment of
the $15,000 limitation. That which would have been competent for the
Director of the 0EO to do is equally proper for the OCD upon its
succession to responsibility for Read Start programs in 1969. As
published in 34 F.R. Part 9, p. 14700, at P. 14702, Section 4( b) of the
Reorganization Order provides that
"Except as inconsistent with the Order, all regulations, rules,
orders, Statements of Policy, or interPretations of the Head Start
program, Office of Economic Opportunity, are adopted by the
Secretary, Department of Health, Education and Welfare, as
regulations, rules, orders, Statements of policy or
interpretations of the Department, and are continued in full force
and effect until such time as they are reissued by the
Department."
Similarly, R.R. Report No. 93-1043 to accompany R.R. 14449 which evolved
into the 1974 Amendments, U.S. Cong. and Admin. News, 93rd Cong. 2nd
session, at p. 8055: "In transferring this authority (over Read Start),
the committee simply recognizes in the law the delegation of operating
authority from the Director of the OEO to the Secretary of DHEW which
took place in 1969".
II.
A reading of the file does create the impression that in denying
approval of grantee's request there was less than full consistency of
theory as well as unnecessary vagueness and complexity in correspondence
from OCD regarding the method to be followed by the grantee in
establishing comparability. This observation does not, however, aid
grantee in its appeal. Grantee can not obviously claim as a matter of
contract. Its entitlement, if any, must be derived from pertinent
statute or regulation and, insofar as statutes are concerned, it is
significant that the 1964 Act as well as the 1974 Amendment have a
common thrust in derogation of grantee's claimed right. Like the
earlier statute which provides that the Director "shall issue rules and
regulations to insure that no employee... is compensated... at a rate in
excess of $15,000 per annum...," the 1974 Amendment directs that the
Secretary "shall take such action as may be necessary to assure that
persons employed... shall not receive compensation at a rate which is
(i) in excess of the average rate..." etc. (italics ours).
'(Page 04 - 67 - 10/17/79)'
As indicated earlier, the 1964 Act does authorize exceptions; but the
total effect of the legislation is that of creating a burden of proof
for the party seeking to bring itself within the exception. Similarly,
if the duty imposed upon the Secretary in the 1974 Amendments to insure
that no employee is compensated at a rate which is in excess of the
comparable rate in the area is to be effectively discharged, a grantee
asserting that its request for a raise in compensation for one of its
employees will not violate the statutory standard must be prepared to
demonstrate that such is the case. This is particularly true where, as
here, nothing in the statute creates an entitlement to salary in any
particular amount, or grade, above the required minimum, anymore than
the 1964 Act can be said to have created an entitlement to salary of
$15,000 per annum. Prescribing a method for demonstrating adherence to
the statutory limitation is properly the responsibility of the
administering agency; and reference to the Economic Opportunity Act, 42
USC Secs. 2835 (a)(d), id., 2942(n), is sufficient to show the wide
scope of discretion vested in such agencies for fashioning practical
guidelines in this area.
Administration guidelines for determining comparability in Head Start
programs consistently include the requirement of an organization review
to be submitted in support of a request for higher salary that should be
comprehensive as well as equitable in respect of all positions inthe
program, Community Action Memo 23-B (March, 1967) Part A.5a; OHD/GAM,
(Office of Human Development/Grant Admin. Manual, Subpart A, Ch. 3, E.
4a; Head Start Manual of Policies and Instructions, Sept. 1967, p. 19;
that the request be accompanied by a statement of justification, and of
availability of funds, OHD/OCD #30 (Feb. 1976) II, 5,6; that a showing
be made of programmatic need "for a person with qualifications calling
for the salary requested. . . " and that reasonableness, in this
context, refers to a position, rather than to a particular incumbent.
OEO Instruction 6903-1 (July, 1968) sec. 3(b)(1) and 3(b)(1)(b).
The evidence reasonably supports the conclusion of non-compliance by the
grantee with the cited requirements. The salary plan submitted by
grantee would result in a considerable and inequitable differential
between the salaries of the program coordinator and the two next lower
ranking position in the program. We agree with OCD that granted had
failed to demonstrate inherent justification for the request in view of
the circumstances that the responsibilities of the program coordinator
relate to a program which operates on a part time (4 hours per day)
basis, 9 months per year, for no more than 280 children; that similar
programs in areas surrounding that of grantee, operating for longer
periods of time and serving greater numbers of children, retain
competent directors at salaries of less than $15,000 per annum, and that
the program coordinator devotes only an indefinite part of her
professional time to the Head Start program. Grantee's proffered
justification is further impaired
'(Page 05 - 67 - 10/17/79)'
by the circumstances that Head Start programs, unlike school systems
employed as a standard of comparison, do not attribute significant
weight to academic qualification, as such. 0CD/HS Transmittal Notice
70.1; Head Start Manual (Sept. 1967) pp. 13,17. While grantee's
submission does show a formally adequate statement as to availability of
funding within the budgetary framework for meeting the request of a
higher salary, the funding is shown to be available only because of
grantee's practice of paying the salaries of some of Head Start
personnel with funds derived from Department of Labor grants.
An additional and independent ground for sustaining OCD's determination
is concerned with the effect that the granting of grantee's request
would have upon the development and administrative costs of the grant.
The 1974 Amendments, 42 USC Sec. 2928f(b), limit such costs to no more
than 15% of the total cost /1/. Cost of overall planning, coordination,
and of general program director appear to be included in cost of
administration and development. F.R. April 7, 1978, Part VIII, Head
Start Grants, etc., p. 14933(k). The record does not contain any
refutation by the grantee of OCD's allegation that if the Director's
(i.e., program coordinator's) salary as proposed was allowed and other
salaries adjusted upward to be in line with the director's salary, the
administrative costs would exceed 35%.
For the reasons stated we dismiss grantee's appeal, and sustain the
determination of OCD against approval of grantee' s request to incur an
expenditure. FOOTNOTES
/1/ The statute provides that if the Secretary determines cost to be
excessive, even if constituting less that 15%, he may take "such steps"
as will eliminate such excessive cost. D11 May 15, 1992