GAB Decision 112
July 16, 1980 Sumter County Opportunity, Inc., York, Alabama;
Docket No. 78-112 Coster, Clarence; Pryzbylinski, Donald Dell'Acqua, Frank
On September 15, 1978, Sumter County Opportunity, Inc. (Grantee)
submitted an application for review of an adverse determination dated
August 28, 1978, signed by the Deputy Director, Grants Administration
Division, Office of Human Development Services (OHDS), Region IV, and
the Acting Head, Children, Youth and Families Unit, OHDS, involving two
actions, one concerning $31,257, the other concerning $15,256, related
to the Head Start program during 1973 and 1975 under Grant No. 3333. In
response to a letter from the Board's Executive Secretary dated November
3, 1978, the Director of Sumter County Opportunity Inc. submitted
supplementary documentation on November 13, 1978. After preliminary
analysis of the case, the Board's Executive Secretary wrote to the
parties on December 22, 1978 asking for a description of the sequence of
relevant events and certain specified documentation. The Grantee
responded on January 19, 1979, and the Regional Office responded on
March 12, 1979. The Board's Executive Secretary requested the Agency to
respond to the appeal on June 29, 1979. On July 24, 1979, the Agency
responded and noted that OHDS had approved the Grantee's request for
relief as to the $31,257 in question. Therefore, only $15,256,
representing an over-expenditure in the Grantee's program year (PY) "G"
(May 1, 1973 -- April 30, 1974), remains in dispute. In response to an
Order to Develop the Record dated May 13, 1980, both parties submitted
additional information pertaining to positive fund balances at the end
of grant periods surrounding the period in question.
Statement of the Case
The notification of disallowance does not set forth the reasons for
the disallowance in detail but merely refers the Grantee to past
discussions and "Amendment Number '0', Grant Number 3333-L." Amendment
"0" states that the $15,256 over-expenditure "must be paid from
non-federal (cash)." An earlier communication from the Region stated
that the "excess expenditure (could not) be charged against federal
funds in any other period" but had to be paid from non-federal sources.
The audit report for the period in question (Audit Control No.
04-56485) states that during PY "G", federal contributions totaled
$555,546 for the grantee's Head Start Full Year/Part Day program,
serving 463 children. The Schedule of Budgeted, Incurred, and
Questioned Costs contained in the audit report shows that the grantee
spent $367 more than the amount of federal funds budgeted in the
"personnel" category, $2,400 in the "consultants and contract
services"
category, $1,915 in the "travel" category, $4,137 in the "space
costs
and rentals" category and $13,916 in the "consumable supplies"
category
for a total of $22,735 in over-expenditures. The Grantee spent $3,381
less than the amount of federal funds budgeted in two other categories,
and it applied to the program $1,848 in Head Start fee income and $2,250
in state funds.After subtracting the $3,381 and the fee and state
income, there was $15,256 in over-expenditures.
The audit report indicates that the costs over budget may have been
incurred because the Grantee operated the program for 48 weeks, having
received permission from the OHDS Community Representative to do so,
while the approved budget anticipated operation of only a 44-week
program.
According to the Regional Office, the Grantee has discontinued
program operations prior to the end of the program year three times in
four years due to a shortage of funds. A special condition was attached
to the grant for PY "L" requiring the Grantee to submit a detailed
plan
to assure the Region that operations would not be interrupted because of
a shortage of funds. The Regional Office also stated that the Grantee
has one of the highest cost per child per year figures in the Region,
which makes the program an unlikely candidate for increased funding
beyond cost of living increases. These statements have not been
disputed by the Grantee.
Grantee's Argument
The Grantee admits that there was an over-expenditure of federal
funds and states that the funds were spent in the form of accumulated
fund balances over several years. It states that it has requested that
the over-expenditure be charged against "future program fund balances."
Discussion
The Statement of Changes in Fund Balance in the audit report
indicates that the Grantee had a positive fund balance of $11,379 on
hand at the beginning of the program year in question. This amount
appears to be made up of non-federal funds. The auditors, therefore,
indicate that there was a negative fund balance of $3,877 at the end of
the year ($15,256-$11,379).
The Agency has asserted, without refutation by the Grantee, that the
Grantee suffered from a shortage of funds and had to discontinue program
operations prior to the end of the program year three times in four
years. The Grantee has indicated, by the submission of Statements from
six audit reports, however, that it had accumulated fund balances in
several years that range from $206 to $26,780. The Order to Develop the
Record noted that if in fact the Grantee had unexpended funds under any
grant, and some of the costs which contributed to the over-expenditure
in question here were allocable to that grant, then it is possible that
all or part of the over-expenditure is properly chargeable to that
grant. The Grantee did not provide any information that could lead the
Board to a determination that any of the costs in question could be
allocable to another grant year.
Since we must determine that the excess costs were not allocable to
grants for which there were unexpended funds, the Grantee's arguments do
not appear to furnish the Board with any other substantial reason upon
which to base a decision in its favor.
The amount of federal funds to be made available to the Grantee for
the budget year in question is clearly set forth in the notice of grant
award issued by the Agency. We are aware of nothing in the notice of
grant award or elsewhere which could reasonably have led the Grantee to
believe that any additional funds would be made available.
Even if this Board found in favor of the Grantee, there is no relief
that the Board could appropriately grant. The authorization requested
is a discretionary one for the Regional Office to make. (Cf. Sencland
Community Action, Inc., DGAB Docket No. 24, Decision No. 21, June 25,
1976). This Board will not engage in grant administration by authorizing
the use of future under-expenditures to cover past over-expenditures, at
least in the absence of a showing that the administerting officials
arbitrarily refused to allow such a set-off. (Cf. Community Action
Agency of Memphis and Shelby County, DGAB Docket No. 76-9, Decision No.
38, July 5, 1977.) No such showing has been made.
It appears that the Grantee has made a request for such authorization
to the Regional Office, and it has been rejected. The Regional Office
asserted in its response to the appeal that, in light of the Grantee's
history, this action was not an arbitrary one. We agree. Since the
Grantee has a history of discontinuing its operations before its school
year has ended, it seems that by granting its request, the Regional
Office would merely increase the likelihood that the current program
would not operate for the full year. As a matter of grants
administration, it would make little sense to allow a grantee to use
current grant funds to pay old expenses when it has had difficulty
operating within its budget for prior years.
In addition, forgiveness of the over-expenditure is not a form of
relief within the Board's authority. The forgiveness of an
over-expenditure would be tantamount to the awarding of a supplemental
award. The Board is not vested with the authority to make an award of
grant funds.(Pinellas Opportunity Council, Inc., DGAB Docket No. 79-58,
Decision No. 80, February 6, 1980; Macon County Community Action
Committee, Inc., DGAB Docket No. 78-7, Decision No. 92, April 29, 1980;
Anderson-Oconee Headstart, Inc., DGAB Docket No. 79-80, Decision No.
90, April 28, 1980.)
In response to the Grantee's appeal, the Agency has taken the
position that the excess costs issue is not subject to the Board's
jurisdiction.
The Board's decisions holding that it does not have authority to
award supplemental funds have viewed this issue, however, as a matter of
remedy, not of jurisdiction. The OHDS notification in this case
identified the $15,256 as costs "not allowable", and informed the
grantee of its right to appeal to the Board. Under 45 CFR 16.5(a)(2),
the Board has jurisdiction over a determination that a cost not
allowable under the grant has been charged to the grant. Although the
Grantee has admitted here tat it did over-expend and requests a remedy
which the Board has determined it is unable to grant under the
circumstances presented here, this does not deprive the Board of
jurisdiction. Accordingly, the Agency's motion to dismiss the appeal
for lack of jurisdiction is denied.
Conclusion
For the reasons stated above, the appeal is denied.
OCTOBER 04, 1983