Montana Department of Social and Rehabilitation Services, DAB No. 119
(1980)

GAB Decision 119

September 30, 1980 Montana Department of Social and Rehabilitation
Services;
Docket Nos. 80-31-MT-HD, 80-78-MT-HD, 78-43-MT-HD (Partial),
78-93-MT-HD (Partial), 78-115-MD-HD (Partial) Coster, Clarence; Settle,
Norval Przybylinski, Donald

The Montana Department of Social and Rehabilitation Services (State)
requested reconsideration of the Office of Human Development Services
(Agency) disallowance of Federal financial participation (FFP) in
various expenditures claimed as training costs under Title XX of the
Social Security Act (Act). The sole issue presented by two of the
requests (Docket Nos. 80-31-MT-HD and 80-78-MT-HD) involves the
disallowance of travel costs and per diem for State agency personnel
attending training programs which lasted less than five full work days.
This issue is also presented in three other requests for
reconsideration. The Board, for purposes of rendering this decision,
will sever the common issue from Docket Numbers 79-115-MT-HD,
78-93-MT-HD and 78-43-MT-HD and consider the matter jointly with Docket
Numbers 80-78-MT-HD and 80-31-MT-HD.

The Agency's disallowances are summarized below:

Period at Issue FFP Disallowed Date of Disallowance Do
8/1/76-12/31/77 $23,899 7/3/78 78-
(DDTI Contract) 10/1/76-12/31/76 $5,744 (Undated -- after
4/17/80) 80- 1/1/77-3/31/77 4,592 4/1/77-6/30/77
7,930 7/1/77-9/30/77 2,955 10/1/77-12/31/77 7,783
*2*(State and County Employees) 1/1/78-3/31/78 $4,327
5/23/78 78-


4/1/78-6/30/78 $5,010 5/15/79 78-1
7/1/78-9/30/78 3,550 10/1/78-12/31/78 3,280
1/1/79-3/31/79 2,728 4/1/79-7/30/79 $4,116
1/10/80 80-


Background

Title XX of the Act provides at Section 2002(a)(1) that the states
shall be entitled to FFP for services provided to achieve the goals
enumerated in the enablng legislation. Services for which reimbursement
is available include expenditures for personnel training and retraining.
Section 2002(a)(2) of the Act further provides that no payment may be
made for expenditures, other than personnel training or retraining,
which exceed a state's pro rata share of the appropriations authorized
for Title XX expenditures during the fiscal year. Thus, the question of
whether an expenditure is an allowable training cost may have a
significant effect on the FFP available to a state.

The regulations governing expenditures for training and retraining,
45 CFR 228 Subpart H, were amended on January 31, 1977 (42 FR 5848).
The amendment resulted in changes in the organization and terminology of
45 CFR 228.84 -- "Activities and costs matchable as training
expenditures." The earlier version of the section had been published on
June 27, 1975 (40 FR 27354) and, as pertinent to this case, read as
follows:

Costs matchable as training expenditures include:

(c) Payment of travel, per diem and educational expenses of employees
while they are attending training programs for less than eight
consecutive work weeks;

(d) Payment of educational expenses (tuition, books, supplies) for
employees on part-time educational leave (part of the working week,
evenings, mornings).

As pertinent, the regulations were amended in 1977 as follows:

Costs matchable as training expenditures include:

(a) State agency employees.

(2) For State agency employees in full-time training programs of less
than eight consecutive work weeks: Per diem, travel and educational
costs;

(3) For state agency employees in part-time training programs (part
of work week, evenings, mornings): Education costs.

The Agency, in disallowing the amounts in dispute, relied upon 45 CFR
228.84(a)(3) (1977). The Agency found that the disallowed training
costs represented expenditures for travel and per diem for employees
attending training sessions of less than five full days. Inasmuch as
the training programs lasted only "part of (a) work week" (45 CFR
228.84(a)(3)), the Agency determined that the regulations did not allow
reimbursement for such costs.

Issues

I. Interpretation of the Regulations

The State argued that the costs in question were allowable under
Section 228.84(c) of the 1975 regulations and that publication of the
amended regulations in 1977 constituted a substantive change in the
Agency's policy which was not explained in the preamble. It argued in
particular that the part-time activities were characterized as
"part-time training programs" in the 1977 regulations and as "part-time
educational leave" in the 1975 regulations. It stated that such
activities involved two different concepts and argued that the State's
interpretation of the regulations was reasonable in view of the lack of
notice of the change in policy.

The Agency stated that its rules governing reimbursement of state
training activities have not changed since the inception of the program.
The Agency asserted that the duration of the training program has always
been determinative of the extent to which FFP was allowable for traning
costs. According to the Agency, the criteria are and have been that if
the training lasted for at least a full work week but less than eight
consecutive weeks, the State may claim for travel and per diem as well
as education costs.

The Agency denied that it ever drew a distinction between "part-time
training programs" and "part-time educational leave." It stated that the
regulations were amended in 1977 in order to clarify the Agency's
existing policy rather than to establish new policy (see Declaration of
Pauline Godwin dated July 29, 1980).

The evidence of record shows that the Agency articulated its policy
with respect to reimbursable training costs in an official response to a
policy interpretation question (PIQ). The response was issued on
September 14, 1977 and was designated PIQ 77-88. Apparently, all of the
Agency's regional offices receive copies of PIQs but the regional
offices do not necessarily transmit them to the states. The Agency
characterized the PIQs as a means of providing uniform guidance to
regional offices by furnishing interpretation and clarification of the
existing law and regulations.

An Agency's interpretation of a statute or the regulations
promulagated to implement a program the agency is charged with
administering is entitled to great deference. Udall v. Tallman, 380 U.
S. 1, 17 (1965). In this case, the Board notes that the statutory
language which exempts training costs from the ceiling imposed on a
state's expenditures for services under Title XX of the Act is extremely
broad and requires further definition. In everyday usage, the concept
of "training" includes activities ranging from informal on-the-job
instruction given by a supervisor to intense classroom instruction given
at an institution for higher education. The Agency must make
distinctions as to those activities which properly constitute "personnel
training or retraining directly related to the provision of (Title XX)
services." In this respect, the Board takes notice of the fact that the
Agency, through its day-to-day dealings with the states and its
evaluations of state program operations, is in a position to determine
which activities constitute effective training. The regulations and the
Agency's published policy statements represent a valid definition of
those training costs eligible for Federal sharing.

II. Effective Date of the Policy Set Forth in PIQ 77-88

The Agency, through the declaration of its Director of the Division
of Training and Education, alleged that it has always been Agency policy
to disallow travel and per diem costs if the training activity lasted
less than one week. The Board finds, however, that even if this was the
policy of the Division of Training and Education, it was not the
practice of at least some of the Agency's field components. The Board
had requested the Agency to provide information in conjunction with an
appeal by the State of Oregon (80-76-OR-HD). In answer to a question
regarding the working definition of "part-time educational leave", the
Agency replied that such leave was considered to be leave which lasted
for less than one full day. Also, the Agency stated that Region X,
Administration for Public Services (APS), defined "training programs for
less than eight consecutive work weeks" as programs which lasted at
least one full day but less than eight consecutive work weeks. The
Agency acknowledged that Region X did permit FFP in travel costs and per
diem if the training program lasted at least one full day (Agency's
response dated August 7, 1980 to Board's request in Docket No.
80-76-OR-HD).

In addition, the Board notes that on June 20, 1977, the Director,
APS, Region IV, requested the Acting Commissioner, APS, to provide
written confirmation of the definition of part-time and short term
training (PIQ 77-88). In his submittal, the Director, APS, Region IV,
asserted that, "(states) in Region IV as well as in other Regions were
led (by Regional Office) to give the interpretation to the phrase 'less
than eight consecutive work weeks' to accommodate any duration of
in-service training programs where employees were engaged strictly in
training and not in provision of services with FFP for travel, per diem
and educational expenses."

The Director, APS, Region IV, further commented with respect to the
amended regulations and their effect on allowable FFP that "the practice
had in fact been established which differentiated part-time educational
leave activities from in-service training." Also, the Regional Program
Director, APS, Region VII, addressed on November 10, 1977 additional
questions regarding part-time training to the Acting Commissioner. His
comments included the obsevation that the amended regulations appeared
to omit "educational leave," which he distinguished from part-time
in-service training. The tenor of the Program Director's presentation
was that Region VII allowed FFP for travel and per diem costs even
though the training was less than one full week in duration.

Based on the foregoing, the Board finds that even though the Agency's
central office may have always had a policy which precluded Federal
sharing in travel and per diem costs for training sessions lasting less
than one full week, the Agency's field components followed a different
practice. The Agency itself apparently realized this fact because on
August 23, 1979, the Commissioner, APS, issued Information Memorandum
HDS-IM-79-10 (APS) which transmitted a complete set of PIQs to the state
agencies administering social service programs under Title XX of the
Act. The Commissioner stated:

Since these interpretations have not been available on a routine or
uniform basis, states will not be held accountable for administering
their programs in accordance with PIQs issued up to and including
September 1, 1979 until receipt of them, unless they have previously
been given actual knowledge of the contents.

Accordingly, the Board finds that it was Agency policy not to hold a
state accountable for the policy interpretation contained in PIQ 77-88
until such time as the State received actual notice of the
interpretation.

Actual knowledge of the Agency's policy interpretation is sufficient
to bind the state to their terms. Whelan v. Brinegar, 538 F.2d 927(
1976); United States v. Aarons, 310 F.2d 341 (1962); Kessler v. FTC,
326 F.2d 673 (1963). In the instant appeals, a responsible official of
the State conceded that the State was informed on December 7, 1977 that
under the Agency's interpretation of 45 CFR 228.84, Subpart H, training
sessions had to last five full days, including travel time, in order for
travel and per diem costs to be reimbursable. (Affadavit of Bill Spivey
dated February 22, 1980; memorandum from Bill Spivey to Ben Johns dated
December 8, 1977). Therefore, the Board finds that the State had actual
notice and knowledge of the terms of the Agency's policy with respect to
such allowable training costs on December 7, 1977 and was bound by the
policy as of that date.

The State alleged that the training programs for the first calendar
quarter of 1978, ". . . had been set and content providers had been
contracted for by the time (it) learned of (the Agency's interpretation
and) there was insufficient time to change the State's practice of
reimbursement for travel and per diem. . . ." (Affidavit of Bill Spivey
dated February 22, 1980). The Board, however, does not find this to be
a sufficient reason to excuse the State's noncompliance with Agency
requirements. It probably would have been inconvenient to reschedule
training for the first month or two following notification of the
duration requirement, but there is no obvious reason why it could not
have been done.

IV. Travel Time

As noted above, the State said that it was unable to effectuate the
five day duration requirement during the first calendar quarter of 1978.
The State asserted, however, that it made a good faith effort to comply,
effective April 1, 1978, with the five day duration requirement, by
scheduling all training sessions for at least three days and allowing
one day for travel at the beginning and at the end of the session. The
State alleged that it did not learn that the necessary travel time
applied to each trainee individually, rather than to all trainees
collectively, until it received on May 15, 1979 a notification of
disallowance of travel costs for the period April 1, 1978 through March
31, 1979. Thereafter, it adopted the practice of scheduling training
sessions for at least four full days.

The State also argued that because of its rural nature and large
size, it was reasonable to assume that the training programs could be
planned to include one full day of travel for commuting to and from the
sessions. Otherwise, some trainees would either miss part of the
training or be required to travel outside the normal work week which
would require the State to pay them overtime. The State asserted that
it was faced with the dilemma of either paying overtime to those
employees who lived a full day's commute from the training site or
scheduling shorter training programs which whould result in the loss of
FFP in travel and per diem costs for those employees who could travel to
the training site in less than one day.

The Board is not convinced that those were the only options available
to the State. Although the State would have found it more difficult to
schedule training programs which took into account the travel time of
the attendees, there is no evidence this could not have been done.
Furthermore, the State was put on notice that the Agency considered it
necessary for a training session to last a full work week to qualify for
Federal sharing in travel and per diem costs. Allowing necessary travel
time to be included within the five days was a rational accommodation on
the part of the Agency and not a device to permit circumvention of the
duration requirement. If the State was able to meet the duration
requirement by having in attendance a few trainees who spent one full
day in travel status each way, the regulation would become meaningless.

The Board concludes that the Agency acted within its discretion and
authority in disallowing FFP for training costs for individual employees
when the training sessions did not last five full workdays, including
travel for each employee. The Agency's policy with respect to travel
time is not unreasonable on its face and the Board will not substitute
its judgment for that of the Agency on this matter.

Conclusion

The Agency's disallowances are reversed with respect to reimbursement
for training expenditures incurred prior to actual notice on December 7,
1977 of the regulatory requirement regarding the duration requirement
for training programs (Docket Nos. 78-93-MT-HD and 80-78-MT-HD). The
Agency is sustained in its disallowances of FFP for those training
programs instituted subsequent to actual notification on December 7,
1977 of the official Agency interpretation (Docket Nos. 78-43-MT-HD,
79-115-MT-HD and 80-31-MT-HD).

The remaining issues in Docket Nos. 78-93-MT-HD, 78-43-M-HD and
78-115-MT-HD will be considered and ruled upon in separate decisions
which the Board will issue in the future.

OCTOBER 04, 1983