Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: Colorado Department of Social Services
DATE: April 3, 1991
Docket No. 90-110
Decision No. 1239
DECISION
The Colorado Department of Social Services (Colorado, State) appealed
a
determination by the Administration for Children, Youth and
Families
(ACYF) disallowing federal funding claimed under title IV-E of
the
Social Security Act (Act). At issue are increasing
retroactive
adjustments of $3,327,162 claimed for administrative costs for
the
period October 1, 1985 through March 31, 1987, as well as
$594,019
claimed on a current basis for the quarter ended June 30,
1987. ACYF
disallowed these claims on the ground that they were not
made in
accordance with Colorado's approved cost allocation plan (CAP).
1/
For the reasons described below, we uphold the disallowance of
the
$3,327,162 in retroactive claims. Colorado based these claims on
a
methodology different from the methodology in the CAP approved for
the
period covered by the claims and from the CAP amendment later
approved
by the DHHS Division of Cost Allocation (DCA) for subsequent
time
periods. In addition, this methodology was seriously flawed and
could
not reasonably be viewed as replicating claims that would have
been
produced by the CAP amendment that was later approved. However,
we
remand the claim of $594,019 for the quarter ended June 30, 1987 to
ACYF
for further consideration in consultation with DCA. The claim for
this
quarter was consistent with the methodology in the CAP
amendment
approved by DCA effective July 1, 1987. Notwithstanding the
effective
date set by DCA, the record indicates that DCA still regards as
open the
issue of an earlier effective date to cover the quarter ended June
30,
1987. If DCA modifies the effective date to cover this quarter,
the
claim for this quarter would be allowable.
The record for this decision consists of written briefs and
exhibits
submitted by the parties, as well as the transcript of a hearing
held on
December 11-13, 1990. In addition, at Colorado's request, the
State's
brief and appeal file in Board Docket No. 89-80 were incorporated in
the
record for this decision. 2/
Summary of Decision
Below, we first discuss the applicable law. We then provide the
history
leading to the changes in Colorado's Time Analysis Reporting
System
(TARS), a part of its CAP, since the timing and content of these
changes
are highly relevant to our analysis. We then discuss the
following
issues:
o whether the changes in the TARS constitute
an amendment to the
CAP method for allocating the
time of county employees in
Colorado's public
assistance programs;
o whether DCA should have approved an earlier
effective date for
these changes;
o whether the claim for the quarter ended June
30, 1987 should be
remanded;
o whether the retroactive claims (for the
period October 1, 1985
through March 31, 1987) were
made in accordance with the CAP
amendment as
ultimately approved; and
o whether the methodology Colorado used to
calculate the
retroactive claims was flawed.
Applicable Law
Title IV-E provides funding for payments for children who would have
been
eligible for AFDC payments under title IV-A but for their removal
from their
homes. Under section 474(a), states are entitled to federal
financial
participation in foster care maintenance payments, adoption
assistance
payments, and expenditures "found necessary by the Secretary
for the proper
and efficient administration of the State plan . . . ."
Since administrative
costs are often commonly incurred and benefit more
than one program, states
must have a CAP, approved under the procedures
in 45 C.F.R. Part 95, Subpart
E, to identify the administrative costs
allocable to title IV-E. See 45
C.F.R. 205.150, made applicable to the
IV-E program by 45 C.F.R.
1355.30(o).
Section 95.505 of 45 C.F.R. defines a CAP as --
a narrative description of the procedures that the State
agency
will use in identifying, measuring, and allocating all
State
agency costs incurred in support of all programs administered
or
supervised by the State agency.
A CAP must be submitted to the Director, DCA, in the appropriate
DHHS
regional office (45 C.F.R. 95.507(a)), and the
Director advises the
state whether a proposed plan or plan amendment is
approved or
disapproved (45 C.F.R. 95.511(a)). A state may request
reconsideration
of DCA's determination under 45 C.F.R. Part 75 within 30 days
after
receipt of the determination letter. 45 C.F.R. 95.513.
A state is required to promptly amend its CAP if any event occurs
which
affects the validity of the approved cost allocation procedures.
45
C.F.R. 95.509(a). Section 95.515 provides that generally, the
effective
date of a CAP amendment is "the first day of the calendar
quarter
following the date of the event that required the amendment . . .
." It
also provides that the effective date may be earlier or later
when:
(a) An earlier date is needed to avoid a significant inequity
to
either the State or the Federal Government.
(b) The information provided by the State which was used
to
approve a previous plan or plan amendment is later found to
be
materially incomplete or inaccurate, or the previously
approved
plan is later found to violate a Federal statute or
regulation.
In either situation, the effective date of any
required
modification to the plan will be the same as the effective
date
of the plan or plan amendment that contained the defect.
Section 95.517, captioned "Claims for Federal financial
participation,"
provides that --
A State must claim FFP for costs associated with a program
only
in accordance with its approved cost allocation plan.
However,
if a State has submitted a plan or plan amendment for a
State
agency, it may, at its option claim FFP based on the
proposed
plan or plan amendment, unless otherwise advised by the
DCA.
However, where a State has claimed costs based on a
proposed
plan or plan amendment the State, if necessary,
shall
retroactively adjust its claims in accordance with the plan
or
amendment as subsequently approved by the Director, DCA. . . .
Factual Background
Colorado's practice is to submit its CAP, together with an indirect
cost
rate proposal, on an annual basis, requesting approval and
negotiation
of rates. All of the CAPs submitted by Colorado since 1980
have
provided for a Time Analysis Reporting System (TARS) which collects
data
on each county employee's activity over a randomly selected
three-day
period in each quarter. This methodology is known as
"cluster
sampling." Colorado brief dated 2/22/91, p. 3.
Colorado's CAP
specifically provided that the data collected in one quarter
was to be
used to claim funds for the subsequent quarter. Colorado ex.
B, p. 20.
On April 30, 1986, Colorado requested approval of its CAP for the
period
July 1, 1986 through June 30, 1987. Colorado ex. J. On
June 16, 1986,
before this CAP was approved, Colorado submitted a request to
DCA for
approval of changes in the TARS, stating that Colorado planned
to
implement the changes on October 1, 1986. Colorado ex. D. The
changes
included several modifications in the codes used by county employees
to
report their time. Among other changes, some codes in the
social
services (title XX) area were eliminated. Compare Colorado ex.
C, p.
24, and ex. D, last page.
In addition to requesting these code changes, none of which
directly
involved title IV-E, Colorado revised the procedures handbook for
county
employees, which explained how to complete the time reporting
form. The
earlier version of the handbook included a definition of
"Foster Care,"
which was coded as "1L." County employees had to combine
this code with
one of a number of other codes to indicate the type of foster
care
activity in which they were engaged at any given time. The
revised
handbook described "1L" as "Child Foster Care," thus excluding
adult
foster care, which is not reimbursable under title IV-E.
In addition, the revised handbook separately defined the particular
foster
care activities covered by each code combination. The definition
for
code 1L02 -- the primary code used for title IV-E activities --
followed the
description of covered activities in title IV-E regulations
at 45 C.F.R.
1356.60(c) more closely than the old definition of "Foster
Care."
Compare Colorado ex. C, p. 32, and Colorado ex. M, p. 33.
Finally, Colorado
condensed the reporting form for county employees from
three pages to
one. Although no substantive change in the reporting
form was intended,
Colorado inadvertently omitted code 1L02 from the
revised form, including
instead code 1L01, a code not described in the
procedures manual.
Transcript of hearing (Tr) 54, 63.
On August 22, 1986, DCA approved the CAP for the period July 1,
1986
through June 30, 1987. Colorado ex. A. This CAP, submitted
April 30,
1986, did not include any of the proposed changes in the
TARS. DCA's
letter did not mention Colorado's June 16 letter concerning
these
changes. Colorado nevertheless proceeded with its plans to
implement
the changes and began collecting data under its revised TARS during
the
quarter ended March 31, 1987. Colorado ex. E. During that
quarter,
Colorado also provided training for county employees in the ten
largest
counties just before the three days for which each county was
scheduled
to report its time. Tr 71. The training included a
general explanation
of time analysis and its purpose as well as an
explanation of how to use
the revised reporting form and procedures
handbook. Tr 72. On several
occasions after the period in
question here, Colorado sent "agency
letters" to the counties emphasizing the
importance to the title IV-E
program of proper time analysis coding.
Colorado ex. U. The first
claim submitted using data from the revised
TARS was the claim for the
quarter ended June 30, 1987.
On May 13, 1987, Colorado submitted its CAP for the period July 1,
1987
through June 30, 1988. Colorado ex. K. This CAP incorporated
the TARS
changes proposed on June 16, 1986. On June 13, 1988, DCA wrote
to
Colorado advising it that it was approving Colorado's "Cost
Allocation
Plan dated June 23, 1986 and subsequent revisions" effective for
the
period July 1, 1987 through June 30, 1988. Colorado ex. F.
(ACYF later
stated that the June 23, 1986 date referred to in this letter
was
incorrect and should have been June 16, 1986, the date of the
submission
of the proposed changes in the TARS. ACYF brief dated
2/19/91, p. 7, n.
4.) In accordance with DCA's request, Colorado
returned to DCA an
"acceptance" of the June 13, 1988 letter signed by the
Controller of the
Department of Social Services.
On March 7, 1988, Colorado submitted claims for the period October 1,
1985
through March 31, 1987 using data from the revised TARS. These
claims
were shown as increasing adjustments on Colorado's Quarterly
Statement of
Expenditures for the quarter ended December 31, 1987.
Using data from the
three quarters from January 1, 1987 through
September 30, 1987, Colorado
reallocated to title IV-E a proportion of
the costs previously allocated to
title XX, based on the assumption that
county employees had been accounting
for time spent on title IV-E
activities using title XX codes. 3/
4/ The resulting amounts were
multiplied by 50% to compute the total
amount of FFP due. The amounts
previously claimed for title IV-E under
the original TARS were then
deducted to arrive at the amount of the
increasing adjustments. Tr
77-80; Colorado ex. R; Colorado ex. T.
ACYF subsequently disallowed both the increasing adjustments claimed
for
the period October 1, 1985 through March 31, 1987 and the current
claim
for the quarter ended June 30, 1987. The amounts originally
claimed for
the period October 1, 1985 through March 31, 1987 based on the
original
TARS were paid.
The Changes in the TARS Constituted a Plan Amendment.
Colorado took the position that claims based on the revised TARS
were
allowable regardless of the effective date set by DCA because
the
changes in the TARS did not constitute a plan amendment requiring
DCA
approval. In support of its position, Colorado noted that the
overall
methodology used by the TARS -- cluster sampling -- was not
changed.
Colorado pointed out that, in a notice to the counties regarding
the
TARS changes, it specifically stated that "the method is the same
as
used previously." Colorado ex. L. Colorado also argued that
even if
changes in the codes constituted a plan amendment, all code
changes
involved titles other than IV-E, so that the failure to obtain
approval
of the changes should not result in the disallowance of its title
IV-E
claims.
ACYF took the position that an amendment was involved because the
changes
made by Colorado resulted in a change in the distribution of
services and
costs. ACYF cited in support of its position the testimony
of the
Controller for the Department of Social Services that the State
made coding
changes in order "to allocate the [administrative] costs
differently. . .
." Tr 256-257. ACYF also argued that, in signing the
"acceptance"
of the DCA Director's decision approving the proposed
changes as a CAP
amendment, the Controller showed that he viewed the
changes as a CAP
amendment. 5/
Colorado responded that the Controller's "acceptance" of DCA's June
13,
1988 letter had little significance since the letter did not
clearly
state that DCA was disapproving the proposed changes for the
period
prior to July 1, 1987.
We conclude that a CAP amendment was involved. As noted above,
the
regulations define a CAP as a "description of the procedures that
the
State agency will use in identifying, measuring, and allocating
all
State agency costs incurred in support of all programs administered
or
supervised by the State agency." 45 C.F.R. 95.505. The TARS
codes were
used to identify time spent on particular programs, providing a
basis
for the allocation of costs. While the title IV-E code
combinations
themselves were not changed, the revised procedures handbook
added
definitions for each of the code combinations. These
definitions
effectively changed the procedures referred to in section 95.505
since
they facilitated reporting and allocation of costs to specific
programs.
Contrary to Colorado's suggestion, moreover, the coding changes
for
programs other than title IV-E potentially affected title
IV-E.
Assuming that the total costs distributed through the CAP remained
the
same, a change in the amount of costs distributed to other
programs
administered by the State agency might well have had an impact on
the
amount of title IV-E costs. Cf. Washington State Dept. of Social
and
Health Services, DAB No. 1214 (1990) at p. 16 (changes in title
IV-E
costs held to affect amounts distributed to other programs covered
by
CAP). Here specifically, the deletion of several codes relating
to
title XX activities might reasonably cause an increase by
county
employees in the use of codes for title IV-E activities.
Our conclusion that a CAP amendment was involved is also supported by
the
fact that the Controller of the State agency submitted "proposed"
TARS
changes to DCA for its "review and approval" in advance of the
planned
implementation date. Colorado ex. D. There would have been
no
reason for him to make this submission unless he believed that the
TARS
changes constituted a CAP amendment.
The Effective Date of the CAP Amendment
In the proceedings before the Board, both parties addressed the
issue
whether an effective date earlier than the July 1, 1987 date set by
DCA
was justified in the event that the Board found that a CAP amendment
was
involved. However, we conclude that we need not reach this
issue. As
we discuss in the two sections which follow, even if DCA had
approved
the TARS amendment with an earlier effective date, the claims for
any
quarters prior to April 1, 1987 would not have been allowable
because
the claims were not based on the methodology in the amendment
and
because the methodology actually used was seriously flawed. 6/
This
rationale does not apply to the claim for the quarter ended June
30,
1987; nevertheless, we do not consider whether an earlier effective
date
to cover this quarter was justified. A witness of DCA represented
that
an April 1, 1987 effective date was still under consideration
within
DCA. Tr 393 - 397. If DCA modifies the effective date of
the TARS
amendment to cover this quarter, then there is no basis for
disallowing
the claim for this quarter. Accordingly, we remand this
portion of this
appeal to ACYF to determine in consultation with DCA whether
this claim
was allowable. 7/ See the provisions of 45 C.F.R. Part
75.
The Claims for the Quarters Prior to April 1, 1987 Were Not Made
in
Accordance with the CAP Amendment As Ultimately Approved.
As noted previously, the TARS -- both before and after its amendment
--
used time reports from county employees from one quarter as the
basis
for claiming funds for costs incurred during the following
quarter.
However, county employees did not report their time using the codes
in
the amended TARS until the quarter ended March 31, 1987. While
Colorado
wished to make claims for the period October 1, 1985 to March 31,
1987
which reflected what it regarded as improvements in its TARS,
time
reports using the amended TARS were never made for this period
and
obviously could not be created retroactively. Colorado therefore
used
time reported for the three quarters beginning January 1, 1987 as
the
basis for determining the costs allocable to title IV-E for the
quarters
prior to April 1, 1987. (In contrast, the claim for the
quarter ended
June 30, 1987 was based directly on the number of title IV-E
hours
reported for the quarter ended March 31, 1987.) Colorado's
retroactive
claims were thus neither fish nor fowl: they departed from
the approved
TARS in effect during the period covered by the claims while
failing to
comply in critical respects with the TARS amendment as approved
for a
later period.
Colorado, nevertheless, argued that the retroactive claims for
the
quarters prior to April 1, 1987 would have been allowable under
section
95.517, which permits claims only in accord with an approved
CAP,
because the methodology used in developing the claim replicated
the
results that would have been achieved through the TARS amendment.
As
discussed below, we find that the methodology was seriously flawed
and
could not reasonably be viewed as replicating the TARS amendment.
The Methodology Used by Colorado to Calculate the Claims for the
Quarters
Prior to April 1, 1987 Was Seriously Flawed.
As already indicated, Colorado's methodology for its retroactive
claims
involved the use of data from three subsequent quarters to
determine
title IV-E costs for the period October 1, 1985 through March 31,
1987.
The Board has previously addressed the question of whether
sample
results from one time period may be used as the basis for claiming
costs
for an earlier time period. Summarizing prior decisions, the
Board
stated in Missouri --
The Board's analysis therefore permits sample results from
one
period to be used to support claims from contiguous periods
when
no better documentation is available, provided that it can
be
shown that there are no significant differences between
the
periods. . . . The party asserting the use of data
for
unsampled periods has the burden of showing that
circumstances
relating to the sampled and unsampled periods are such
that the
data can be used for the unsampled period. We are not
prepared
to state what degree of similarity in circumstances is
necessary
to support the retroactive application of sampling results
or
other data; each case must be judged by its
particular
circumstances. The uncontested soundness of the data
provided
during the sample period is not sufficient in itself to
support
the application of the data as support for expenditures made
in
earlier periods; the conditions surrounding the
expenditures
must closely approach those in the sampled period.
Missouri, supra, p. 15.
Thus, in order to support its retroactive claims, Colorado has the
burden
of showing both that the data for the sample period -- January 1,
1987
through September 30, 1987 -- was reliable and that its title IV-E
program
remained essentially the same in the sample period as it was
during the
earlier period to which the State seeks to apply sample data.
(There was some
overlap between these periods as the average of the
title IV-E hours for the
sample period -- which included the quarter
ended March 31, 1985 -- was used
to calculate the claim for that
quarter.) We find that Colorado has not
met that burden. In addition,
we find that there were other flaws in
the methodology used to calculate
the retroactive claims.
The record shows that the number of title IV-E hours reported using
the
amended TARS for the quarters ending March 31, 1987, June 30, 1987
and
September 30, 1987 were 1,748, 1,143 and 1,007, respectively.
Colorado
ex. U. Colorado acknowledged that the large variation from
quarter to
quarter indicated that there was some problem with the data.
According
to Colorado's statistician, the variation from quarter to quarter
was
due to "non-sampling error," i.e., errors in reporting (such as when
the
respondent does not have accurate knowledge to give a
better
measurement) as well as errors in editing, recording and
databasing.
Colorado ex. W, p. 2. One State witness testified that the
variation
could be explained by the fact that the reporting of title IV-E
hours
became less accurate as the effects of the training provided for
the
quarter ended March 31, 1987 faded. Tr 83-86. ACYF agreed
that the
training might have had an impact on the hours reported, although
it
suggested that the emphasis in the training on increasing title
IV-E
claims might have resulted instead in the initial over-reporting
of
title IV-E hours. Tr 162; ACYF brief dated 2/19/91, p. 16.
Thus, the
record clearly establishes that the data was not reliable as a
basis for
determining time allocation for earlier periods.
Colorado nevertheless contended that the average of the hours reported
for
the first three quarters in which the revised TARS was used was a
sound basis
for calculating the prior quarter claims since the
three-quarter average was
close to the average for the thirteen quarters
ended March 1990, computed by
the statistician after the retroactive
claims had been filed. (The
three-quarter average was 1,299, while the
thirteen-quarter average was
1,381.) Colorado ex. W, p. 3; Tr 286.
However, the data for the
additional ten quarters also shows a marked
variation in the time
reported. Colorado never persuasively
demonstrated the cause for the
continuing fluctuation. While it may be
attributable in part to the
issuance of the agency letters, it may also
be attributable to any number of
other factors. Thus, the fact that the
averages were similar is not in
itself significant.
As noted above, Colorado also contended that title IV-E hours for
the
second and third quarters were under-reported as the effects of
training
wore off. Colorado argued that the three-quarter average was
therefore
a conservative estimate which resulted in lower retroactive claims
than
were actually justified. Colorado brief dated 2/22/91, p.
9. However,
Colorado provided no evidence to support its view that
title IV-E time
was reported most accurately immediately after training was
provided.
Even if the data for the sample period had not shown marked
fluctuations,
moreover, we are not persuaded that Colorado's title IV-E
program remained
the same throughout the period in question, a necessary
condition for
applying data from later periods to earlier ones. As
previously noted,
the party seeking to do this has the burden of proof
on this issue.
Colorado did not meet its burden here.
Colorado relied primarily on evidence that the amount of title
IV-E
payments to providers (i.e., program costs) during each quarter
from
July 1, 1985 through June 30, 1987 remained relatively constant, as
did
the amount of payments to providers under title XX. Colorado ex.
H
(corrected version submitted 1/11/91). However, ACYF showed that
when
the title IV-E payments were broken down by category
(i.e.,
non-voluntary foster care, voluntary foster care and
adoption
assistance), the amount varied from quarter to quarter. ACYF
ex. 20;
ACYF ex. 22. (ACYF also included figures for the quarter
ended
September 30, 1987, which was omitted from Colorado ex. H.)
A witness for Colorado also testified that she "didn't have any
knowledge
of any changes . . . in regard to IV-E eligibility." Tr
276-277.
However, this testimony was based on the witness' experience
with the title
IV-E program during the period of her employment with a
local department of
social services, which began in September 1986.
Thus, the testimony does not
rule out program changes prior to that
date. Moreover, the testimony
does not rule out changes in state or
county organization or other changes
which could affect how county
employees spent their time.
Accordingly, data from the sample period was not appropriately used
to
calculate claims for the earlier period under the standards
articulated
in Missouri.
The record shows that there were other flaws in the way the
retroactive
claims were calculated as well. As noted previously,
Colorado
determined what percentage of title IV-E and title XX time for the
three
quarters ended September 30, 1987 was spent on title IV-E
activities
alone. This percentage was applied to title XX costs for
each of the
quarters covered by the retroactive claims, and the resulting
amount was
reallocated to title IV-E. This calculation rested on the
assumption
that prior to the TARS amendment, county employees had been
accounting
for time spent on title IV-E activities using title XX
codes. This
assumption was in turn based on the results of a test of
the amended
TARS in Fremont County conducted from March 10 - 12, 1986.
The test
showed a decrease in time reported spent on title XX activities
which
corresponded to an increase in time reported spent on title
IV-E
activities. Tr 88-89; Colorado brief dated 2/22/91 p. 7.
However, we conclude that it was unreasonable for Colorado to rely on
one
quarter's experience in one county to make the assumption on which
the entire
methodology for calculating the retroactive claims was based.
For example,
contrary to the results in one county, it seems likely
that, even if title XX
time was previously overstated on a statewide
basis, time actually spent on
programs other than title IV-E might also
have been incorrectly reported as
title XX time. If some title XX costs
were reallocated to these
programs, this could result in a smaller
allocation to title IV-E.
There is also evidence in the record which raises questions about
the
accuracy of the retroactive claims although it does not point
to
specific flaws in Colorado's methodology. Documentation provided
by
ACYF shows that Colorado's retroactively adjusted claim for each
quarter
beginning October 1, 1985 and ending June 30, 1987 was larger than
the
claim submitted for any of the five succeeding quarters. ACYF ex.
22.
ACYF also documented that the average number of title IV-E children
in
each category except voluntary foster care increased annually
from
fiscal year 1986 to fiscal year 1988, as did the amount of program
costs
in all categories. Id. and ACYF ex. 20. In
ACYF's view, this
indicated that the retroactive claims were inflated because
the logical
assumption would be that, as the number of title IV-E children
and title
IV-E program costs increased, administrative costs for title IV-E
would
also have increased, not decreased as was the case here. ACYF
also
documented that Colorado's title IV-E administrative claims for
the
retroactive period were larger than its maintenance claims for the
same
period. It pointed to this as further evidence that the
retroactive
claims were inflated, contending that administrative costs
would
normally be substantially smaller than program costs. Tr 449;
ACYF ex.
32 and ex. 33.
In response, Colorado did not challenge ACYF's position that title
IV-E
administrative costs should have increased as the number of title
IV-E
children and title IV-E program costs increased. Nevertheless,
Colorado
pointed out that the retroactive claims were comparable in amount
to
Colorado's title IV-E administrative claims beginning October 1,
1988.
Colorado contended that this was a more valid comparison since
reporting
under the amended TARS had become more accurate by that time.
Tr
513-514. This merely confirms that the retroactive claims
were
overstated, however, since the retroactive claims should have been
lower
than the later claims, not at the same level, given the
undisputed
increase over time in the number of title IV-E children and in
title
IV-E program costs.
In summary, since the methodology used to calculate the claims for
the
period October 1, 1975 through March 31, 1987 was seriously
flawed,
these claims are not allowable.
Conclusion
For the reasons stated above, we uphold the disallowance with respect
to
the period October 1, 1985 through March 31, 1987. As discussed on
page
9, we remand the disallowance for the quarter ended June 30, 1987
to
ACYF for further consideration in consultation with DCA. Colorado
may
appeal any CAP determination by DCA for that quarter pursuant to
45
C.F.R. Part 75. In the event ACYF .reinstates any portion of
the
disallowance for that quarter, Colorado may appeal the disallowance
to
this Board within 30 days of receiving notice.
_____________________________ Judith A. Ballard
_____________________________ Cecilia Sparks Ford
_____________________________ Donald F. Garrett Presiding
Board
Member
1. An additional basis for the disallowance of the
claim for the
quarter ended December 31, 1985 was that it was not filed
within two
years of the end of the calendar quarter in which the expenditures
were
incurred, as required by section 1132 of the Act. Colorado
contended
that the claim was excepted from the two-year filing requirement
because
it involved an adjustment to prior year costs within the meaning of
45
C.F.R. 95.19. However, this exception refers specifically
to
adjustments in the amount of a particular cost item previously
claimed
under an interim rate concept. 45 C.F.R. 95.4; Washington
State Dept.
of Health Services, DAB No. 924 (1987). Colorado did not
provide any
rationale for considering the amounts previously claimed under
its
existing approved CAP as "interim rates," and we know of none.
Thus,
there is an independent basis for disallowing Colorado's claim for
the
first quarter in question.
2. Docket No. 89-80 involved the appeal of an earlier
disallowance
of the $3,327,162 claimed for the period October 1, 1985 through
March
31, 1987. ACYF withdrew the disallowance in that case, stating
that it
would be issuing a corrected disallowance. The corrected
disallowance
led to the current appeal.
3. To calculate these claims, Colorado first took the
average (mean)
of the title IV-E hours reported under its revised TARS for
the three
quarters from January 1, 1987 through September 30, 1987.
Colorado then
determined what percentage this represented of the sum of the
average
for the three quarters of title IV-E hours and title XX hours.
Next,
Colorado applied this percentage, weighted by the salaries of
the
persons reporting, to the costs allocated to each of several title
XX
codes for each of the six quarters for which claims were submitted.
4. This did not result in a reduction of title XX
claims since title
XX funding is subject to a cap and Colorado had exceeded
its cap on
title XX claims by more than the amount reallocated to title
IV-E. Tr
115.
5. ACYF also cited Missouri Dept. of Social
Services, DAB No. 844
(1987), in support of its position. However, that
decision merely
indicates that Missouri itself treated a change in coding as
a plan
amendment.
6. It should be noted in any event that
Colorado did not request a
retroactive effective date for the TARS amendment
at the time the
amendment was submitted for approval. Moreover,
Colorado did not allege
that it was prevented by any factor (other than its
own lack of
diligence) from proposing and implementing the TARS
changes
contemporaneously with the beginning date of its claim, October 1,
1985.
In addition, both parties agreed that the increased claims for
the
quarters prior to April 1, 1987 were largely the result of the
training
provided in conjunction with the implementation of the TARS
changes.
Colorado brief dated 2/22/91, p. 8; Tr 162. To the extent that
the
training merely clarified the reporting instructions in the
procedures
handbook, Colorado could presumably have increased its title IV-E
claims
sooner simply by providing training.