Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: New York State Department of Social Services
DATE: January 7, 1993
Docket No. A-93-32
Decision No. 1377
DECISION
The New York State Department of Social Services (NYSDSS) appealed
a
decision by the Division of Cost Allocation (DCA) disallowing
$1,467,984
in federal financial participation (FFP) claimed for space
costs
associated with NYSDSS headquarters at the Ten Eyck building in
Albany,
New York. The disallowance represents the difference between
FFP
claimed by NYSDSS as lease costs for the period April 1, 1989
through
March 31, 1992 and FFP in the amount of a use allowance to which
DCA
determined that NYSDSS was entitled for the space costs.
NYSDSS argued that it was entitled to the larger amount (including
amounts
attributable to interest costs) on several grounds. NYSDSS
summarized
its arguments as follows:
Interest is allowable as a cost of space under the
existing
lease/purchase agreement. The Department's claim is
allowable
pursuant to [Office of Management and Budget Circular]
A-87
attachment B, C.2.a. The first occupancy date of October
1,
1980 established in that provision is unreasonable and
should
not bar reimbursement. The distinction in OMB Cir. A-87
between
public and private landlords for lease/purchase contracts
is
unreasonable and rent paid to a public landlord should
be
subject to FFP in the same manner and extent as rent paid to
a
private landlord. The reimbursement paid to the State should
be
subject to the same rules governing payments made by
federal
agencies to their contractors. Federal agencies regularly
pay
their contractors interest under a variety of
contracts.
Finally, Congress through the Tax Reform Act of 1986,
encouraged
states to borrow money to meet their costs of operation and
thus
this federal legislation creates an exception to OMB Cir.
A-87,
Attachment B, D.7.
Notice of Appeal at 2. NYSDSS noted that this appeal is
"substantially
similar" to the issues decided in New York State Department of
Social
Services, DAB No. 1336 (1992), and indicated that NYSDSS would
not
object to a summary decision based on the record in DAB No. 1336.
Id.
In acknowledging the appeal, the Presiding Board Member proposed
to
issue a summary decision unless DCA objected to that procedure
within
ten days. The ten days have expired, and the Board has received
no
objection from DCA.
The decision in DAB No. 1336 addressed each of the arguments raised
by
NYSDSS and found that none of them had merit. Rather, we concluded
that
interest costs for the Ten Eyck building were unallowable under
the
plain terms of OMB Cir. A-87 and that only a use allowance
was
permissible for the costs of space in that building.
Therefore, we sustain the disallowance of $1,467,984 based on DAB
No.
1336, which we incorporate by reference.
___________________________
Donald
F.
Garrett
___________________________
Norval
D. (John)
Settle
___________________________
Judith
A.
Ballard
Presiding
Board