Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: New York State Department of Social Services
DATE: March 22, 1996
Docket Nos. A-96-82
Decision No. 1566
DECISION
The New York State Department of Social Services (New
York) appealed a determination by the Administration for
Children and Families (ACF) disallowing $8,625 in federal
financial participation (FFP) claimed by New York under
title IV-E of the Social Security Act (Act). New York
had sought reimbursement for administrative costs
associated with the development of an automatic data
processing (ADP) system. ACF found New York's claim
unallowable because New York had not sought prior federal
approval, as required by 45 C.F.R. 95.611, before
incurring expenditures relating to the acquisition of ADP
equipment or services.
In its notice of appeal New York acknowledged that the
facts and issues presented by this case were similar to
those reviewed by the Board in New York State Dept. of
Social Services, DAB No. 1525 (1995). New York
accordingly stated that it would acquiesce in the Board's
issuance of a summary decision in this appeal based on
the Board's holding in DAB No. 1525. ACF also agreed to
the issuance of a summary decision here based on DAB No.
1525.
In DAB No. 1525, the main issue was whether the
expenditures for which New York claimed FFP were the type
of activities that required prior approval from ACF. New
York claimed FFP for administrative costs associated with
three employees from the New York City Human Resources
Administration. These employees provided New York with
advice related to the development of a preliminary
analysis concerning the feasibility and need for a
statewide automated system to be used in the title IV-E
eligibility determination process, the payment for foster
care services, and the claiming of federal funding. ACF
disallowed New York's claim for FFP for costs incurred
prior to the date New York submitted an Implementation
Advance Planning Document (APD) to obtain prior federal
approval for the development and implementation of the
statewide system.
In upholding the disallowance, the Board noted that the
regulatory definition of ADP services included such
activities as feasibility studies and systems studies.
The Board found that the activities performed by the
three employees clearly fell within these categories.
The Board further found that, under New York's
description of a continuum of the administrative decision
making process, a state could avoid the prior approval
requirements of section 95.611 by simply asserting that
activities undertaken related to the acquisition of ADP
equipment or services were "pre-decisional." The Board
concluded that this would be inconsistent with the
regulations as a whole, which contemplate submission of a
Planning APD when an ADP project is at the planning
stage, before any feasibility study is performed.
As to New York's argument that prior federal approval was
not required because the expenditures in question fell
far short of the $500,000 threshold figure in section
95.611(a), the Board found that the regulation's dollar
limit refers to the total acquisition costs of ADP
equipment or services associated with an APD project a
grantee anticipates it will incur, and not to the cost of
any one component or aspect of an ADP system. When New
York decided to commission the feasibility and system
studies, it did so in the context of a much broader
anticipated acquisition of ADP equipment and services
than the studies themselves, an acquisition that clearly
exceeded the $500,000 threshold.
Conclusion
Accordingly, based on the analysis in DAB No. 1525, which
we incorporate by reference in its entirety, we sustain
the disallowance of $8,625.
_________________________
Judith A. Ballard
_________________________
Cecilia Sparks Ford
_________________________
Donald F. Garrett
Presiding Board Member