GAB Decision 180
May 29, 1981 South Dakota Department of Social Services; Docket No.
79-111-SD-HD, 79-112-SD-HD Ford, Cecilia; Settle, Norval Garrett,
Donald
By letters dated June 13, 1979, the South Dakota Department of Social
Services appealed from determinations by the Acting Regional Program
Director, Administration for Public Services, Office of Human
Development Services, dated May 17, 1979 and May 16, 1979, disallowing
Federal financial participation (FFP) totalling $9,982 claimed under
Title XX of the Social Security Act for training costs for the quarters
ended December 31, 1978 and March 31, 1979 (May 17 determination) and
June 30 and September 30, 1978 (May 16 determination). The appeals were
assigned Docket Nos. 79-111-SD-HD and 79-112-SD-HD, respectively, and,
with the consent of the parties, were considered jointly. This decision
is based on the applications for review, the Agency's responses to the
appeals, the parties' responses to an Order to Show Cause issued by the
Panel Chair, a telephone conference with the parties held by the Panel
Chair, and the Agency's report on a meeting between the parties held
pursuant to the telephone conference.
The Order to Show Cause identifies those parts of the disallowances
not appealed by the State or withdrawn by the Agency in its responses to
the appeals. The remaining issues, representing FFP totalling $4,839,
are discussed separately below.
Travel and Per Diem Costs for Training Programs Lasting Less Than
Five Full Days ($1,665 FFP)
The Agency found that the State had claimed travel and per diem costs
incurred for attendance at training programs which lasted less than five
full days and disallowed those costs on the ground that 45 CFR 228.84
(1977) allows only education costs for attendance at such training
programs. That section provides, in pertinent part, that --
(costs) matchable as training expenditures include:
(a)(2) For State agency employees in full-time training programs of
less than eight consecutive work weeks: per diem, travel and
educational costs;
(2) (a)(3) For State agency employees in part-time training programs
(part of work week, evenings, mornings): Education costs.
The Agency's position is that Section 228.84(a)(3) clearly indicates
by the phrase "part of work week" that "part-time" means
less than five
full days. (Response to appeal, Docket Nos. 79-111-SD-HD and
79-112-SD-HD, p. 2.) The State does not contend that the regulation is
unclear, * but argues that "an exception should be made to the five day
rule in rural areas," since training programs of that length are less
effective yet more costly than shorter programs. (Application for
review, Docket Nos. 79-111-SD-HD and 79-112-SD-HD, p. 1.). We find that
the State's argument, standing alone, does not provide a basis for
requiring the Agency to make an exception to the regulations, and,
accordingly, sustain the disallowance with respect to this item except
as indicated below.
The State also contends that $187 of the amount disallowed, (Voucher
10800, Docket No. 79-111-SD-HD), was incurred for attendance at a
training program which ran from a Saturday through the following
Wednesday, and argues that this amount should have been allowed since
the Agency had not previously defined a work week as Monday through
Friday and since some of the trainees may not have worked a traditional
work week in any event. (Application for review, Docket No.
79-111-SD-HD, p. 1.) The agency maintains in response that "unless the
training coincides with the exact five full days of an employee's work
week, the training is only for part of a work week." (Response to
appeal, Docket No. 79-111-SD-HD, p. 2.) Section 228.84(a)(3) allows
education costs but not travel and per diem costs for training programs
lasting "part of work week."
(3) In its response to the Order, the State stated that only one
trainee was involved and that he worked on a flexible schedule that
sometimes included a Saturday through Wednesday work week. (State's
response to Order, p. 2.) Even if the training program did not coincide
with the trainee's regular work week, however, we find that the travel
and per diem costs were allowable. Since the regulation does not
specify particular days as constituting a "work week," any five-day
period can be considered as such.
The State in its application for review contends with respect to
another portion of the costs claimed for travel, (Voucher 06819, Docket
No. 79-111-SD-HD), that it had been informed that the disallowance
"should (not) have been taken and a correction will be made."
(Application for review, Docket No. 79-111-SD-HD, p. 2.) In response to
the Order's request for further clarification, the State replied that it
could not support this contention, but asserted that the costs, for
travel by the State Agency Director of Staff Development, were
nevertheless allowable. The matter was raised at the telephone
conference, and the Agency subsequently agreed to allow the $118
involved. (Confirmation of Telephone Conference, dated 4/24/81, p. 1;
Agency's letter dated 5/6/81, pp. 102.)
Finally, the State argues that $173 of the costs claimed, (in
Vouchers 12120, 15127, and 14948, Docket No. 79-111-SD-HD), was incurred
in connection with training programs which lasted five full days,
although the three individuals in question did not attend the entire
program. The State contends that there was good cause for the
individuals to return to their duty stations prior to the end of the
program, and that the costs should therefore be allowable. (Application
for review, Docket No. 79-112-SD-HD, p. 1.) In its response to the
appeal, however, the Agency argues that, even assuming that it could
make exceptions to the regulation for good cause shown, good cause did
not exist in two of the cases, since one individual returned for a court
appearance which was already schudeled (the implication being that he
should not have attended the program in the first place) and the other
returned "to open a satellite office," an event which presumably could
have been scheduled around the training program. In the third case, the
Agency found that the training program in question related to the WIN
program, which is funded out of Title IV-C of the Social Security Act,
and contends that the costs are unallowable on that basis. (Response to
appeal, Docket No. 79-112-SD-HD, pp. 2-3.)
The State later agreed that the costs were not allowable in the third
case. (State's response to Order, p. 2.) With respect to the other two
individuals, although the regulation speaks in terms of the duration (4)
of the program, not individual attendance, we find persuasive the
Agency's argument (at p. 5 of Agency's response to Order) that the
intent of the regulation would be defeated if travel and per diem were
routinely allowed where individuals attended only part of a five-day
training course. Under such circimstances, the State would be
reimbursed for these costs even where they related to what was in effect
part-time training. We further agree with the Agency that the State has
not made an adequate showing in this case to support an exception to the
regulation for good cause. The Order suggested that the Agency might
have considered factors other than the reason for leaving the training
early (such as the availability of similar training programs should the
individuals not have attended the one in question), but the State did
not identify any other factors present in the instant case, although
given an opportunity to do so.
Persons Ineligible for Training ($725 FFP)
The Agency disallowed a portion of the costs claimed for attendance
at two training programs on the ground that some of the trainees were
not paid directly or indirectly by Title XX funds and hence were not
eligible for training under 45 CFR 228.81. The State appealed the
disallowance of this item in part, contending that only 35 participants,
rather than 38 as found by the Agency, were ineligible for the first
training program, and that only one participant, rather than five as
found by the Agency, was ineligible for the second training program.
(Application for review, Docket No. 79-112-SD-HD, p. 2.) None of the
participants named by the State as eligible for training were among
those identified by the Agency as ineligible, nor were they even shown
to have attended the training programs in question. (Response to
appeal, Docket No. 79-112-SD-HD, p. 5 and Exhibits 2 and 3.)
In response to the Order's request to clarify its position, the State
identified three individuals not previously named by it who it contended
were paid directly or indirectly by Title XX funds. (State's response
to Order, p. 3.) In the telephone conference, the State further modified
its position, contending that only one of the three individuals was
eligible. (Confirmation of Telephone Conference, dated 4/24/81, pp.
1-2.) The Agency agreed to withdraw the $17 disallowance relating to
that individual after reviewing the documentation provided by the State.
(Agency's letter dated 5/6/81, p. 2.)
Training Grant ($2,449 FFP)
The State claimed Federal financial participation in payments made to
the South Dakota Association of Mental Health Centers (SDAMHC) for a
workshop entitled " are of the Long-Term Mentally Disabled."
(5) Faculty for the workshop came from two universities and from a
program not affiliated with SDAMHC. The agreement with SDAMHC is in the
form of a Notice of Grant Awarded, which specifies the title of the
workshop, shows the amount budgeted for various line items, and requires
grantee participation in the project over and above the amount of the
grant. (Response to appeal, Docket No. 79-112-SD-HD, Exhibit 3.) The
payments made pursuant to the grant were disallowed on the ground that
the cost of training by other that a state agency is allowable under 45
CFR 228.84 only if furnished by an "outside expert" or by a "provider
agency" and that SDAMHC was neither of these. The State's appeal does
not specifically address the stated basis for the disallowance, but
simply contends that the purpose of the training provided under the
grant was to improve direct Title XX service delivery and that the major
participant group was Title XX service delivery staff. (Application for
review, Docket No. 79-112-SD-HD, p. 2.) The State's basic point is that
training of benefit to the Title XX program was provided and that the
cost of such training should therefore be allowable.
We agree with the Agency's position that SDAMHC is not a "provider
agency" within the meaning of 45 CFR 228.84(f) (1977) since it did not
contract with the State to provide social services under Title XX of the
Social Security Act. Although there is no express definition of a
"provider agency" in the Title XX regulations, parts of 45 CFR 228.70(
a) and (d) use the term "provider" to refer to an "agency, individual,
or organization from which services are purchased" (emphasis added) by
the state agency. SDAMHC, however, provided training, which is treated
as discrete from services by the Social Security Act. (See, for
example, Section 2002(a)(1) of the Act, which refers to "personnel
training and retraining directly related to the provision of . . .
services.") Hence, SDAMHC cannot be considered a provider agency.
We are not persuaded, however, by the Agency's argument that, because
SDAMHC did not itself provide the training but hired persons outside the
organization to do so, it is not an "outside expert" within the meaning
of 45 CFR 228.84(c)(1) (1977).
The Agency, citing the generic definition of "expert" as one having
special skill or knowledge (Webster, Third New International Dictionary
at 800 (Unabridged)), argues that "(once) the total work is
subcontracted, the prime contractor is not contributing any special
skills or knowledge and therefore is not an 'expert.'" (Agency response
to Order, p. 7.) The Agency also contends that allowing subcontracting
under such circumstances "would result in an unnecessary administrative
cost level." (Agency response to Order, p. 7.)
(6) Section 228.84 of Title 45 provides in pertinent part that --
(costs) matchable as training expenditures include:
(c) State agency training activities.
(1) for experts outside the State agency engaged to develop or
conduct special programs: salary, fringe benefits, travel and per diem.
There is no language in this provision which requires the distinction
made by the Agency. Moreover, an official agency issuance interpreting
Section 228.84(c)(1) specifically refers to "the employment of experts,
either as individual consultants of from a firm." Addendum to PIQ 77-31
(APS), dated August 25, 1977. (Response to appeal, Docket No.
79-112-SD-HD, Exhibit 7.) A "firm" or other organizational entity
must
of necessity arrange for the presentation of the trainingg which it has
contracted to provide by individuals. In the instant case, SDAMHC
recruited individuals from a number of sources to present various
segments of the workshop. We find that this constitutes the provision
of training by an expert outside the state agency within the meaning of
the regulation. With respect to the Agency's expressed concern with the
incurrence of unnecessary administrative costs, we note that the Agency
did not identify any unreasonable or unallowable costs charged to Title
XX fundds under the SDAMHC grant, although invited to do so.
(Confirmation of Telephone Conference, dated 4/24/81, p. 2.)
The Aggency also argued, however, that even assuming that SDAMHC
remained an expert despite the subcontracting, the costs were
unallowable because the notice of grant award did not authorize SDAMHC
to subcontract the training. (Agency response to Order, dated 4/2/81,
p. 7.) We find no support for this argument. The award notice shows an
approved budget of $1,545 for "travel," $770 for "supplies,"
and $1400
for "contractual." Since there is no separate line item for personnel
or
salaries, SDAMHC's intent to have the training provided under contract
is clear from the face of the document.
The Agency stated in the notification of disallowance in Docket No.
79-112-SD-HD that if the disallowance of this item was not upheld on the
ground that SDAHMC was neither a provider agency nor an outside expert,
it would propose to disallow some of the costs on other grounds. One of
the alternate bases for disallowance was that trainers' salaries
exceeded the rate of pay in their regular employment. The Agency stated
it its response to the appeal, however, that it had determined this to
be an allowable cost. (Response to appeal, (7) Docket No. 79-112-SD-HD,
p. 8.) The other alternate basis was that 13 of the 50 workshop
participants had neither a direct nor an indirect relationship with
Title XX activities. (Response to appeal, Docket No. 79-112-SD-HD, p.
8.) Since the State stated in its application for review in Docket No.
79-112-SD-HD (at p. 2) that it did not contest a disallowance on this
basis, the $547 of the disallowance allocable to the 13 ineligible
individuals stands.
Conclusion
For the foregoing reasons, the Board's disposition of the two
docketed cases is as follows:
Travel and Per Diem Costs
Disallowance sustained except for $305 FFP claimed in vouchers 10800
and 06819.
Persons Ineligible for Training
Disallowance sustained except for $17 FFP allocable to one
individual.
Training Grant
Disallowance reversed except for $547 FFP allocable to 13
ineligibles. * In several decisions involving this issue, the Board
reversed the disallowances to the extent that they covered periods
before each state received actual notice of an Agency publication
explaining the term "part-time training" (or the contents of that
publication.) Montana Department of Social and Rehabilitation Services,
Decision No. 119, September 29, 1980; Alabama Department of Pensions
and Security, Decision No. 128, October 31, 1980; Oregon Department of
Human Resources, Decision No. 129, October 31, 1980; Utah Department of
Social Services, Decision No. 130, October 31, 1980; and South Dakota
Department of Social Services, Decision No. 142, January 21, 1981. The
publication was dated September 14, 1977, however, and lack of notice is
therefore not an issue in the instant appeals, which involve
substantially later time periods.
OCTOBER 22, 1983