SUBJECT: Maryland Department of Human Resources

DECISION

By letter dated June 10, 2002, the Department of Human Resources of the State of Maryland (Maryland) appealed the May 7, 2002 determination of Wade F. Horn, Ph.D., Assistant Secretary for the Administration for Children and Families, disallowing $745,685 in federal financial participation (FFP) in expenditures claimed for the period October 1, 1992 through March 31, 1997. The claims were for services provided by local Maryland sheriff's offices in relation to child support services under title IV-D of the Social Security Act (Act).

Relevant facts and history of the case

Title IV-D of the Act (sections 451-469; 42 U.S.C. �� 651-669) is a cooperative federal-state program that aims at increasing the effectiveness of child support collection by such measures as: locating absent parents; enforcing their support obligations; establishing paternity; obtaining child and spousal support; and assuring that assistance in obtaining support be available to all children for whom such assistance is requested. See section 451 of the Act. The program is administered at the federal level by the Office of Child Support Enforcement in ACF and at the state level in Maryland by the Child Support Enforcement Administration (CSEA) of the Maryland Department of Human Resources. In Maryland, sheriff's offices in the various counties served warrants for child support enforcement and received payments for those services from CSEA.

CSEA developed a methodology which individual sheriff's offices could elect to use to charge a set amount of $245 per warrant executed for the child support enforcement program. Maryland described the basis of this figure as "averaging the large, medium and small jurisdictions' warrants and body attachment costs." Notice of Appeal at 2.

The disallowance challenged here followed several iterations of the dispute between the parties over the amount of federal funds properly recoverable by Maryland for payments made under its cooperative agreements with these sheriffs. An audit found that Maryland was essentially charging more for the child support enforcement warrants than the fees set for other process service. Maryland Ex. B. Thereafter, the first disallowance in this matter was issued on August 27, 1998 for $745,685 in federal funds, which represented the FFP claimed under the $245 rate less an allowance of $30 per warrant based on Maryland law that provided a $30 sheriff's fee for service of process generally. This disallowance was appealed to the Board but withdrawn by ACF during the briefing process. ⁽¹⁾

On May 22, 2000, the ACF Regional Administrator issued an amended disallowance for the full amount of all the FFP claimed ($849,734). That disallowance stated that, based on Maryland's brief in the prior appeal, the Regional Administrator concluded that the sheriffs were not actually reimbursed on a fee-for-service basis but for the costs of their services. The disallowance concluded that Maryland could claim the actual costs (even if higher than the service of process fee) but that no FFP could be approved (not even at the $30 rate) unless the actual costs were adequately documented. The Regional Administrator found that, despite Maryland being "encouraged" to do so, it had failed to provide adequate documentation.

On June 23, 2000, Maryland sought reconsideration of the amended disallowance by the Assistant Secretary of ACF. The Assistant Secretary issued his determination on May 7, 2002. After apologizing for the extended delay, the determination letter went on to reverse a part of the disallowance, reducing the total again to $745,685. The rationale was explained as follows:

[W]e conclude that the claims for a fee of $30 for each IV-D case are supportable as they are consistent with the same charge made to everyone for the same services rendered. If the State wishes to claim actual costs for providing these services, all costs, including the $30, must be documented. However, in those cases where the State is claiming only the $30 fee, we will not require the State to support the fee with documentation since we believe that these services probably can not be rendered for less than $30.

Assistant Secretary's letter at 3. The present appeal to the Board from this reconsideration determination followed.

Applicable legal standards

State participation in title IV-D is funded through FFP payments based on a percentage of the total funds expended by each state to operate its approved plan for child support enforcement. Section 455 of the Act. In order to receive FFP, a state must operate its title IV-D program in accordance with a federally approved state plan and applicable federal regulations. 45 C.F.R. �� 304.15, 304.20. ⁽²⁾ That state plan must provide for cooperative agreements with appropriate law enforcement officials to assist the agency administering the plan to deliver child support services. Section 454(7) of the Act; 45 C.F.R. � 302.34. Among the activities for which FFP may be claimed pursuant to the state plan are necessary costs of enforcing support obligations through warrants, court orders, and civil and criminal proceedings. 45 C.F.R. � 304.42(b)(3)(iv).

The general administrative requirements applicable to Department of Health and Human Services (HHS) grants to states in Part 74 of Title 45 of the Code of Federal Regulations were expressly made applicable to child support enforcement grants throughout the time period at issue (with two exceptions, not relevant here, for cost sharing and financial reporting provisions). 45 C.F.R. � 304.10; 45 C.F.R. Part 74. Part 74 specifies that the allowability of costs claimed by the states shall be determined in accordance with the cost principles set out in Office of Management and Budget (OMB) Circular A-87, "Cost Principles for State and Local Governments." 45 C.F.R. � 74.27.

The methods to be used in determining costs for federal funding for cooperative agreements of the kind that CSEA executed with Maryland sheriffs is governed by 45 C.F.R. � 304.21(c). That subsection gives the state "discretion with respect to the method of calculating eligible expenditures by courts and law enforcement officials under cooperative agreements," but also requires that "any method used must account for specific costs incurred on behalf of cases receiving services under the IV-D State plan."

In addition, section 303.107 requires, among other things, that any cooperative agreement "specify the financial arrangements, including budget estimates, covered expenditures, methods of determining costs, procedures for billing the IV-D agency, and any relevant Federal and State reimbursement requirements." 45 C.F.R. � 303.107(e). In addition, all agreements with other state and local agencies, including law enforcement officials, must be consistent with procurement standards at 45 C.F.R. � 74.40 et seq. 45 C.F.R. � 304.20(b)(1)(iii).

Issues

Maryland asserted that the real basis of the disallowance continued to be a conclusion in the original audit about the proper fee being $30 per warrant under state law. Maryland argued that the sheriffs' offices were entitled to FFP in their costs, which were much more than the $30 general fee. Maryland argued that "neither the federal audit team nor ACF should be deemed to have any expertise on Maryland law." Maryland Br. at 5.

Maryland further contended that the flat rate payment methodology that it used during the time at issue to arrive at a figure for the sheriffs' costs was beneficial to the program and was adopted as a "creative, cost-saving" measure. Maryland Br. at 4, 10. Maryland argued that the methodology should have been permissible under applicable federal requirements. Notice of Appeal at 2.

Alternatively, Maryland asserted that ACF had conceded that actual costs incurred under the cooperative agreement were eligible for FFP but now relied on the position that those costs were not documented sufficiently. Notice of Appeal at 2-3. Yet, according to Maryland, ACF failed to review and analyze the documentation submitted to establish the bases of specific costs in the affected law enforcement offices.

ACF's position before us was that the flat fee approach based on reported averages for service in cases generally did not provide an adequate basis to assure that only actual costs incurred for the benefit of title IV-D were reimbursed. ACF insisted before us that Maryland simply failed to provide documentation adequate to show the actual costs of services in title IV-D cases provided by the sheriffs' offices involved.

1. Questions of Maryland law are no longer relevant to resolving this dispute.

Maryland's wide-ranging arguments belie the simplicity at the heart of this case. In essence, the case as it now stands turns on a dispute about how much documentation was needed to establish the costs that particular sheriffs' offices actually incurred in performing title IV-D services. The tangled history and changing bases of the disallowances before this dispute became ripe for decision before us created a good deal of confusion. As a result, much of the discussion in the briefs is now largely beside the point.

In particular, any question of Maryland law regarding the financing of sheriffs' offices and fee-for-service payments is moot. In the determination appealed to us, ACF essentially conceded that $30 per case is eligible for FFP on either of two grounds: (1) that CSEA could pay the same fee charged to others or (2) that ACF accepts that the costs of the services at issue would have exceeded $30 per case and therefore waived further documentary support for this amount. ⁽³⁾ Assistant Secretary letter at 3. Further, ACF did not dispute that the actual costs incurred by the sheriffs' office under cooperative agreements for purposes of providing services in title IV-D cases were allowable expenditures. See, e.g., ACF Br. at 5.

Maryland argued that the sheriffs' authority under state law ⁽⁴⁾ to collect fees from state agencies for various services did not create any legal bar to sheriffs seeking FFP "for necessary expenditures consistent with routinely applied criteria" less any program income collected. Maryland Br. at 6-7. Before us, though, ACF made no such argument that the sheriff's offices' expenditures were ineligible for FFP. Instead, ACF stated that the only issue was whether the costs were adequately documented. ACF Br. at 5. Given this state of the dispute, we see no need to revisit any issue of Maryland law. The remaining questions, thus, are whether the $245 flat rate as calculated by CSEA was permissible, and, if not, whether Maryland has otherwise adequately documented actual costs of service in excess of $30 per case in Title IV-D cases for any of the sheriffs' offices.

2. Maryland had the burden of documenting the actual costs on which its claims for FFP were based.

We first briefly lay out the nature and sources of Maryland's obligation to document actual costs. OMB Circular A-87 provides that all costs claimed by a state under federal grant awards must "[b]e adequately documented." OMB Circular A-87, Att. A, � C.1.j; see 45 C.F.R. � 74.27(a)(making the Circular applicable). The grantee, here Maryland, is responsible for maintaining "records that identify adequately the source and application of funds for HHS-sponsored activities," and that "contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, outlays, income and interest." 45 C.F.R. � 74.21(b)(2). Governmental entities that receive FFP under a grant to the state, as did the sheriffs with cooperative agreements here, are also required to keep adequate documentation of actual expenditures, including accounting for the application of all funds spent and retaining source documentation such as payrolls and time and attendance records. 45 C.F.R. �74.5(b) (making 45 C.F.R. Part 92 applicable); 45 C.F.R. � 92.20. As noted above, the title IV-D regulations explicitly provide that states using cooperative agreements must ensure that "any method used must account for specific costs incurred on behalf of cases receiving services under the IV-D State plan." 45 C.F.R. � 304.21(c).

Both parties recognized that the Board has "consistently held that it is a fundamental principle of grants management that a grantee is required to document its costs, and that the burden of documenting the allowability . . . of costs for which funding was received rests with the grantee." Rincon San Luiseno Band of Mission Indians, DAB No. 1826 (2002); see, e.g., ACF Br. at 11; Maryland Br. at 10. Such documentation includes the need to show not only the hourly rates of personnel but also which hours they actually worked on grant activities. California Dept. of Health Services, DAB No. 1539, at 11 (1995). This need is recognized by the cost principles which require that costs for employees whose wages might also be partly for activities not chargeable under the particular federal grant must be supported by appropriate time distribution records. OMB Circular A-87, Attachment B, �B.10.b. A "time distribution record" is any contemporaneous record that demonstrates how the employees divided their time between various cost objectives. Maryland argued that the Board has sometimes accepted non-contemporaneous documentation of costs where actual records are unavailable. Maryland Br. at 11, citing Indiana Dept. of Public Welfare, DAB No. 772 (1986). As Maryland recognized, such retrospective documentation is "carefully scrutinized." Id. In fact, in DAB No. 772, a title IV-D case, the Board explicitly rejected the State's attempt to use a retrospective affidavit, in part because it contained "after-the-fact statements which were unsupported by any documentation from the time period in question, such as a job description, organizational charts, or actual evidence of work performed." Id. at 3. The Board has not generally accepted as adequate non-contemporaneous estimates or "best guesses" or merely conclusory statements. See, e.g., Michigan Dept. of Mental Health, DAB No. 1291 (1992), and cases cited therein.

With this framework in mind, we turn to the question of whether the costs at issue here were adequately documented.

3. Maryland's obligation to document actual costs incurred in providing title IV-D services was not satisfied by the estimated average cost per warrant methodology.

In pressing its entitlement to use the $245 per warrant methodology of calculating its sheriffs' costs, Maryland relied heavily on regulations granting the states "discretion with respect to the method of calculating eligible expenditures by . . . law enforcement officials under cooperative agreements." 45 C.F.R. � 304.21(c). Hence, according to Maryland, its method of calculating an average per warrant cost is within its discretion. Notice of Appeal at 2. Maryland indicated that the method was chosen in part because it reduced the documentation burden on sheriffs' offices that chose it. Id. Furthermore, Maryland contended that the method it chose best served the interests of the child support program by encouraging a higher priority treatment of child support warrants. Id. Finally, Maryland suggested that this methodology resulted in a reduction of FFP claimed for "the larger and more expensive offices," because only successful service was compensated rather than all costs. Maryland Br. at 4. Maryland stated that more FFP was paid to sheriffs' offices after this method was abandoned and proportionately more during its use to those sheriffs' offices who elected not to use it. Id. at 9.

These points essentially amount to an equitable argument that the number selected for the rate was a good one and had positive effects so the federal government should pay for it without insisting on actual documentation. Thus, Maryland argued that it "was not required to provide expenditure information to counter the erroneous legal finding regarding Maryland law" in the audit, since the auditors failed to examine and challenge any documentation in reviewing claims for sheriff's offices. Id. at 9-10; see Maryland Ex. B, at 5-6. Maryland characterized the disallowance as a guaranteed "federal windfall" chastising Maryland for not using "'standard' cooperative reimbursement arrangements." Id. at 10-11.

Maryland's position is fundamentally flawed. First, Maryland had a continuing obligation under applicable law to document the expenditures for which it claimed reimbursement under title IV-D. Second, even if the focus of the audit did not trigger a clear need to produce the relevant documentation, Maryland has had ample notice of the need and multiple opportunities to do so, including during the course of this proceeding before us. Maryland should surely have had available at a minimum documentation that the original fee calculations by which it established the $245 average were based on actual costs for title IV-D cases and in accord with its cost allocation plan. ⁽⁵⁾ Yet, Maryland did not even establish before us that the "averaging" process was based on actual costs relating to title IV-D incurred in some base year by particular offices. At most, the evidence suggests that various offices estimated costs per service of process by combining "average" hourly rates with estimated "average" hours spent relating to serving process generally, along with some figure to approximate related costs such as postage. From these estimates and averages, CSEA then arrived at some average of "the large, medium and small jurisdictions warrants/body attachment costs." Maryland Ex. A, Response to Draft Audit at 1. Absent a much more concrete showing of how the resulting $245 figure could be tied to the actual costs relating to title IV-D, we need not address whether a methodology using a flat fee per warrant could ever be developed that met the regulatory requirements to reflect actual costs. We simply conclude that Maryland has not shown here that its methodology reflected actual costs or met regulatory requirements.

The arguments Maryland proffered that the methodology was nevertheless a good, fair, or economical one are beside the point. The requirement that costs be adequately documented is independent of whether the costs are reasonable. The reason is obvious - the amount of the cost does not in itself provide any assurance of whether that amount was actually incurred for the benefit of the federal program from which reimbursement was sought. In any case, Maryland made conflicting representations about its portrayal of the methodology as one that saved program funds. Thus, Maryland contended that the "sheriffs willing to accept this methodology recognized that they were likely to receive less FFP," because only successfully executed warrants were counted for compensation and "because the methodology significantly reduced payments in the larger and more expensive offices." Maryland Br. at 4. Logic implies that the use of an "average" of small, medium, and large jurisdictions would mean that smaller and less expensive sheriffs' offices that elected the methodology would receive correspondingly more FFP. What is more, Maryland also asserted that a major advantage of the method was that "it enabled sheriffs to increase their resources," which enabled them to "use those resources effectively to give priority to child support work . . . ." Maryland Ex. I, at 2; see also Maryland Ex. A, Response to Draft Audit at 1. It seems improbable that the method was accepted primarily by sheriffs' offices that would lose FFP as a result of the election and yet generated more resources for those offices. Nevertheless, Maryland asserted that more FFP was claimed for sheriffs' services before the use of this methodology, more went to the offices that did not adopt it, and more was claimed by the involved sheriffs once the method was eliminated. Maryland Br. at 9. It is impossible to verify any of these factual assertions based on the one document cited by Maryland - which is a one-page summary sheet entitled "Sheriff Office CRA Data Analysis FY2002." Maryland Ex. W. The summary lists jurisdictions and their budgets and identifies them by "contract type," as full service, fee for service, or combination. Since Maryland claimed to have eliminated the challenged methodology before FY 2002, we cannot discern the significance of the contract type, nor is there any way to compare the history of costs incurred by jurisdictions that differ widely in population, staffing, and number of warrants or other process served. On this point, as on the other issues discussed in this decision, Maryland has failed to document its assertions in a meaningful way.

4. Maryland had a clear duty to provide any additional available documentation in the course of this appeal.

Maryland repeatedly suggested that, while it was indeed responsible to document its claims, somehow that obligation should not attach in the present proceedings. Its position arose from the idea that the audit that originally raised questions about these expenditures was based only on a legal analysis and not a complete review of supporting documentation. Maryland Br. at 4, 9-10. According to Maryland, to prevail on the legal issue about Maryland law, it need not "provide expenditure information." Id. at 9. Thus, since ACF was not pressing the original legal basis of the audit finding regarding Maryland law on sheriff's fee payments, the proceedings "did not give rise to a mandate for the State to flood ACF with additional paper" or "create an obvious vehicle for the State to provide cost information, much less to supplement information that had been provided but not analyzed." Id. at 10. As late as its Supplemental Reply Brief in this case, Maryland continued to argue that ACF should have offered proof that its Regional Office or Assistant Secretary had "prior to their disallowance letters, reviewed the extensive documentation" and set out "at least their bare bones analysis, not just conclusions, regarding that documentation." Maryland Supp. Reply Br. at 1. This formulation misconceives Maryland's obligations and our review process.

We are not examining the process by which ACF arrived at the disallowance but rather whether Maryland has supported the allowability of its claims on the full record before us. Even if ACF presented a complete account of its in-depth analysis of the documentation before it at each stage of internal considerations, the issue before us would remain whether the documentation in the record before us supports Maryland's claim. The record we review is not merely what was represented to the agency officials but also includes any additional materials submitted to the Board on appeal. Hence, an inquiry into the pre-decisional thought processes of agency officials at the various levels of ACF would be fruitless, as well as improperly intrusive. Instead, we are in essence taking a fresh look at the evidence presented by both parties.

Maryland had ample notice that the bases for the disallowance included more than the legal issue raised in the audit and encompassed the question of whether the costs were adequately documented. Maryland indeed provided documentation in its appeal file and was given every opportunity to add to that material, if more source documentation were available. The briefing before us by both parties offered analyses of what the documentation proves about the costs incurred by the individual sheriffs' offices during the relevant period. Maryland never suggested that any further documentation was available but withheld because of the erroneous belief that it was not necessary to provide it in these proceedings. On the contrary, Maryland clearly represented that more detailed payroll records were provided for Baltimore City precisely because the other sheriffs' offices were unable to provide similar documentation. Maryland Br. at 11. This representation is consistent with the information provided by Maryland in response to the audit findings in explaining why the flat fee methodology was adopted to begin with:

While Sheriffs were receptive to giving higher priority to child support work, based on obtaining funds to increase resources, they were unable to develop methodologies to document the actual cost of deputies spending less than full time on child support activities. This was because Sheriffs lacked automated time keeping and tracking systems. It would have been necessary to establish manual processes that could capture the necessary data from weekday shift activity and weekend duty.

Maryland Ex. A, Response to Draft Audit at 1. We turn next to the adequacy of the documentation that Maryland did submit.

5. Maryland's documentation failed to identify costs incurred by the sheriffs' offices that were attributable to title IV-D.

Maryland presented, as its "best case" for documentation, records from the Baltimore City Sheriff's Office, ⁽⁶⁾ which, Maryland stated, "could, more easily than the other sheriffs, identify deputies assigned exclusively to perform duties under the cooperative reimbursement agreement, and . . . retains detailed payroll records." Maryland Br. at 11. In addition, Baltimore City expenditures represented a large share of the disallowed FFP, a total of $678,325. Reinhart letter, Att. A, at 2. Hence, the adequacy of the documentation in this instance is decisive for the bulk of the disallowance, and a negative resolution on this office is likely conclusive for all the others with less complete documentation.

Maryland did indeed submit payroll records for dozens of named Baltimore City employees, and summary totals for ten of the individuals, presumably deputies, for each relevant fiscal year showing days they worked and their pay. Maryland Exs. X-1 through X-5. Maryland also submitted an expenditure report by quarter showing total expenditures, total number of summons and total warrants served with associated administrative activity costs, and resulting "estimated costs" for warrant and summons service. Maryland Ex. V. In neither case, however, did Maryland include any documentation, contemporaneous or otherwise, to show what portion of these expenditures related to the child support enforcement program. Maryland did not submit records of actual activity or any sampling study or other methods to support an allocation of deputies' time. Further, the record does not include affidavits from any deputies or administrative personnel from Baltimore City, attempting to establish retrospectively that certain deputies were dedicated solely to child support enforcement or asserting that they could reconstruct reliably what portion of the time of particular individuals was so allocated.

The closest Maryland came to even asserting that particular deputies could be identified with the child support program came in its briefs in contending that ACF had no basis to disbelieve that the payroll records were accurate. Thus, Maryland stated as follows:

Because the Baltimore City Sheriff obviously is involved in this disallowance, the detailed salary information provided, showing expenditures by this one sheriff in salary costs alone greater than the entire amount involved in this disallowance should itself be sufficient to at least persuade the Board to return this dispute to ACF to conduct an adequate review. Appellant does not dispute ACF's right to scrutinize any documentation. Perhaps, for example, ACF simply does not believe that Baltimore City Deputy Sheriff Seabrook was performing child support work in 1995 (Att. X-3) or that Carroll County Deputy Paulsen was paid $14.64 an hour in 1996. (Att. S)

Maryland Reply Br. at 3-4 (emphasis in original; footnotes omitted). Again in its supplemental reply brief, responding to ACF's analysis of the documentation of Baltimore City deputies' payroll records, Maryland wrote:

[I]t does not suffice for respondent to just keep restating the claim that costs were not documented in accordance with relevant requirements. Respondent may not believe, just to pick an example, that Charles Paulsen, Jr., worked full-time for the child support program for the Sheriff in Carroll County, or perhaps it believes that the State fabricated his payroll records. Perhaps respondent also does not believe that Deputy Sheriff Arthur Seabrook (e.g., Exhibit X-4) was among the several deputies assigned full-time to child support work. [Maryland] DHR acknowledges respondent's right to question documentation, request additional clarification, and to audit or through other means closely scrutinize any claim for FFP. However, respondent cannot simply ignore documentation by stating the truism that a document cannot itself prove beyond any doubt that the information therein is accurate.

Maryland Supp. Reply Br. at 2-3 (emphasis in original).

These formulations overlook the reality that nothing in the cited documents even purports to show what Deputy Sheriff Seabrook or Charles Paulsen, Jr., were assigned to do during the years in question. Instead, the documents are "raw" daily payroll records for individuals. Accepting without question the accuracy of all these records would not suffice to establish any costs allocable to title IV-D. Perhaps, Maryland wished ACF, or the Board, to extrapolate from the arguments in its brief that all the individuals for whom payroll records were submitted were exclusively working on title IV-D, or perhaps that those whose information was pulled out in summary form were so dedicated. However, such an inference requires an evidentiary basis, not mere argumentation, to justify reliance. Maryland had the burden to provide such evidence and offered none.

The material proffered by Maryland as to other counties is far less supportive of its claims than that for Baltimore City, which at least included some contemporaneous source documents as to salaries. For example, a summary of costs for the Howard County sheriff's office for three years simply asserts that a total was arrived at by showing an "average" hourly rate for deputies multiplied by an "average" number of hours to serve a warrant, with the addition of an estimated amount for mileage and administrative costs per warrant. Maryland Ex. U. Attached to the summary are earnings records for some identified employees for some quarters within the period at issue, with nothing to tie them to deputies or verify what time worked was allocated to title IV-D efforts. The numbers for averages used in the summary are impossible to connect to anything in the scattered earnings records. For Carroll County, some specific deputies were identified with their hourly rates and other salary information for a portion of the disallowance period, but again Maryland presented no evidence as to which of these deputies worked on child support warrants or for what portion of their time. Maryland Ex. S. Similar summary forms are offered as documentation for other counties but with no attempt at source documentation at all. See, e.g., Maryland Exs. Q (Worcester County) and R (Frederick County, broken down by quarter instead of year), T (Washington County, bare list of names and salaries). No detailed calculations were provided to support the summary figures provided.

Maryland also argued that ACF did not challenge the propriety of costs claimed for other Maryland sheriffs that were "indistinguishable" from those at issue here. Maryland Br. at 3. Maryland noted that, after the methodology challenged here was ended, ACF examined "documentation of expenditures for Maryland sheriffs' cooperative reimbursement agreements in detail," but made no "corrections, reductions, or criticisms" as a result. Id. at 9. Maryland failed to recognize the obvious distinguishing point, that is, the claims for other sheriffs and for these sheriffs under the reformed methodology were based on adequately-documented actual costs. This change is evident in the FY 1998 cooperative agreement with the Baltimore City which Maryland provided, which plainly instructs all providers that "it is necessary to maintain documentation for actual costs," including records that "indicate on a daily basis the number of hours spent on IV-D functions . . . using the time distribution records." Maryland Ex. K at 1, and page 4 of form DHR/CSEA 420E included in same exhibit.

Given the extensive history of this case and the lengthy interactions between the parties in an effort to resolve it, returning the matter to ACF for further review, as Maryland requested, would not be reasonable. First, it appears there is nothing further to review since Maryland did not suggest that additional documentation based on which one could equitably distribute labor and other costs between title IV-D and other activities was available but not produced already. Second, even were Maryland to assert that evidence on that point was now available, there is no justification for the failure to have produced it before the Board.

Conclusion

For the reasons explained in detail above, we uphold the disallowance in full.

Cecilia Sparks Ford

Marc R. Hillson

Judith A. Ballard
Presiding Board Member

1. This first appeal was Maryland Dept. of Human Resources, Board Docket No. A-99-47, and was closed on March 27, 2000.

2. Citations to the Code of Federal Regulations are to the 1998 revision in effect at the close of the disallowance period. No material changes were made to the provisions cited during the relevant years.

3. The language of the Assistant Secretary letter is a bit more equivocal, referring to such a waiver only if Maryland limited its claim to $30 per case, but requiring documentation of even the $30 if Maryland wished to claim actual costs in toto. Assistant Secretary letter at 3. No rationale is provided for this distinction. Since the actual amount disallowed did not include the reimbursement for the $30 fee amounts, however, ACF has de facto treated that portion as reimbursable regardless of the remaining disputed amount. We will not revisit that treatment and ourselves treat that the $30 per case amount as allowed.

4. Maryland explained that sheriffs are elected State officials with common law powers and that local counties are mandated to pay expenses of sheriffs' offices. Maryland Br. at 6-7, and n.5 and authority cited therein.

5. Maryland clearly undertook to provide such documentation to ACF in its September 25, 1998 letter seeking review by the Assistant Secretary of ACF, in which Maryland wrote:

The State further contends that the reasonableness of the [$245] amount can be documented in greater detail once the State receives a final accounting of administrative and other costs from each of the affected sheriffs' offices. CSEA expects its data collection to be completed and ready for . . . submission to ACF by the end of October 1998.

Maryland Ex. F at 2-3.

6. ACF initially denied that costs from the Baltimore City Sheriff's Office were included in the disallowance, but later acknowledged that the denial was mistaken, resulting from confusing that office with the Baltimore County Sheriff's Office, which was not included. Letter from William M. Reinhart (Jan. 27, 2003), and attachments thereto.