DAB Decision 200 10 July 31, 1981 Colorado Department of Social
Services; Docket Nos. 78-20-CO-HD, 79-17-CO-HD; Decision No. 200
Settle, Norval D. (John); Teitz, Alexander G. Garrett, Donald F.
DECISION
The Colorado Department of Social Services appealed from determinations
by the Acting Regional Program Director, Administration for Public
Services, Office of Human Development Services, dated March 20, 1979 and
January 3, 1979, disallowing Federal financial participation (FFP)
claimed under Title XX of the Social Security At for training costs for
the quarters ended September 30 and December 31, 1977 (March 20, 1978
determination) and March 31, and June 30, 1978 (January 3, 1979)
determination). The appeals were assigned Docket Nos. 78-20-CO-HD and
79-17-CO-HD, respectively, and were considered jointly since they
involved some common issues.
After the applications for review were filed in the two docketed cases,
the Agency adjusted the amounts of the disallowances downward upon
considering a part of the State's claim which it had previously
deferred. (Letter to State dated September 17, 1979). The amounts in
dispute before the Board, as adjusted, were $105,282 for Docket No.
78-20-CO-HD and $90,320 for Docket No. 79-17-CO-HD. During various
stages of the proceedings in the two cases, however, the Agency withdrew
the disallowance with respect to several items and the State withdrew
its appeal with respect to several other items. All of the items
initially in dispute are identified separately below for clarity of the
record, however.
The Board's decision is based on the applications for review, the
Agency's responses to the appeals, the parties' responses to an Order to
Develop Record issued by the Board Chairman, a telephone conference with
the parties held by a member of the Board's staff, and subsequent
communications by the parties individually by telephone and in writing.
Training student interns. (Docket No. 78-20-CO-HD, Fining 1; Docket No.
79-17-CO-HD, Finding 1)
The Agency disallowed FFP claimed in payments made to student interns
ont he ground that 45 CFR 228,85(e) provides that FFP is not available
for "(e)mployment of students on a temporary basis, such as in the
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summertime." The Agency later accepted the State's contention that the
applicable regulation was 45 CFR 228,81(d), which provides that FFP is
available for training "(p)ersons preparing for employment in the State
agency in. . . positions. . . which directly relate to operation of the
title XX program." The Agency maintained, however, that the costs were
unallowable since the State had not shown that the individuals in
question were "(l)egally committed to work for the State agency for a
period of time at least equal to the period for which financial
assistance is granted if employment is offered within 6 months after
training is completed," as required by 45 CFR 228.83(a)(2)(iii).
In its response to the Order, the State identified the four individuals
to whom the disallowance pertained, indicating that three of the four
were not employed by the State after the termination of their training.
The length of the fourth individual's employment by the State was not
specified. The State did not content that any of the individuals were
legally committed to work for the State. (State's response to Order, p.
2.) In response to an inquiry made during the telephone conference, the
State indicated that the fourth individual was not legally committed to
work, and did not in fact work, the requisite length of time, and
conceded that FFP for his training was not appropriate. (Letter dated
May 14, 1981, Attachment, p. 1.) Accordingly, the Agency's disallowance
for this item is sustained.
Travel costs for training of less than five days. (Docket No.
78-20-CO-HD, Finding 3, Docket No. 79-17-CO-HD, Finding 3)
The Agency disallowed FFP claimed for the quarters ended September 30,
1977, December 31, 1977, March 31, 1978 and June 30, 1978 for travel and
per diem costs of State agency employees who attended training programs
lasting less than five full days on the ground that under 45 CFR 228.84
such costs are allowable only for attendance at training programs which
last at least five full days. That section provided, in pertinent part,
that
(c)osts 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; (a)(3) For State agency employees in
part-time training programs (part of work week, evenings,
mornings): Education costs.
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The State argued that neither these regulations not the Social Security
Act draws a distinction between training lasting less than five full
days and training lasting five full days or more. It also noted that
the Title XX Program Regulation Guide issued by HEW in 1975 to interpret
the earlier version of the regulations contained no mention of such a
distinction. Finally, the State argued that the Agency's interpretation
of the regulation was unfair to states with large rural areas where
state agency staff had to travel long distances to attend training
programs. 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.
The issue of the allowability of travel and per diem costs for training
lasting less than five full days has been addressed in several prior
Board decision. 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' and
South Dakota Department of Social Services, Decision No. 142, January
21, 1981. In those decision, the Board found that the practice of the
Agency's regional offices had been to allow travel and per diem costs
incurred with respect to such training, and further, t hat it was Agency
policy not to hold states to the Agency's interpretation of "part-time
training" as training lasting less than five full days until the States
received actual notice of the interpretation. The Board found in
addition that the Agency's interpretation was clearly articulated in PIQ
77-88, and sustained the disallowances in those cases tot he extent that
they covered periods after each state received actual notice of PIQ
77-88 or its contents. The PIQ (Program Information Question) was a
memorandum for the Acting Commissioner, Administration for Public
Service (APS), responding to a question raised by the Regional IV
Director of APS. The memorandum was later incorporated into a series of
Agency issuances which are periodically sent to the Regions and then
distributed to the states for informational purposes.
In the Order to Develop Record issued in this case, the Agency was asked
to provide a copy of any written issuance supporting its interpretation
of "part-time training" of which the State had notice and to indicated
when and in what manner such notice was given. The Agency responded
that it had explained its interpretation at a conference held in Denver
on January 25 and 26, 1978, which was attended by the Director of Staff
Development, Colorado Department of Social Services. (Agency's response
to Order, pp. 1-2.) The State conceded that the "part-time training"
issue was discussed at the January 1978 conference, but stated that the
State's representative at the conference
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could not recall whether a definitive interpretation was given by the
Agency. It argued that it should therefore not be deemed to have
received actual notice of the Agency's interpretation until February 26,
1979, the date of OHDS/APS Region VIII, Regional Memorandum, OHDS/
PS-79-29, and Agency issuance setting forth the Agency's interpretation.
(Letter dated May 14, 1981, Attachment, pp. 1-2.)
The Agency has not verified the substance of the Agency's presentation
at the January 1978 conference not has it shown when given opportunity
that any written notice to the State preceded OHDS/PS-79-29.
Accordingly, we grant the appeal in full on this issue since all of the
costs were incurred prior to the date of issuance of OHDS/PS-79-29.
Urban League Child Care Center. (Docket No. 78-20-CO-HD, Finding 4;
Docket No. 79-17-CO-HD, Finding 7)
The State claimed FFP for the quarters ended September 30, 1977, March
31, 1978, and June 30, 1978 for costs incurred under a contract with the
Urban League Child Care Center to provide training. Although the costs
were initially disallowed on the ground that the Urban League was an
"expert" outside the State agency and that allowable costs for experts
under 45 CFR 228.84(c)(1) did not include the types of costs claimed,
the Agency later accepted the State's position that the Urban League was
a provider agency and that the applicable provisions were 45 CFR
228.84(f), (g)(1) and (g)(2), which provide as follows:
(f) Provider agency staff development personnel. for provider
agency staff development personnel (including support staff)
engaged in providing training to State title XX agency staff or
provide agency staff eligible for training under Sec. 228.91
salaries and fringe benefits, travel and per diem. (g) Provider
agency training activities. (1) For experts outside the
provider agency engaged to develop or conduct special programs:
salary, fringe benefits, travel and per diem. (2) For provider
agency training activities directly related to the title XX
program: cost of teaching supplies and purchase or development of
teaching materials and equipment--for example, books and
audio-visual aids.
'(Page 05 - 200 - 07/31/81)'
The Agency maintained nevertheless that the costs claimed were
unallowable on various grounds. It contended first that the costs
claimed for a training coordinator and a child care planning coordinator
employed by the Urban League on its Caretaker Training Project were
unallowable since it appeared that they were not full-time trainers and
performed duties unrelated to training. (Response to appeal, Docket No.
78-20-CO-HD, p. 4; Response to appeal, Docket No. 79-17-CO-HD, p. 5.)
The State subsequently furnished a letter from the Director of the Urban
League Child Care Department, dated April 15, 1980, which states that
the training coordinator worked full-time on the project, although only
30 percent of her time was spent in direct training, and that the child
care planning coordinator spent 20 percent of her time on the project,
although none of it was devoted to direct training. The State also
submitted a copy of a 12-month budget for the project which includes as
line items salaries for a training coordinator and for a child care
planning coordinator at "1/5 time." (Grantee's response to Order,
Exhibit F.)
In response to an invitation to comment on whether this documentation
was adequate to support the costs, however, the Agency stated that it
could not examine the documentation unless the costs were identified by
quarter claimed. (Confirmation of Telephone Conference, dated April 21,
1981, p. 2.) The State indicated that it was unable to provide this
information, and the Agency stated that it could no allow the costs.
(Letter dated May 14, 1981, Attachment, p. 2; Confirmation of Telephone
Conversations, dated July 7, 1981.) The Agency's worksheets accompanying
the initial disallowance identify the costs by quarter claimed as well
as by month incurred, however, and presumable were based on State
records which the Agency found satisfactory. (Docket No. 79-17-CO-HD,
notification of disallowance, Schedules B-1, DD-2, DD-5, and DD-6.)
Thus, we no not believe that a disallowance is properly based on the
State's inability to identify the costs as shown in the budget by
quarter claimed.
We find, however, that the State has not adequately responded to the
question raised by the Agency whether the training coordinator and child
care planning coordinator performed duties unrelated to training. In
response to the Order's direction to provide documentation on this
point, the State indicated that the individuals in question did not
spend all of the time charged to the project in direct training, but
failed to specify the nature of the duties performed at other times,
except to state that the role of the child care planning coordinator was
solely a "management role." (State's response to Order, Exhibit B,
letter dated april 15, 1980.) Thus, except with respect tot he costs
allocable tot he 30 percent of the training coordinator's time spent
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on direct training, the State has not shown that the funds were expended
for activities related to training. Accordingly, we sustain the
disallowance with respect to the two individuals in question except for
the allocable costs just indicated. Our decision does not preclude the
State from presenting additional evidence to the Agency solely on the
question whether the time not spent in direct training was devoted to
training-related functions.
The Agency also stated that it would not allow costs identified by the
State as "training materials" claimed under the contract with the
Urban
League Child Care Center, unless the State provided a breakdown of the
costs by quarter. The State indicated that, by training materials, it
intended to refer to the $500 for curriculum materials shown on the
budget for the Caretaker Training Project submitted with its response to
the Order, but was unable to provide the breakdown requested by the
Agency. (Confirmation of Telephone Conference, dated April 21, 1981, p.
2; Letter dated may 14, 1981, Attachment, p. 3.) The notification of
disallowance and accompanying Agency workpapers do not show training or
curriculum materials as a separate item, the first reference to training
materials appearing in the Stat's response to the Order. (State's
response to Order, p. 3.) Since the State has provided no way of
ascertaining that the $500 for curriculum materials corresponds to
amount disallowed by the Agency, no allowance can be made for this item.
The remaining costs disallowed under the contract with the Urban League
Child Care Center are no longer in dispute. The Agency stated that
secretarial salary and fringe benefit costs were allowable under 45 CFR
228.84(f) as staff support costs, and the State withdrew its appeal with
respect to all other costs claimed under this contract. (Agency's
response to Order, p. 2; State's response to Order, p. 3.)
David E. Barbee. (Docket No. 78-20-CO-HD, Finding 4)
This item is no longer in dispute. In its response to the appeal, the
Agency reduced the amount of the disallowance to $1,574 after
determining that some of the costs were allowable under 45 CF 228.84(
c)(1). (Response to appeal, p. 4.) The State subsequently stated that
it did not wish to appeal this issue "any further." (State's response
to
Order, p. 3.)
Colorado Department of Institutions "TRACY Project" and Larimer County
Mental Health Center. (Docket No. 78-20-CO-HD, Finding 4; Docket No.
79-17-CO-HD, Finding 4)
The State claimed FFP for costs incurred under contracts with the
Colorado Department of Institutions for the "TRACY Project" and with
the
Larimer County Mental Health Center. The costs were disallowed
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on the ground that the training was provided by outside experts and
that, under 45, CFR 228.84(c)(1) pertaining to outside experts, FFP was
available only for certain limited costs not including the ones
disallowed. The State appealed, contending that the contracts were with
provider agencies rather than with outside experts and that the costs
were allowable under the portions of the regulation applicable to
provider agencies. The Agency initially took the position that the
Stat's argument was irrelevant since the State was unable to furnish a
copy of any written contract between these providers and the State
agency as required by 45 CFR 228.81(c)(1) and 228.70(a). The Agency
stated, moreover, that in the absence of any written contracts, it was
constrained to increase the disallowances to cover all costs claimed by
the State for payments to these providers, including costs that were
previously allowed. In its response to the Order, however, the Agency
stated that it had determined that the Colorado Department of
Institutions had satisfied the requirements for provider agencies for
the time period in question and that the Agency was therefore reducing
the amount of the disallowance of costs claimed under that contract to
$1,938 FFP. (Agency's response to Order, p. 5.) This left in dispute
(with respect to the Colorado Department of Institutions) FFP claimed
for operating expenses and for capital outlay, which the State claimed
was allowable under 45 CFR 228.84(g)(2). That section provides that
costs matchable as training expenditures include: "for provider agency
training activities directly related to the title XX program: cost of
teaching supplies and purchase or development of teaching materials and
equipment. . . " The State argued that the costs in question were
incurred for the "purchase or development of teaching materials and
equipment" since they were incurred to directly train foster care
providers. (State's letter dated July 2, 1981, p. 2.)
We conclude that the disallowance with respect to the remaining items
was properly taken. The costs are identified in the audit workpapers
(Notification of disallowance dated 1/3/79, Schedule DD3) as "Operating"
and "Capital Outlay," categories which would not normally include
teaching materials and equipment. thus, some additional documentation
would be required to show that the costs were in fact incurred for the
purchase or development of teaching materials and equipment. The State
indicated, however , that it "no longer has specific documentation of
each capital outlay and operating expense incurred in the program."
(State's letter dated July 2, 1981, p. 2.) In the absence of such
documentation, we sustain the disallowance.
'(Page 08 - 200 - 07/31/81)'
The State in effect withdrew its appeal with respect to the Larimer
County Mental Health Center, conceding that the only contracts in
existence did not comply with the requirement for a provider agreement
in 45 CFR 228.70. (Letter dated May 14, 1981, Attachment, p.3.)
Mile High Child Care Association. (Docket No. 79-17-CO-HD, Finding 7)
This item is no longer in dispute. The Agency stated in its response to
the appeal that it agreed that the costs claimed were allowable under 45
CFR 228.84(f). (Agency's response to appeal, p. 6.) It subsequently
clarified this remark, indicating that in addition to the secretarial
and fringe benefit costs allowable under 45 CFR 228.84(f), printing
costs were allowable under 45 CFR 228.84(g)(2). While the Agency stated
that it was withdrawing the disallowance of $368.41 ($276.00 FFP) for
these items, that amount pertains only to the quarter ended March 30,
1978. A chart attached to the Agency's response to the Order indicated
that the Agency also intended to withdraw t he disallowance of $741.94
($556.46 FFP) pertaining to the quarter ended June 30, 1978. (Agency's
response to Order, p. 3, and attached summary of disallowances.)
City and county of Denver Department of Social Services. (Docket No.
79-17-CO-HD, Finding 7)
This item is no longer in dispute. The Agency withdrew the disallowance
on the ground that the costs involved were allowable under 45 CFR
228.84(c)(1) and (2). (Agency's response to Order, p. 3.)
University of colorado Medical Center. (Docket No. 79-17-CO-HD, Finding
7)
This item is no longer in dispute. The Agency reduced the amount of the
disallowance to $1,301 FFP after determining that some of the costs were
allowable under 45 CFR 228.84(f) and (g). (Agency's response to Order,
pp. 3-4.) The State subsequently withdrew its appeal in view of the
reduction of the disallowance. (Confirmation of Telephone Conference,
dated April 21, 1981, p. 2.)
Matching share. (Docket No. 78-20-CO-HD, Finding 8; Docket No.
79-17-CO-HD, Finding 5)
This item is no longer in dispute. In its response to the Order, the
Agency withdrew the disallowance of in--king costs claimed by the State
for the TRACY Project. (Agency's response to Order, p.5.)
'(Page 09 - 200 - 07/31/81)'
The State subsequently in effect withdrew its appeal with respect to
those costs pertaining to the Larimer County Mental Health Center,
conceding that the only contacts in existence do not comply with 45 CFR
228.70. (Letter dated May 14, 1981, p. 3.)
Miscellaneous issued resolved before issuance of Board's Order.
Docket No. 78-20-CO-HD--Finding 2--disallowance not appealed by State.
(See application for review, dated April 19, 1978, p. 1.)
Docket No. 79-17-CO-HD--Finding 2--disallowance not appealed by State.
(See application for review, dated January 30, 1979, p. 1.)
Docket No. 78-20-CO-HD--Finding 7--disallowance withdrawn by Agency.
(See Agency's response to appeal, dated April 6, 1978, p. 6.)
Docket No. 79-17-CO-HD--Finding 6--disallowance withdrawn by Agency.
(See Agency's response to appeal, dated April 6, 1978, p. 4.)
Conclusion.
For the reasons specified above, the appeals are granted in part and
denied in part. The disposition of the various items is as follows:
Training student interns
Disallowance sustained in full.
Travel costs
Appeal granted in full.
Urban League Child Care Center
Child Care Planning Coordinator--Disallowance sustained in full.
Training Coordinator--Disallowance sustained except for 30 percent of
costs allocable to direct training.
Secretarial and fringe benefits--Agency withdrew disallowance. Other
costs--State withdrew appeal.
David E. Barbee
Disallowance reduced by Agency; State withdrew appeal.
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Colorado Department of Institutions "TRACY Project"
Reduced disallowance sustained in full.
Larimer County Mental Health Center
State withdrew appeal.
Mile High Child Care Association
Agency withdrew disallowance.
City and County of Denver Department of social Services
Agency withdrew disallowance.
University of colorado Medical Center
Agency reduced disallowance; State withdrew appeal.
Matching Share
"TRACY Project"--Agency withdrew disallowance. Larimer County Mental
Health Center--State withdrew appeal.
Miscellaneous Issues
See text above. D11 June 5, 1992