GAB Decision 733
March 26, 1986
Illinois, Department of Public Aid;
Docket No. 85-15;
Audit Control No. 05-40552
Settle, Norval D.; Stratton, Charles E. Ballard, Judith A.
The Illinois Department of Public Aid (State) appealed to this Board
from a determination by the Office of Human Development Services (OHDS)
disallowing $6,139,187 in federal financial participation (FFP) claimed
by the State under Title XX of the Social Security Act. The
disallowance included two categories of costs: costs associated with
"juvenile residential centers" (JRCs), including some "room and board"
costs, and costs for "room and board" for juveniles placed in other
settings.
OHDS disallowed $5,570,501 for costs associated with JRCs for the
period
July 1, 1978 through June 30, 1981. OHDS found that (1) the
primary
purpose of the JRCs was detention and, therefore, the JRCs
were
"separate juvenile correctional facilities" (SJCFs); and (2) the
State
had claimed for all costs associated with the JRCs. Title
XX
regulations permit FFP for social services provided by SJCFs,
but
prohibit FFP in the costs of the detention function, room and board,
and
other "inherent responsibilities" of such facilities. The State
argued
that the Title XX regulations did not give the State clear notice
that
its JRCs were properly classified as SJCFs, rather than
"community-based
residential service facilities," for which a broader range
of funding is
available. The State provided evidence to show that the
primary purpose
of the JRCs was rehabilitation and reintegration of the
juveniles into
their communities, rather than detention. The State
contended that
Congress intended States to have maximum flexibility in
defining what
was an allowable social service under Title XX and that OHDS
had
approved inclusion of services provided by the JRCs in the
State's
services plan.
OHDS also disallowed $468,686 for costs of room and board claimed for
the
period January 1, 1976 through September 30, 1981 for juveniles
placed in
foster family homes, boarding homes, or hotels. OHDS
determined that
the room and board was not "an integral but subordinate
part" of the social
services provided to the juveniles, as required by
Title XX and the
implementing regulations. The State asserted that the
room and board
costs met the "integral but subordinate" test, because
the primary purpose of
the placements was to provide needed social
services.(2)
For the reasons stated below, we conclude that the regulations
were
sufficiently clear to give the State notice that the JRCs were
SJCFs,
rather than community-based residential service facilities, and that
the
disallowance here is consistent with the statute and OHDS approval
of
the services plan. We further conclude that the State has not
shown
that the room and board costs fit the narrow exception under which
such
costs may be reimbursed. Accordingly, we uphold the disallowance
of
both types of costs, subject to potential reduction if the State
can
document, on the terms described below, what part of the JRC costs
were
for allowable social services.
Our decision is based on the parties' submissions and on the transcript
of
an informal conference held by telephone conference call. (The
State
had initially requested a hearing, but subsequently withdrew
that
request, asking only for an opportunity for oral argument, which
was
provided.)
Below, we first discuss the applicable statutory and
regulatory
provisions, since they are relevant to both types of disallowed
costs.
We then discuss each type of cost, explaining the basis for
our
conclusions.
I. The statute
Effective October 1, 1975, Title XX of the Social Security Act (the
Act)
authorized FFP in expenditures incurred under state programs for
social
services directed at the goals specified in the Act. Pub. L.
93-647.
/1/ Each state seeking Title XX funding had to develop a
"comprehensive
annual services plan" and states had considerable flexibility
in
determining what could be considered a social service promoting a
Title
XX goal. Section 2002(a)(3) of the Act. The Act did,
however, contain
certain prohibitions on FFP, two of which are relevant
here. Section
2002(a)(11) of the Act provided in part:
No payment may be made under this section with respect to
any
expenditure for the provision of any service to any individual living
in
any hospital, skilled nursing facility, or intermediate care facility
.
. ., any prison, or any foster family home. . . .
(emphasis added)
(3)
This section then continues by listing exceptions to this prohibition.
One
of the exceptions is for certain "in-reach" services to
institutions, which
are provided by other than the staff of the facility
involved and which are
also available to non-institutionalized
individuals. Another is for
services to meet a special need of a foster
care child, as determined under
regulations prescribed by the Secretary,
beyond the basic foster care.
The legislative history of this section indicates that Congress
was
primarily concerned that the states not use Title XX funding
to
refinance existing state programs. The relevant Ways and
Means
Committee Report states:
The prohibition in the bill against funding for services
provided by
hospitals, skilled nursing facilities, intermediate care
facilities, and
prisons, is designed to avoid refinancing programs in such
institutions.
Again, however, the issue is complex: in order to improve
the lives of
institutional residents, and particularly to prepare them to
leave the
institutions, in-reach services by outside organizations
appear
warranted, and are provided for in the bill. A continued concern
for
refinancing, however, requires that States only fund in-reach
services
provided to other eligible individuals.
H.R. REP. No. 1490, 93d Cong., 2nd Sess. 8 (1974); see,
also, S.
REP. No. 1356, 93d Cong., 2nd Sess. (1974).
Section 2002(a)(7)(e) provided (with certain exceptions not relevant
here)
that no payment could be made under Title XX "for the provision of
room or
board . . . other than room or board provided for a period of
not more than
six consecutive months as an integral but subordinate part
of a service"
meeting one of the Title XX goals.
II. The implementing regulations.
The Title XX regulations implementing the prohibition on FFP in
services
provided by prisons originally provided:
(i) "Prison" means any State or local correctional institution
or
facility for the confinement of individuals charged with or convicted
of
criminal offenses. Juvenile correctional facilities are not
included
under this definition. However, FFP is not available for
inherent
responsibilities of the(4)
correctional facility such as food, clothing, shelter and
managing
and carrying out the detention functions.
No community based residential service facility, including
half-way
houses, irrespective of auspices or the status of individuals who
live
in it is included in the definition.
45 CFR 228.44(a)(5); 40 Fed. Reg. 27352, 27360 (June 27, 1975).
The preamble explained that commenters on the proposed rule had
mistakenly
believed the definition of prison to include juvenile
correctional
facilities. In response, the preamble stated:
The definition of prison was clarified to clearly reflect
the
Department's intent to exclude juvenile correctional
facilities.
However, the provision makes clear the inherent responsibilities
of such
facilities are not subject to Federal matching. This section
also makes
clear that FFP is available for services provided by the staff
of
facilities which are service oriented such as half-way houses
providing
transition from prisons and institutions back into the community
and for
other short-term service facilities such as those providing an
intense
regimen of services for alcoholics or drug addicts.
40 Fed. Reg. at 27353.
When the regulations were revised in 1977, the proposed version
specified
limitations on services provided in juvenile correctional
facilities.
When commenters objected, the limitations were removed with
the following
explanation:
Section 228.44(d) returns to the language of the current
regulation
and allows FFP for services but not for inherent responsibilities
(e.
g., food, clothing, shelter, general maintenance and
administration
(including the detention function), general supervision and
care) in
such facilities.
42 Fed. Reg. 5842, 5844 (Jan. 31, 1977).
The revised version read as follows:
(1) "Prison" means any State or local correctional institution
or
facility for the confinement of individuals charged with or convicted
of
criminal offenses. The term does not include separate
juvenile
correctional facilities(5) nor community-based residential
service
facilities, such as half-way houses.
(2) Separate juvenile correctional facility means one that is
located
in a separate building or buildings; is served by separate
day-to-day
operational staff; and provides a separate and distinct
program of
services.
45 CFR 228.44(c).
This regulation was recodified in 1980 at 45 CFR 1396.44(c) with
no
change.
The draft Title XX Program Regulation Guide, issued October 1, 1975
(1975
Guide), interprets the regulation by stating: "Community
based
residential facilities are excluded from the definition of 'prison'
and
refer to correctional or release-oriented facilities other than
prisons
or juvenile correctional facilities." 1975 Guide, p. 2448. The
1975
Guide further provides that availability of FFP for
community-based
facilities nonetheless is subject to certain criteria,
including that
regulatory provisions on room and board are met if room and
board costs
are claimed. The Guide to Federal Financial Participation
Under Title
XX of the Social Security Act, issued June 10, 1980 (after most
of the
disallowance period here) (1980 Guide), reiterated these criteria
and
stated: "Community-based residential service facilities
(e.g.,
release-oriented facilities or half-way houses) are excluded from
the
definition of 'prison.'" 1980 Guide, 3.D.43.
The regulatory provisions on room and board reiterate the
statutory
prohibition on charging such costs to Title XX, except where they
are an
"integral but subordinate part" of a social service. The
regulations
(and the Guides) elaborate on documentation requirements and
the
relationship to care in foster family homes and other facilities,
and
include the following statement:
Room or board . . . shall not be considered an integral
but
subordinate part of a service when provided to an individual in a
foster
family home or othe facility such as a foster care institution
or
juvenile correctional facility whose primary purpose is to
provide
board, room and care or supervision.
45 CFR 228.41(c), recodified as 45 CFR 1396.41(c).
III. Costs claimed for the Juvenile Residential Centers.
A. The audit findings.
Federal auditors determined that the State had claimed FFP under Title
XX
of approximately $5.6 million incurred in operation and(6)
maintenance of
four juvenile residential centers (JRCs) during the
period July 1, 1978
through June 30, 1981. /2/ The auditors concluded
that the four JRCs were not
community-based residential service
facilities but, rather, were separate
correctional juvenile facilities
(SJCFs). The auditors found that,
while placement in a JRC was an
alternative to confinement in a large
institution, its objective was to
carry out a sentence for a crime committed
by the youth, and, therefore,
the primary purpose of the placement was
detention. The auditors
supported this finding by analyzing the
staffing pattern at the JRCs
(excluding staff providing secondary
education). The auditors found
that few of the staff were filling
"service-type" positions, and that 56
percent of the employees were "youth
supervisors," whose functions
related primarily to detention. The
auditors noted that the Illinois
Department of Corrections (IDOC), which
operated the JRCs, did not
attempt to segregate the costs of providing social
services from those
pertaining to the inherent responsibilities of the
facilities. Thus,
the auditors recommended disallowance of all of the
costs incurred by
the JRCs, and OHDS adopted this recommendation.
B. The issues and our general conclusions regarding
the JRCs.
The major arguments raised by the State regarding the disallowance of
JRC
costs may be summarized as follows:
* Under applicable court cases, the conditions upon which the
states
receive federal funds must be "seasonably and unambiguously stated,"
yet
neither Congress nor OHDS have been sufficiently specific with
respect
to the definitions of SJCFs or community-based residential
facilities.
/3/
(7)$% * The JRCs were release-oriented facilities, representing
an
alternative to institutional placement and had as their primary
goal
rehabilitation and reintegration of the youths into their
own
communities. Thus, the State reasonably determined they
were
community-based residential facilities.
* The State has the authority under the Act to categorize and select
its
social service plan, and OHDS cannot second-guess the State
concerning
what is a social service directed at one of the goals of the
Act.
* The services were directed at specified Title XX goals and were
within
the definitions of service categories defined in the
State's
Comprehensive Annual Services Plan (CASP), which was approved by
OHDS.
Specifically, the State said that services provided at the JRCs fit
the
definitions of "Transitional Placement" or "Comprehensive
Youth
Development Services."
OHDS, in response, argued that the JRCs were SJCFs because they
were
facilities housing youths who had been committed to the IDOC and,
unlike
residents of half-way houses, had not been released from IDOC's
custody.
OHDS said that the JRCs were similar to the Illinois Youth
Centers,
which the State admitted were SJCFs. OHDS also noted that it
did not
dispute the allowability of social services provided by the JRCs,
but
was disallowing the JRC costs because they included costs of room
and
board and the detention function, which were traditionally
a
responsibility of the State. OHDS also pointed to wording in
the
State's CASPs as support for the proposition that approval of the
CASPs
did not mean that OHDS had determined that the CASP met
federal
requirements. (8)
At the outset, we note that determining the "primary purpose" of
a
facility is a difficult exercise, and the auditors initially may
have
relied too heavily on the staffing patterns of the facilities
without
examining more in depth what the facilities were actually
doing.
Moreover, the relevant preamble statements and OHDS guides permit
FFP
for a broader range of facilities than simply post-release
facilities.
On the other hand, the State's arguments about the nature and
purpose of
the JRCs were largely conclusory. Much of the evidence the
State
presented in support of its characterization of the JRCs was
IDOC
literature discussing the general nature of services provided by
the
Juvenile Field Services Division of IDOC, which provided a range
of
services in the four regions of the State. Very little of it
is
specifically directed at the JRCs, and some of that information
directly
contradicts the State's assertions.
Based on our analysis of the record, we conclude that the
disallowance
should be upheld, subject to reduction to the extent the State
can show,
under the terms described below, what part of the JRCs costs was
for
social services. While the regulatory provisions and guidance
materials
are not models of clarity, we think that they were sufficiently
clear
(when read in light of the statutory purposes) to raise a
substantial
doubt about the allowability of the costs at issue here.
The primary
reasons in support of our conclusion are:
* The JRCs were part of the State's correctional system, for
the
confinement of juveniles who had not been released, but were
serving
their sentences for actions which, if committed by an adult, would
have
been the basis for a criminal conviction.
* The JRCs were regional and not readily classified as
"community-based
residential service facilities."
* The facilities were similar, in a number of significant respects,
to
State facilities which the State acknowledged were SJCFs.
* The costs do not readily fit within the descriptions in the CASPs
under
which the State claimed them.
We further conclude that this disallowance is consistent with the
statute
since the flexibility provided to states is limited by the
statutory
prohibitions. Finally, we conclude that the disallowance is
consistent
with approval, if any, of the CASPs, which did not indicate
that the State
would claim these JRC costs.
Below, we provide an explanation of each of our conclusions.(9)
C. Why we conclude the JRCs were correctional facilities.
In arguing that the regulations did not clearly cover the JRCs as
SJCFs,
the State pointed primarily to the definition of an SJCF in the
revised
regulations. We agree that, read by itself, that definition
provides
little guidance. It focuses on what makes a juvenile
correctional
facility "separate" (i.e., it is located in a separate building
or
buildings, has a separate staff and provides a separate
services
program); it assumes that the reader understands what a
juvenile
correctional facility is. At first blush, this seems like a
significant
omission, but, in context, the meaning is fairly clear. The
purpose of
the definition is to distinguish such a facility from a
"prison";
otherwise, the term "prison" might encompass it. The term
"prison" is
defined by the regulations (as a correctional institution or
facility
for the confinement of individuals charged with or convicted of
criminal
offenses), and it is only logical to consider the term
"juvenile
correctional facility" in light of this definition. The
regulations
clearly imply that, if a juvenile correctional facility is not
separate,
it is within the prohibition on funding for prisons.
Here, the State admitted that the JRCs were facilities run by the IDOC
for
juveniles who had been committed to IDOC's custody on the basis of
crimes
which, if committed by an adult, would have been punishable
by
imprisonment. Even if confinement was not the primary purpose of
the
facilities, as the auditors found, it was certainly a
significant
purpose of the JRCs. The State did not dispute the audit
finding that
the highest percentage of JRC staff were "youth supervisors."
Instead,
the State provided job descriptions intended to support the
State's
argument that youth supervisors in the JRCs functioned more as
social
workers than the youth supervisors in other State facilities.
But these
job descriptions (like the job title) emphasize the security
function of
the youth supervisors, more than their other roles.
Moreover, as the auditors found, there is little in the job titles of
the
other members of the facilities' staff to suggest that the
facilities
themselves placed an emphasis on providing social services.
Although, of
course, residents of the JRCs might have been receiving
more intensive social
services from other resources, the issue here is
the nature of the facility
itself.
We do not find persuasive the State's argument that residents of the
JRCs
often left the facilities on authorized absences or furloughs. The
State did
not deny the audit finding that, while on such leave, the
juveniles were
under the responsibility of IDOC officials. Moreover,
State law refers
to authorized absences and furloughs as "extending the
limits of confinement"
of persons committed to IDOC. Ill. Code,
Sections 1003-9-4 and
1003-11-1. In any event, the record shows that,
while in the
facilities, the juveniles were subject to indices of
confinement: for
example, (10) the residents were subject to regular
head-counting by the
youth supervisors.
We agree with the State that the fact that the JRCs were run by IDOC
is
not determinative; the Title XX regulations and Guides indicate
that
some facilities run by a corrections system might be fundable if
they
qualified as a "community-based residential service facility."
But,
where facilities fit the concept of an SJCF, and were
confining
individuals for whom the State would traditionally have provided
room
and board and the other functions at issue here, the State at the
very
least had a duty to inquire whether it could reasonably consider them
to
be excluded from the prohibition. /4/ The State provided no
evidence
that it had considered the prohibition in designing its JRC program
or
submitting its claim, nor that it had consulted with OHDS in doing so.
D. Why we conclude the JRCs are not readily classified
as
"community-based residential service facilities."
As the State pointed out, no definition of the concept
"community-based
residential service facility" is given in the
regulations. The terms
used, illustrative examples, and explanatory
statements, however, were
in our minds sufficient to call into question
whether the JRCs could
have been reasonably excepted from the
prohibition.
The Board asked the parties whether the term "community-based"
was
anywhere defined for purposes of Title XX. Both parties agreed that
it
was not, but pointed to language in section 2001(4) referring
to
"community-based care" as a form of care less intensive
than
institutional care and to the following language in the
legislative
history of Title XX, describing as a goal:
community-based care (to secure and maintain community-based
care
which approximates a home environment when living at home is
not
feasible and institutional care is inappropriate). . . .
S. REP. No. 1356, 93rd Cong., 2nd Sess. 6 (1974).(11)
The State also pointed to definitions under the Juvenile
Delinquency
Prevention and Control Act of 1968, and its 1974 amendment.
For
purposes of this program (which the State itself apparently thought
was
relevant and which we think has some bearing on the question of when
a
facility for juvenile delinquents should be
considered
"community-based") the following regulatory definition applied
prior to
the 1974 amendment:
Community-based programs refers to those residential
or
nonresidential programs providing services to youth within or in
close
proximity to the community and which draw on services from agencies
in
the community and which provide for full participation in
community
activities.
45 CFR 270.1(n) (1970).
The 1974 amendments to the statute in question added the
following
definition of "community-based facility, program, or service":
. . . .a small, open group home or other suitable place located
near
the juvenile's home or family. . . .
OHDS also pointed to a number of references to community-based care
which
contrast it to institutional care.
The JRCs were admittedly regional in nature (there was one for each
of
four regions in the state and, apparently, juveniles from all parts
of
the State were placed in the Morris facility). While some of
the
juveniles may have been from homes relatively near the JRC in which
they
were placed, others could have been placed at a JRC which was
a
considerable distance from their homes. While the concept
of
"community" is subject to varying interpretations, we do not think
that,
either in ordinary usage or under the definitions cited, an
entire
fourth of a state the size of Illinois would be considered
a
"community." Nor has the State provided any definitive evidence that
the
JRCs were "community-based" in the sense of being a part of
the
community in which they were located. The record shows that they
were
set off from the surrounding area, and definitely were not
simply
house-like structures. One of the JRCs held up to 60 juveniles,
and the
sleeping quarters of all JRCs were like dormitories. Moreover,
the
State's own literature shows that the JRCs were not considered
"group
homes."
Of the continuum of placements offered by the IDOC regional programs,
the
JRCs were clearly the most restrictive type of environment. While
the
JRCs were themselves not maximum security facilities, as some of the
Illinois
Youth Centers were, the State offered no evidence which
convinces us that the
environment at the JRCs was closer to a home
environment than to an
institutional environment, and, indeed, some of
the IDOC literature refers to
the JRCs as "institutions."(12)
We also find that the JRCs are distinguishable from half-way houses
and
short-term service facilities such as drug treatment
facilities.
Illinois law provides for post-release facilities for
juveniles
comparable to half-way houses for adults, but the juveniles placed
in
the JRCs had admittedly not been released. While the JRCs may have
been
"release-oriented," we do not think that by itself this is
sufficient
where a facility also fits the concept of a juvenile
correctional
facility. Moreover, unlike a drug treatment facility where
the facility
itself provides an intense regimen of services and the
individual is
placed in the facility solely for the purpose of receiving
those
services, the JRCs were providing minimal services themselves and
there
were other reasons for the placement decision, such as the need for
more
intense supervision than in a group home. On the other hand, as
we
discuss next, the JRCs were similar in many significant respects to
some
of the Illinois Youth Centers, which the State acknowledged were
SJCFs,
rather than community-based facilities. /5/
Finally, we note that, even if the State reasonably classified the
JRCs
as "community-based residential service facilities," the State
would
still have a burden to show that the room and board costs were
an
"integral but subordinate part" of social services provided by
the
facility and that the costs of managing and carrying out the
detention
function could reasonably be considered a cost of providing
those
services. The State has not met that burden here. /6/
(13)
E. Why we conclude the JRCs were similar to acknowledged SJCFs.
The State originally tried to distinguish the JRCs from acknowledged
SJCFs
on the basis that the JRCs emphasized social services aimed at
rehabilitating
the youths and reintegrating them into their communities.
The record does not
wholly support this proposition, however. As
mentioned above, the
State's literature refers to its regional program
as a whole and we have very
little evidence of the services the JRCs
were themselves providing. In
any event, the State subsequently
acknowledged that rehabilitation and
reintegration are a goal of all of
its correctional facilities.
OHDS pointed out a number of ways in which it contended the JRCs
were
similar to the acknowledged SJCFs. Specifically, OHDS contended
that
the facilities were similar (or at least not distinguishable) in
the
following respects:
* The stated institutional philosophy, purpose, and types of
services
offered at the facilities were the same.
* All of the facilities were designed to implement
the
regionalization concept of serving youths as close to their homes
as
possible.
* Some of the acknowledged SJCFs were smaller in size than one
of the
JRCs.
* Some of the acknowledged SJCFs were minimum security
facilities
which used authorized absences as part of their programs.
* Facilities of both types used outside resources in furthering
their
programs. (14)
The State conceded these points (State's reply brief, pp. 15-16),
but
argued that the JRCs differed radically from the acknowledged SJCFs
in
administration, target population, staffing, and functions. Many of
the
factors the State pointed to, however, are either
relatively
insignificant or not fully supported by the record. Other
factors,
while supported by the record, are not sufficient in our view to
show a
"radical" difference between all acknowledged SJCFs and the JRCs.
Unlike the Illinois Youth Centers, the JRCs were not under the
central
administration of the IDOC, but were under regional offices which
were
part of the Juvenile Field Services Division of IDOC.
This
organizational structure was apparently designed to further
the
regionalization concept in the State's correctional system. We do
not
think too much significance should be given this factor, though,
since
placement in the Youth Centers also took into consideration
the
regionalization concept.
The State also argued that the population of the JRCs differed from
the
SJCFs. The State said that the JRCs served "youths from the
communities
surrounding the center who were in need of local services, were
minor
offenders, needed more frequent support from their families, and
would
not benefit from a larger institution." State's brief, p. 11. The
State
also said: "The youths were not aggressive nor were they likely
to
attempt to escape. On the other hand, the population of the
juvenile
correctional institutions tended to be more aggressive, acting out
with
an extensive criminal history. They tended to be committed to the
IDOC
for more serious offenses. . . ." State's brief, p. 11. The State
did
not say that the acknowledged SJCFs did not also serve some youths
who
fit the description of the youths served by the JRCs. Moreover,
the
record shows that at least one of the JRCs, Pere Marquette, did
not
serve only non-aggressive youths. The IDOC brochure on its
Juvenile
Division Program and Services states about Pere Marquette:
Youths are usually placed here at the beginning of
their
commitment---hose who exhibit acting-out behavior of the
aggressive
verbal and assertive nature. As soon as they indicate
ability to accept
community responsibilities, they are relocated in the
community, either
in their own home or in group homes, under supportive
supervision.
State's appeal file, Tab 6, p. 14.
This brochure also indicates that, while some of the acknowledged
SJCFs
may have been larger institutions, the JRCs were nonetheless
considered
institutions. When the brochure speaks of alternatives to
institutional
placement, it refers to "group homes," not to the JRCs.
See, e.g., Tab
6, p. 15; see, also, Tab 3, unnumbered p. 2.(15)
The materials the State cited in support of its proposition that
the
functional responsibilities of the various job positions at the
JRCs
differed radically from the acknowledged SJCFs are not persuasive.
The
job descriptions relate solely to the JRCs and we do not know what
the
job descriptions were for employees of the acknowledged SJCFs. See
Att.
7 of Tab 7 of the State's appeal file. One of the documents
cited
describes the VAST program in the central region. Tab 7, Att.
8. This
document states: "Almost all personnel, regardless of
classification,
function as caseworker advisors, providing counseling and
casework
services. . . ." Tab 7, Att. 8, p. 2. By itself, however, this
statement
is not sufficient to show a "radical difference" between staff of
JRCs
and acknowledged SJCFs. /7/
Other allegations made by the State concerning program focus,
security
restraint level, community involvement, and physical plant are
either
unsupported or, to the extent supported, merely show what the JRCs
were
like and are not sufficient to rebut the evidence OHDS relied on
showing
that some of the acknowledged SJCFs were similar to the JRCs in
these
characteristics.
Finally, the State argued that the JRCs had developed from a
grant
provided to support innovative correctional programs. That the
JRCs
might have been part of an innovative program at the time the grant
was
awarded in 1974, however, does not outweigh considerations such as
that
the JRCs were part of a correctional program, that the JRCs
were
referred to as "institutions," and that the JRCs were fulfilling
a
function which was a traditional State responsibility. Nor does
it
necessarily follow that the JRC programs were radically different
from
what was being provided at some of the acknowledged SJCFs during
the
period in question here.
F. Why we conclude the disallowance is not inconsistent
with the
CASPs.
The State argued that funding for the JRCs should be available under
Title
XX because the services were provided in accordance with the
approved
CASPs. Specifically, the State relied on sections of its
CASPs
referring to "Transitional Placement Services" for fiscal year 1979
and
to "Comprehensive Youth Development Services" for fiscal years 1980
and
1981. The State(16) quoted the following part of the description
of
"Transitional Placement Services":
Placement in a substitute living environment providing
day-to-day
guidance and supervision as an alternative to
institutionalization. . .
.
State's brief, p. 9.
A close look at the relevant CASPs, however, shows that this was
not
describing placement at a JRC. The full CASP definition states:
Placement in a group home milieu providing day-to-day guidance
and
supervision of a child as an alternative to
institutionalization.
Placement may be before or after incarceration of a
youth.
State's appeal file, Tab 5.
As mentioned above, the State's own literature indicates that the
State
did not consider the JRCs to be "group homes." Moreover, many of
the
juveniles in the JRCs were placed there immediately following
evaluation
by IDOC (or were there for purposes of evaluation); none of
the youths
had been released by IDOC. We fail to see how these
juveniles could be
considered to be in transition "before or after
incarceration." /8/
A later definition of "Transitional Placement" does not
specifically
refer to group homes, but does refer to foster caretakers, which
would
also appear to exclude JRCs. Tab 5.
With respect to the definition of "Comprehensive Youth
Development
Services," the State quoted only that part of the CASPs which
states:
. . . Comprehensive activities provided to youths and their
families
which are designed to improve personal and social functioning
and
prevent future contact with(17) the juvenile justice system.
Service
resources are primarily community-based and emphasized use of
existing
community resources. . . .
State's brief, p. 10.
A careful review of the CASPs shows, however that the definition
of
"Comprehensive Youth Development Services" also states:
"Placement,
when appropriate, may utilize regular or specialized group homes
or
foster homes." State's appeal file, Tab 5.
When the Board specifically pointed out to the State the parts of
its
CASPs which it had omitted from its briefs, and questioned how
the
activities of the JRCs in question here qualify under the
CASP
definitions, the State responded by repeating the partial quotes
from
the CASPs and repeating its arguments that services at the JRCs
fostered
Title XX goals and that the services described in the CASPs
were
discrete services reviewed and approved by OHDS personnel. The
State
provided no evidence of any specific mention of JRCs as a
placement
alternative in connection with the CASP services. /9/
We think that the CASP language shows that the State understood
that
costs of placement in a JRC would not be covered under Title XX,
and
that community-based residential service facilities would not
encompass
facilities such as the JRCs. In view of the wording of the
CASPs,
moreover, we simply cannot attribute any significance to the fact
that
OHDS may have reviewed and approved the CASPs. /10/
G. Why we conclude the disallowance is consistent with
the statute.
The State argued that the statute (and regulations) gives the State,
not
OHDS, the sole authority for defining and selecting the State's
social
services plan. The State cited to section 2002(a)(3) of the Act,
which
provides:
The Secretary may not deny payment under this section to any
State
with respect to any expenditure on the ground that it is not
an
expenditure for the provision(18) of a service or is not an
expenditure
for the provision of a service directed at a goal described in .
. .
this subsection.
(language following subparagraph (B))
The State also pointed to statements in the legislative history of
Title
XX, which the State described as "articulating the desire of
Congress
that states be given freedom from regulatory control and
maximum
flexibility in designing and operating their social services
programs. .
. ." State's response to order, p. 9.
In context, the statements on which the State relied do not have the
broad
effect the State would have us accord them. The statements
are
referring to the states' discretion in designing their social
services
programs and determining how best to meet the Title XX goals.
These
statements cannot override the specific limitations in the Act
on
services to individuals in institutions, and on room and board costs,
in
particular.
We also cannot agree with the State that, simply because the program
of
services provided to JRC residents may have been
innovative--and
Congress indicated an intent to fund innovative social
services
programs--funding should be available for the costs at issue
here.
Providing room and board and managing and carrying out the
detention
function for juveniles serving their sentences certainly was
a
traditional responsibility of the State. The State has not even
shown
here that it intended its program to cover such costs when incurred
by
JRCs, much less that OHDS was aware of this intent and approved it
or
that the disallowance of such costs is inconsistent with
congressional
intent.
IV. The room and board costs.
A. What the auditors found.
In addition to the costs related to the State's JRCs, the
auditors
recommended disallowance of $568,686 in FFP claimed by the State for
the
cost of room and board provided to juveniles by vendors
under
contractual agreements with IDOC for the period January 1, 1976
through
September 30, 1981. The auditors found:
Most of the room and board was provided by such facilities as
private
agency boarding homes or institutions and foster homes approved
for
providing that type of care by the Department of Children and
Family
Services (DCFS). While DCFS had identified the percentage of
costs in
these facilities that are eligible for FFP because they represent
the
cost of providing social services, IDOC apparently was unaware of
the
percentages and reported the total payments to the State Agency. As
a
result, all payments made by IDOC to the facilities, including
the
unallowable portions pertaining to room and board, were claimed for
FFP.
Audit report, p. 6.(19)
The auditors further found that the vendors were primarily responsible
for
providing room, board, care and supervision to juveniles who were no
longer
required to stay in correctional facilities but were unable to
live in their
own homes. Audit report, p. 31.
The State commented on the draft audit report by asserting that OHDS
had
permitted room and board previously for group homes on the basis
that
the primary purpose of group homes was social services and that room
and
board were incidental to the social services. The auditors
responded
that the vendors included a combination of foster care
institutions,
boarding homes, group homes, foster families, and hotels, not
separately
accounted for on IDOC records. The auditors explained that
they had
used DCFS records to apportion costs between social services and
room
and board and had permitted 100 percent reimbursement where DFCS
records
showed a per diem rate for a particular vendor to be 100 percent
social
services. Presumably, this would include group homes.
OHDS adopted the auditors' recommendation, disallowing the room and
board
costs.
B. The State's position.
The State argued that the room and board costs were necessary to
achieve
the objective of a broader service and were not merely to provide
food
and shelter. The State said that the placements in question were
an
alternative to institutionalization of the individuals, provided
by
IDOC's Juvenile Field Services Division as part of a structured
team
approach designed to return the youths to the community as quickly
as
possible. The State asserted that, contrary to the auditors'
findings,
the CASP categories under which the State claimed the costs
were
"Transitional Placement Services" and "Comprehensive Youth
Development
Services" (the CASP categories described in our discussion of the
JRCs
above). The State pointed out that its CASPs indicated that room
and
board would be provided when an "integral but subordinate part" of
these
social services.
The State also contended regarding restrictions on room and board
costs
that--
the test for compliance requires an assessment regarding why
the
placement was made. If room and board is an integral but
subordinate
part of another service, the primary purpose of a particular
vendor, who
provides the room and board, is not relevant and is not at
issue.
State's brief, p. 21.
The State admitted that the youths in question could not have
been
either returned to their own homes or placed in an independent
(20)
living situation. When asked to explain this, the State gave
the
following reasons:
First of all, a lot of these children had come from family
situations
where returning them to that family would have created a
continuation of
a juvenile problem. In a lot of cases, there were
difficulties with the
family situation which led to the acting-out behavior
of the child so it
was inappropriate to return them to that type of
setting.
And, secondly, in order to make a juvenile into a productive
adult,
it was essential to provide them with some type of a home
environment
that showed them positive role models in a way that they could
become
productive members of society.
Transcript of telephone conference (Tr.), pp. 47-48.
The State also clarified that services were provided to the juveniles
both
by the vendors and by other sources in the community, that the
juveniles were
still under the custody of IDOC, and that the placements
in hotels were only
on a short-term basis for juveniles in transition
from one type of setting to
another. Tr., pp. 48-53.
C. Our analysis.
As mentioned above, Title XX places restrictions on room and
board
costs. (See pages 3 to 5 above.) Most of the State's arguments
are
directed at showing that the room and board here should be considered
to
fit within the exception where room and board are an "integral
but
subordinate part" of social services. As this Board stated in
Illinois
Department of Public Aid, Decision No. 457, July 29, 1983, the
exception
in the Act permitting FFP in room and board under certain
circumstances
should be narrowly construed, given that the general rule is
that room
and board costs are unallowable. /11/ The State focuses on
provisions in
the regulation which state that room and board will be deemed
to be an
integral but subordinate component of a service if--
(1) It is necessary to achieve the objective of that service and
not
merely to provide food and shelter;
(2) Room or board are included in the State's services plan
along
with the description of the service of which it is an integral
but
subordinate part, . . . .
45 CFR 228.41(b) (later 45 CFR 1396.41(b)).
(21)
The State's arguments ignore the specific provison that room and
board
"shall not be considered an integral but subordinate part of a
service
when provided to an individual in a foster family home or other
facility
such as a foster care institution or other facility whose
primary
purpose is to provide board, room and care or supervision." 45
CFR
228.41(d). Thus, we do not agree with the State that the purpose of
the
vendor is irrelevant. Moreover, the wording of this regulation
suggests
that there is a presumption that the primary purpose of foster care
is
to provide board, room and care or supervision: the 1975 Guide
made
this clear. The 1975 Guide states:
The requirements of this provision under no circumstances would
allow
FFP for room and board care even as an integral and
subordinate
component of a service provided in an institution under
Sec.228.44 and
Sec.228.45. This is because any room or board provided
in an
institution . . . is considered intrinsic to the purpose of
these
facilities.
1975 Guide, p. 2429.
The State's argument also ignored section 228.45(a) (later
1396.45(a)),
which provided:
A foster family home is a home licensed or approved by
appropriate
State or local authority . . . to provide board and care
including
parenting for children . . . .
The regulations provided that FFP was not available for
activities
described in this section, although it would be available
for
specialized services provided by foster family homes to children
with
behavioral problems if certain conditions were met.
The State did not dispute the auditors' finding that the placements
here
(with the possible exception of the hotels) were in foster family
homes
or institutions, approved by DCFS, the State foster care agency.
Nor
did the State dispute the auditors' finding that DCFS apportioned
the
costs between allowable social services and costs it
considered
unallowable under Title XX. The implication is that the
claims by IDOC
for the full amount were made by mistake rather than based on
a
deliberate determination that the regulatory requirements had been
met.
The State provided nothing which would indicte that this implication
is
unwarranted.
The children here, the State admitted, could not be returned home
nor
placed in independent living situations. Thus, the State would have
a
duty to provide room and board and care for the children,
irrespective
of whether the State was also providing a specific regimen of
services.
The particular choice of placement may have been dictated by
each
youth's specialized needs, but this does not overcome the fact that
the
State had a responsibility to provide some placement. Indeed,
a
spokesman for the State acknowledged(22) this, by stating that
in
response to the audit the State had researched whether the room
and
board could be claimed under the federal foster care program "because
we
recognized that it was an inherent responsibility of the State
to
provide that under children services. . . ." Tr., p. 50. The
spokesman
attributed the unavailability of federal foster care funds for the
room
and board to the technical factor of which State agency managed
the
cases, not to any substantive determination that the youths were
not
receiving foster care.
Moreover, we cannot agree with the State that, simply because the
foster
caretakers here needed special training to provide role modeling for
the
juveniles involved, this renders the room and board costs
allowable.
The Title XX regulations contemplate that such special services
might be
provided but makes it clear that the basic foster care--room, board,
and
parenting--is nonetheless unallowable.
With respect to the placements in hotels, there might be some
question
about whether this constitutes foster care, but there is also
a
substantial question about whether these placements had a
social
services objective. Simply because the youths were in transition
from
one setting to another does not mean that the purpose of placing them
in
hotels was to aid them in adjusting to the transition.
Rather,
placement in the hotels appears to have been necessary because it
was
not always possible to place the child immediately from one setting
into
another.
On the whole, there is a conspicuous lack of documentation in the
record
here to support the State's allegations. While we agree with the
State
that OHDS cannot hold it to specific documentation requirements
which
were deleted when the regulations were revised in 1977, we agree
with
OHDS that this deletion cannot be read as relieving the State totally
of
its normal obligation to document the allowability of its costs.
Thus, we conclude that OHDS properly determined that the room and
board
costs here were prohibited and did not fit within the exception for
such
costs when they are an "integral but subordinate part of a
social
service."
Conclusion
For the reasons stated above, we uphold the disallowance of
$5,570,501
claimed for JRC costs and $468,686 claimed for room and board
costs.
In an Order to Develop the Record, the Board asked the State whether
it
could identify what part of the JRC costs were for allowable
social
services. The State responded that it had not segregated the JRC
costs
according to type because it believed all JRC costs were
allowable.
Since OHDS has acknowledged that social(23) services costs
incurred by
the JRCs might be allowable, we think that the State should have
an
opportunity to document, within 15 days of the date of this decision
or
such longer time period as OHDS might agree to, what part of the
JRC
costs were for allowable social services. If the parties cannot
agree
on this issue, the State may return to the Board. /1/ Public Law
97-35,
effective October 1, 1981,
amended Title XX to provide for block
grants to states, subject to minimal
federal requirements. /2/
The
four JRCs were: the Vocational Academic and Social Training
Program
(VAST), located near Decatur; Freedom, Alternatives,
Confrontation,
Equality, Success (FACES), located in the Cook County Region
near
Chicago, the Pere Marquette Residential Center (Pere Marquette),
located
near Grafton; and the Morris Residential Center (Morris),
located five
miles east of Morris. Three of the four facilities were
closed on June
30, 1981, and the fourth facility, Pere Marquette, was
restructured;
the State admits it is now a correctional
institution. /3/ The
State
cited various court cases for the proposition that grant
conditions must be
"seasonably and unambiguously" stated. We agree with
the general
proposition, but, as we discuss below, we conclude that the
State did have
sufficient notice of the grant condition in question
here. We also note
that the case on which the State primarily relied,
Pennhurst State School and
Hospital v. Halderman, 451 U.S. 1 (1981), is
distinguishable from the case at
issue here. In Pennhurst, the Supreme
Court was examining a purported grant
condition which would have placed
an affirmative obligation on states to
expend considerable amounts of
their own money, in order to be eligible for
any federal funds. Here,
the issue is whether federal funds are
available to pay for costs the
State would have incurred in any event.
The State had custody of the
juveniles; placed them based on
considerations other than availability
of federal funding; and was
operating the JRCs prior to 1978 when the
State began claiming the costs
under Title XX. /4/ The
State
argued, "OHDS is well aware that Illinois, as well as at
least
thirty-five other states and the Island of Puerto Rico are
providing
social services to incarcerated individuals in various kinds
of
correctional settings (including settings that are characterized
as
"community-based residential centers") with the expectation that
such
services are Title XX reimbursable. . . ." State's reply brief, p.
6,
citing Tab 1 of the reply brief. This proves nothing, however,
since
OHDS did not contend that FFP is never available for social services
to
incarcerated individuals, but only that FFP is not available
for
"inherent responsibilities" of
SJCFs. /5/ The State argued
that
OHDS was aware (and expressed no concern or disapproval) that the
State
maintained its JRCs were community-based residential centers and
that
the State was providing social services to JRC residents. In
support,
the State submitted a copy of a list of facilities which was
apparently
attached to the fiscal year 1981 CASP. State's reply brief, Tab
2. The
JRCs are listed under the heading "Residential Centers."
Significantly,
the Illinois Youth Centers--which the State acknowledged were
SJCFs--
appear under the same heading. Even if the JRCs were listed
separately,
however, this would not show that OHDS knew the State maintained
that
JRCs were community-based residential service facilities.
Moreover,
OHDS has not denied that FFP is available for social services
provided
to JRC residents--the issue is whether FFP is available for
"inherent
responsibilities" of the facilities. /6/ The State submitted
three
memoranda which it said constituted "prior rulings" that FFP for
room
and board costs in facilities like the JRCs was allowable.
These
documents were from attorneys in the Office of General Counsel
division
which serves the Inspector General's office, not OHDS. OHDS
objected to
including these documents in the record on the ground that they
were
privileged, and moved to strike them from the record. The Board
granted
the motion to strike on the basis that the memoranda were part of
a
pre-decisional deliberative process, did not constitute "rulings"
by
OHDS, and were, in any event, not relied on by the State during
the
disallowance period. The State also pointed to a report by an
OHDS
staff member recommending that the auditors' findings not be adopted
by
OHDS. We find that this memorandum does not represent OHDS
policy,
since the recommendation was rejected by higher OHDS officials, and,
in
any event, the recommendation gave too much weight to factors
we
consider irrelevant, such as OHDS review of the CASP and the
description
of the IDOC regional program in
general. /7/ We also note
that,
while this document describes the VAST program as a
"community-oriented"
program involving youths in community activities, it
also states:
"Youth received at the VAST program for reception and assessment
may be
assigned to the VAST program, or placed in their own or
another
community, or sent to another state juvenile institution." Tab 7,
Att.
8, p. 2. /8/ Title XX
regulations provided that the CASP "shall:
(a) Describe each discrete service
. . . in as much detail as necessary
to enable a reasonably prudent person to
understand what is included in
the service. . . . If . . . room and
board . . . are part of a service,
the plan shall so specify in describing
that service. . . ." 45 CFR
1396.26. The State argued that its
descriptions in its CASPs met this
requirement. This may be so, but is
not a basis for expanding the
service category beyond what was specified in
the CASP: that placement
would be in group homes or foster
homes. /9/ The
contracts
between the Illinois Department of Public Aid and IDOC also refer
to a
"group home milieu" for juveniles before or after incarceration
as
"Transitional Placement Services." State's appeal file, Tab 5.
/10/
OHDS took the position that OHDS did not "approve" the CASPs. We
do not
need to reach the issue here of the scope or meaning, if any, of
OHDS' review
of the CASPs in light of our findings on what the
CASPs
said. /11/ This Board
decision was upheld in Illinois v.
Heckler, 616 F.Supp. 620 (N.D. Ill.
1985).
MARCH 28, 1987