GAB Decision 028
November 29, 1976 University of Guam; Docket No. 76-5 Clarke, Stuart;
Kelly, Bernard Mason, Malcolm
Auditors from the United States Department of the Interior questioned
$13,746 of grantee's claimed Federal costs for fiscal years 1971 and
1972 of which $140 was later allowed by the U.S. Office of Education.
Three separate programs were involved in the disallowance made by the
Office of Education on January 14, 1976. The programs and disallowances
are these:
1. Upward Bound FY 1971 FY 1972 Program
$3,933 $3,806
2. Education Professions Development Act Part V-D Program - $5,107
3. Education Professions Development Act Part B-2 Program - $760
4. Total disallowed (deducting the above mentioned $140) - $13,606.
Upward Bound Program
In the Upward Bound Program, grantee exceeded the maximum Federal per
student cost which must not, when averaged over the entire grant period,
exceed $1,440 per year per student (80 percent of $150 per month per
student) as established by Section 408(c) of the Higher Education Act of
1965 and the 1970-71 Upward Bound Guidelines. According to 408(c), the
Commissioner of Education could approve assistance in excess of 80% of
the cost of carrying out the program if he determined, "in accordance
with regulations establishing objective criteria," that such action was
required in furtherance of the purposes of the program. Such
regulations have not been promulgated, however.
(2) Grantee in its appeal to this Board of February 18, 1976, admits
that it was in fact aware of the per student limitation, but appears to
argue that the questioned expenditures were retroactively authorized by
a 25% cost of living adjustment approved by DHEW in 1974. The $1,440
per student per year expenditure limit in fiscal years 1971 and 1972 was
a statutory requirement. The 25% adjustment on which grantee relies,
even if it were permissible for the grant years in question, appears to
pertain only to eligibility criteria and not at all to Federal share
limitation, and as such is not a defense to the excess cost per student
per month.
Education Professions Development Act Part V-D
The audit found improper personnel costs in grantee's EPDA Part V-D
Program for advanced training and retraining of personnel serving in
programs of education other than higher education. The project director
spent less than 100% of his working time on the project because he
carried a parttime teaching load during the period of the project.
Grantee admits this fact and the fact that the director received no
additional compensation for his teaching duties but argues that it is
reasonable to assign such a person some teaching duties as long as the
teaching does not interfere with the timely completion of the project.
The facts seem to be clear that the project was completed
satisfactorily and on time. It is also clear that only that portion of
the salary of an employee assigned to a Federal project which is
comparable to the portion of his time devoted to the project may be
charged to the grant. Section J.7(d) of OMB circular A-21 extended to
training grants by Supplement B, (adopted in OE regulations in
substantially the same terms 45 CFR Sec. 100c Appendix C, Part I, P J.
7.d and Part II, P J.) states, in part, that:
"The direct cost charged to organized research for the personal
services of professorial and professional staff will be based on
institutional payroll systems. Such institutional payroll systems must
be supported by... an adequate appointment and workload distribution
system accompanied by monthly reviews performed by responsible officials
and a reporting of any significant changes in workload distribution of
each professor or professional staff member..."
(3) Education Professions Development Act Part B-2
Two participants in grantee's EPDA Part B-2 Program, which was
designed to attract and qualify teachers to meet critical teacher
shortages, were employed as full-time teachers in the semester
immediately preceding the training program according to both grantee and
OE. Both participants were uncertified at the time of their enrollment
in the Program. The Program guidelines provide the following
eligibility criteria:
"Only persons 'otherwise engaged' i.e., not presently engaged in the
field of education are eligible to participate in the training
projects... Teacher trainees are commonly recruited from seven major
categories... former teachers who have not taught for at least one
semester immediately preceding the training program..." (emphasis
added).
There appeared to be no dispute as to the legal requirement of a
limit in fiscal years 1971 and 1972 of $1,440 per student per year in
the Upward Bound Program. There appeared to be no dispute as to the
legal requirement that an employee assigned to a Federal project may
only have charged to the program grant that portion of his compensation
which corresponds to the portion of his time spent on the project,
regardless of the effect on that project of non-project work. There
also appeared to be no dispute that the two teachers in the EPDA Part
B-2 Program were full-time teachers immediately preceding the training
program and that program guidelines specifically disqualify persons of
this type from the program.
Accordingly, the appellant was directed to show cause in writing why
the Board should not proceed to decision forthwith on the record already
made; identifying the respects, if any, in which a statement of the
facts and issues substantially as set forth above was materially
incomplete or inaccurate, and the reasons, if any, why the appeal should
not be rejected for violation of the statutory and regulatory provisions
cited above; accompanied by any briefing on any aspect of the case the
appellant wished to submit. Grantee was also directed to furnish a copy
of the notices of grant awarded for Grant No. 0-70-4494( 453) (Upward
Bound Program), Grant No. OEG-0-71-1862(725) (EPDA Part V-D Program) and
Grant No. OEG O-1-021410-2752(731) (EPDA Part B-2 Program).
(4) Grantee has responded to the Order to Show Cause. It did not
furnish the notices of grant awarded. These were required because they
might furnish an argument in support of grantee's position. Its failure
to furnish these documents does not however appear to affect the result,
since grantee's response confirms that it has no additional information
to present; that it admittedly exceeded the allowable expenses for
students (but, it argues, in doing so, made the program more beneficial
to the students); that it did not comply with the applicable EPDA
regulations (but it argues, in doing so accomplished the basic mission
of the project); and that it charged for 100% of the time of the
project director who did not spend 100% of his time on the project.
CONCLUSION
The violations are thus clear. The policy arguments, while possibly
persuasive, call for a change of statute or a change of regulation.
They do not justify a clear violation of the terms under which grantee
requested and accepted Federal funds. The appeal is denied.
SEPTEMBER 22, 1983