GAB Decision 047
September 28, 1978 Topeka Public Schools, Topeka, Kansas; Docket Nos.
77-7, 77-8, and 77-9 DeGeorge, Francis; Dukes, David Wilner, Irving
This is an appeal by the United School District No. 501, Topeka,
Kansas (grantee) from determinations by the Chief, International Equal
Education and Procurement Management Division, Office of Education (OE),
that the grantee has failed to meet its proper share of the project cost
of a grant, and demanding refunds.
The determinations relate to three successive grant awards in support
of a follow-through program for three periods commencing August 1, 1972,
and ending June 30, 1975. These will be referred to for convenience as
years A, B, C. Upon audit, the deficiencies in non-Federal
contributions were calculated to be in the amounts of $709.34,
$7,218.00, and $17,328.51, for the grant years A, B, C, respectively.
Grantee does not dispute the mathematical correctness of the amounts
of the asserted underpayments nor the formula upon which they are based.
It contends, however, that during each of the relevant periods, it had
contributed considerably in excess of its required share of the
follow-through project costs by contributing the services of five
teachers who "would not have been employed except for the grant,"
and
that it had paid their salaries out of its general fund. In this
connection, it argues that to be allowable in satisfaction of its proper
share of the actual project cost, the contribution is not required to be
made in cash, but can consist of in-kind services.
We do not understand the OE to be in disagreement with this
last-cited proposition as a matter of principle. What the OE does
assert is that grantee has failed to demonstrate that the payment of the
salaries of the five "follow-through" teachers by the grantee out
of its
general fund, if made, was necessarily or reasonably related to the
follow-through grant program.
Federally-assisted follow-through programs are authorized by section
222(a)(2) of the Economic Opportunity Act of 1964, as amended (P.L.
90-222) 42 USC 2809(a)(2). Their objective is the educational progress
of children of low-income families who were previously enrolled in Head
Start or similar programs, through provision of intensified and
enriching instructional activities and parent participation. Section
225(d) of the Act, 42 USC 2812(d), provides that no program be approved
for assistance under Section 222(a) unless the Director satisfies
himself:
"(1) that the services provided under such program will be in
addition to, and not in substitution for, services previously provided
without Federal assistance, and (2) that funds or other resources
devoted to programs designed to meet the needs of the poor within the
community will not be diminished in order to provide contributions
required under subsection (c). . ." (Emphasis added.)
Section 225(c) of the Act prescribes minimum precentages of the
non-Federal contribution, and vests discretion in the administering
agency to lower the rate if he determines such action to be required "in
furtherance of the purposes of this subchapter," and authorizes the
adoption of regulations for the establishing of objective criteria.
Implementing guidelines and regulations duly established a sliding scale
formula for determining the extent of a non-Federal share in
follow-through grants by reference to the number of elementary school
grades and number of grant years involved. Since there is no
disagreement between the parties as to the applicable percentage rate,
further elaboration concerning this is not required.
In support of its position, grantee has introduced into the record of
this proceeding an inter-office memorandum dated March 1, 1977, to its
treasurer's office confirming that teachers there listed were employed
as follow-through teachers and that they have all received their
remuneration from grantee's general fund. This list shows the total
number of such teachers to have been 14 for year A, and 12 for each of
years B and C of the grant. The memorandum further states for each of
the grant years that five of these teachers "would not have been
employed" had the follow-through program not been in existence. This is
due to the alleged fact that "many of the follow-through students are
transferred from their home school to the building where the
follow-through program is assigned."
The foregoing, together with some additional information furnished by
the grantee in response to our Order to Develop the Record, bearing upon
the designation of the follow-through attending schools and the number
of pupils, according to grade, who attended them from the several home
schools, and salaries paid to each of the teachers, represents the
entire evidence for the grantee's assertion that is has satisfied its
statutory obligation in respect of meeting a specified part of the
follow-through cost project. An examination of the entire body of
information in the file leads us to a contrary conclusion.
To begin with, we note a discrepancy in respect to the total number
of alleged follow-through teachers employed during school year A between
the inter-office memorandum (14) and the response to our Order to
Develop the Record (13). Furthermore, while grantee indicates that 166
pupils required transportation to a follow-through attending school in
year A, compared with 261 for year B, and 258 for year C, it claims the
salaries of five teachers as its contribution to the Follow-Through
program in year A, as in year B or C, without offering any explanation
for such result.
Nor does it provide any information concerning the total number of
teachers employed in its school system in relation to the number of
pupils attending kindergarten and grades 1-3 prior to the A grant year,
as compared to the situation in year A.
Of even greater significance is the inconsistency of grantee's
position with the statutory and regulatory postulates governing
follow-through assistance and the difficulty of reconciling that
position with official documentation in the file. The requirement that
follow-through assistance, whether from Federal or non-Federal sources,
must be supplemental to what a recipient would normally contribute in
routine practice, and not in substitution thereof, must be viewed as of
cardinal importance. All guidelines and regulations governing this
matter, in force during all of the grant periods, have emphasized this
requirement. No assistance by a grant recipient which does no more than
maintain its normal effort of performance can qualify as an allowable
contribution, whether cash or in-kind, in satisfaction of the
contractual obligation to contribute from non-Federal sources to the
cost of the follow-through project. A contrary view would be patently
repugnant to the legislative purpose. Follow Through Program Manual,
February 24, 1969, pp. 27-8 *; 34 F.R. sec. 158.2(d); 39 F.R. 158.67;
45 CFR 158.67.
Also, services to be "acceptable" as in-kind contributions must
be
shown to be necessary and reasonable for the proper and efficient
accomplishment of objectives of the grant, 45 CFR 100a.92(b), and as
directly benefiting and specifically identifiable to the
federally-supported activity,id., at 100 a. 91.
The factual evidence in this proceeding must be measured against the
foregoing criteria. There is nothing in the Follow Through Applications
filed by the grantee to have suggested to the grant officials or to put
them on notice in any way, that grantee had contemplated the appointment
of additional teaching staff in furtherance of the grant project and
that such appointment was necessary or reasonable. Absence of such
information effectively precluded the administering officials from
scrutinizing the claimed in-kind contribution for acceptability. The
Manual, supra, at p. 30, contains a seemingly absolute prohibition of
the use of grant funds -- Federal or non-Federal contribution -- for the
payment of salaries of regular classroom teachers during the normal
school day except for supplementary kindergarten teachers, which the
record shows have been paid out of Federal funds. But even aside from
this outright prohibition, the important point here is that there is
nothing in the official documentation which grantee was required to
submit, or which it did presumably submit, to indicate that additional
instructional staff was, indeed, appointed or needed.
Thus, in its proposed budget for year A, grantee, under
"Instructions, Salaries, Teachers" listed 14 teachers in the
"Maintenance of Effort" column, including seven whose names are
identical with seven of the 14 teachers whose names appear in the list
attached to grantee's inter-office memorandum of March 1, 1977. An
attempt does appear to have been made in the proposed budget for year B
to list a sum of $32,000 as salaries for 4 (not 5) follow-through
teachers in the non-Federal contribution column, but this item is shown
to have been stricken through on the face of the application.
Similarly, the proposed Follow-Through Budget for year C (1974-5) merely
lists only two kindergarten teachers and two master teachers (i. e.,
teachers having no direct teaching responsibility, except to afford
guidance to other teachers) whose compensation was, in fact, charged to
Federal funds.
The absence of supporting documentation is especially hard to explain
in view of the requirements set forth in the Grant Terms and Conditions
which apprised grantee herein of its obligation to submit a variety of
program and fiscal reports at various intervals during a grant period.
Thus, the Notification of Grant Award for 1973-4 (year B) requires the
grantee to submit to OE, by December 31, 1973, a report showing "the
work planned to be accomplished during the next budget period, and a
detailed estimate of expenditure report for the current budget period."
It is almost inconceivable that an in-kind non-Federal contribution now
estimated by grantee to have a value of approximately $35,000, annually,
would not have found its way into one or another of those reports.
It remains to be added that in a letter from grantee, bearing the
February 17, 1976, to OE, it admits "some difficulty in meeting the
"in-kind" costs in the past and expresses the hope that "fiscal
year
1975-76 should reflect greater emphasis on the meeting of these
non-Federal costs." This admission is almost totally irreconcilable with
the claim made March 1, 1977, in the inter-office memorandum, concerning
the payment by grantee of the salaries of five teachers out of its
general fund for each of the three grant periods, the aggregate of which
is computed by grantee in its memorandum of March 8, 1977, to be of a
value exceeding $117,000 or almost five times as much as the aggregate
of the deficiencies asserted by OE.
As indicated earlier, the record does not disclose any disagreement
between the parties concerning the percentage rates applicable to
grantee's contribution to the grant project costs for any of the three
grant periods. A reading of the file does, however, show a stated
overlap between the second and third grant periods. It appears that
while the second grant period is defined as August 1, 1973, to August
31, 1974, the third period is stated to have run from July 1, 1974, to
June 30, 1975. Since the non-Federal contribution was assessed at 16%
of the project cost for the third period (year C) and at only 14% for
the second period (year B), the erroneous inclusion of the months of
July and August in the third period worked a prejudice against the
grantee. But, in view of the fact that OE has offered to make an
adjustment in its deficiency determination in the amount of $17,328.51
for year C to reflect a 2% reduction to the extent of authorized
obligation made by the grantee prior to September 1, 1974, we do not
consider it essential to delay a decision pending a recomcomputation
based upon further development of the record.
Accordingly, we dismiss the appeal and affirm the demands for a
refund on account of underpayment of non-Federal contributions in the
amount of $709.34 for year A, $7,218.00 for year B, and $17,328.51, as
adjusted in a manner consistent with our opinion, for year C. *
Although titled "Draft," this document served as the primary
administrative guide in the follow-through grant field during the grant
years involved in this proceeding prior to the promulgation of the
implementing regulations in June 1974. Grantee admits that it had been
furnished a copy of the Manual contemporaeously with the grant of the
initial award, and it draws upon provisions of the Manual as a basis for
legal argument.
OCTOBER 04, 1983