DAB Decision 81
February 6, 1980 Yakima Public Schools; Docket No. 79-3; Decision No.
81 Kelly, Bernard E.; Malone, Thomas Mason, Malcolm S.
SUMMARY
(The following summary is prepared on the responsibility of the
Executive Secretary of the Board as a convenience to the interested
public. It is not an official part of the decision and has not been
reviewed by the Panel. Similar official summaries of earlier cases
appear in 45 CFR Part 16 Appendix.)
Grantee appealed from a determination by the Office of Education
requiring the refund of unexpended funds awarded to Grantee for a
Follow-Through grant which Grantee contended were properly used to cover
expenditures in excess of the amount budgeted for the preceding year's
grant. Grantee asserted that it had been advised by DE employees that a
supplemental grant would be awarded to cover the overexpenditures, and
upon denial of its request for a supplemental grant, that it would be
permitted to charge the costs in question to the subsequent grant.
The Board denied the appeal on the grounds that the Board bad no
authority to make a supplemental award and that the OE General Grant
Terms and Conditions at Appendix A of 45 CFR Part 100 barred application
of grant funds to costs incurred prior to the grant period, relying in
addition on DE regulations which provided that no DE employee could
waive or alter any applicable statute or regulation.
The Board also found that although Grantee's non-Federal contribution
for the grant under which the overexpenditures were incurred exceeded
the required non-Federal share by more than the amount in dispute, the
amount of the asserted excess cash contribution represented in fact an
in-kind contribution of specific services and was therefore not
available to offset the overexpenditures.
DECISION
I. Procedural Background.
Yakima Public Schools (Grantee) appealed by letter dated January 25,
1979, from a determination dated November 30, 1978 of the Chief, Policy,
Procedures, and Planning Branch, Grant and Procurement Management
Division, Office of Education, requiring the refund of $13,895 in
unexpended funds awarded to Grantee for a Follow-Through grant.
Grantee's earlier request for an extension of time to file an
application for review was granted for good cause shown. The basis of
the appeal was that the funds were properly used to cover expenditures
in excess of the amount budgeted for a Follow-Through grant in the
preceding year. Since the amount of the prior year's overexpenditure
was $12,196.76, that amount and not the full $13,895 required to be
refunded is in dispute.
On November 8, 1979, an Order setting forth the facts and issues as they
appeared from the record and directing Grantee to show cause why the
appeal should not be denied on certain grounds (set forth below) was
issued by the Board Chairman. The Order was based on the application
for review, the Agency's response to the appeal, dated March 26, 1979,
and an additional submission by the Agency supplementing its response to
the appeal, dated June 21, 1979. The Agency, which was invited but not
required to submit briefing in response to the Order, chose not to do
so. Grantee stated in response to the Order that there appeared to be
no additional material facts that would strengthen its appeal. We
therefore adopt the tentative conclusions stated in the Order and rule
against Grantee.
II. Statement of the Case.
Grantee received Grant No. OEG-9-70-0047 for the period 6/15/73 through
8/31/74 in the amount of $374,603. It was permitted to carry over to
that grant an additional $24,739 in unexpended funds from the previous
budget period, for available funding totalling $399,342. Grantee's
actual costs for this period, however, totalled $411,533.76, or
$12,191.76 in excess of the amount authorized in the notification of
grant award.
Grantee asserts that an unexpended balance under the subsequent grant,
Grant No. OEG-O-70-0047, awarded for the period 9/1/74 through 8/31/75,
was properly used to cover the overexpenditures, which it attributes to
"a computer change-over and the resultant inadequate bookkeeping records
of our Follow Through program." In support of its position, Grantee
'(Page 02 - 81 - 02/06/80)'
asserts that it was advised by "the Follow Through officer in USOE"
to
submit a request for a supplemental grant to cover the overexpenditures.
Over three months later, however, OE denied Grantee's request on the
ground that it was made after the expiration of the grant under which
the overexpenditures were incurred. Grantee further asserts that after
its request for a supplemental award was denied, it was advised by both
its program (or project) officer in OE, Mr. John Smith, and an employee
in the Fiscal Services Branch of OE (not better identified) that it
would be permitted to charge the overexpenditure to the succeeding
year's grant. Grantee states that "(i)n light of the fact that we feel
we had misleading, inappropriate and untimely information from USOE, we
are making this application for review."
III. Discussion.
To the extent that the appeal rests on the contention that a
supplemental award should have been made, we conclude that the appeal
should be denied. This Board is not vested with the authority to make
an award of grant funds. With respect to Grantee's contention that the
unexpended balance under Grant No. OEG-0-70-0047 can properly be applied
to the previous year's overexpenditures, we note that the Office of
Education General Grant Terms and Conditions provide that
"(e)xpenditures of the grantee may be charged to this grant only if
they: (1) Are in payment of an obligation incurred during the grant
period...." 45 CFR Part 100, Appendix A, Section 4.a. The term "grant
period" is defined in Section I.f. of Appendix A as "the period
specified in the notification of grant award during which costs may be
charged against the grant." The notice of grant award for Grant No.
OEG-0-70-0047 shows as the "period of grant" the dates 9/01/74 to
8/31/
75. Thus, the use of funds awarded for this grant to cover costs
incurred prior to 9/1/74 would be improper under these regulations.
OE also cited in support of its position Clause No. 3 of the terms and
conditions applicable to Grant No. OEG-9-70-0047 (the grant under which
the overexpenditures were incurred) which provided that "(t)he
Government shall not be obligated to reimburse the grantee for costs
incurred in excess of (the amount set forth in the Notification of Grant
Award) unless or until the Grants Officer has notified the grantee in
writing that such amount has been increased and has specified such
increased amount in a revised Notification of Grant Award." This appears
to bar the use of the unexpended balance under Grant No. OEG-0-70-0047
to cover the overexpenditures incurred under Grant No. 0EG-9-70-0047,
since the effect would be to increase the amount available for the
latter grant. There is a serious question, however, as to whether this
provision is legally enforceable, since it was not published in the
Federal Register until after the effective date of Grant No.
OEG-9-70-0047 and thus apparently did not comply with 20 U.S.C
1232(b)(1), which prior to its amendment in 1976 provided that "(n)o
standard, rule, regulation, or
'(Page 03 - 81 - 02/06/80)'
requirement of general applicability prescribed for the administration
of any applicable program may take effect until thirty days after it is
published in the Federal Register." (Cf. Knox County Economic
Opportunity Council, Inc., DGAB Docket No. 78-14, Decision No. 68,
October 29, 1979, p.2; Head Start of New Hanover County, DGAB Docket
No. 78-94, Decision No. 65, September 26, 1979, p. 3; Ohio University,
DGAB Docket No. 75-10, Interlocutory Decision, August 16, 1977, pp.
4-6.) Nevertheless, even without this provision, Section 4.a. of
Appendix A of 45 CFR Part 100 constitutes ample authority for the
Agency's position.
There is still the further question, however, whether the project
officer or Fiscal Services Branch employee could waive Section 4.a. of
Appendix A and make a commitment binding on OE to permit the use of the
unexpended balance to cover the previous year's overexpenditures. OE
does not dispute Grantee's allegations that it was advised that it could
use the funds in this manner. It asserts, however, that in making these
representations, the project officer and Fiscal Services Branch employee
exceeded their authority and therefore did not make a binding
commitment. The Agency notes that the Special Grant Terms and Conditions
for Grant No. OEG-0-70-0047 provided that "(t)he Project Officer is not
authorized to make any commitments or changes which affect the grant
price, terms or conditions; any such changes shall be referred to the
Grants Officer for action," and asserts that Grantee was on notice by
virtue of this provision that "only the Grants Officer was vested with
the power to authorize the expenditure of public funds." As indicated
previously, there may be some question as to whether a provision not
published in the Federal Register is binding on Grantee. The Agency
also cited in support of its position, however, 45 CFR 100a.483, which
clearly provides that no official, agent or employee of the Office of
Education may waive or alter any applicable statute or regulation.
Thus, we conclude that Grantee was not justified in relying on the
advice of either the project officer or the Fiscal Services Branch
employee.
The Order noted that the audit report for Grant No. OEG-9-70-0047 showed
that Grantee exceeded the required non-Federal share by $22,642
($127,642- $105,000) and stated that if any of Grantee's contribution
was cash rather than in-kind, it would be necessary to consider whether
the excess cash contribution could have been used to offset the excess
expenditures incurred under that grant. Grantee's response to the Order
states that it made a cash contribution of $20,171; documentation
provided by Grantee indicates, however, that amount represented specific
services provided to the grant program for which-the school system
assumed the cost. Thus, the contribution would not be available to
offset the excess expenditures.
'(Page 04 - 81 - 02/06/80)'
IV. Conclusion.
The Order directed Grantee to show cause why the appeal should not be
denied on the ground that Section 4.a. of Appendix A of 45 CFR Part 100,
which could not be waived by the project officer or the Fiscal Services
Branch employee, barred the application of the unexpended balance under
Grant No. OEG-O-70-0047 to overexpenditures incurred under Grant No.
OEG-9-70-0047. No such showing has been made. Grantee's response gave
no basis for the suggested possibility of an offset to the excess
expenditures. No briefing was requested on the question whether a
supplemental award should have been made, since this Board has no
authority to award grant funds. Accordingly, the appeal is denied. D11
May 21, 1992