Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: Pennsylvania Office of the Budget
DATE: June 28, 1991
Docket No. 91-83
Decision No. 1262
DECISION
The Pennsylvania Office of the Budget (Pennsylvania) appealed a
decision
by the Regional Director, Region III, Department of Health and
Human
Services. The Regional Director had affirmed the determination by
the
Director, Division of Cost Allocation (DCA), Region III,
that
Pennsylvania was required to return $3,183,700 to the
Federal
Government. That amount represented the federal share of
interest
earned by Pennsylvania on surpluses from self-insurance
accounts,
established by Pennsylvania and partially funded with federal
grant
funds, that had been invested in interest-bearing securities. The
DCA
Director found that the earned interest was being credited
to
Pennsylvania's General Fund rather than the self-insurance
accounts.
Citing cost principles set forth in Office of Management and
Budget
Circular A-87, the DCA Director found that the earned
interest
constituted applicable credits and that the portion of the
interest
generated by federal funds in the self-insurance accounts should
be
refunded to the Federal Government.
The Board sustained a similar determination involving Pennsylvania for
an
earlier time period in Pennsylvania Office of the Budget, DAB No.
1234
(1991). There the Board found that the self-insurance accounts,
funded
in part with federal grant funds, had generated interest and
that the Federal
Government was entitled to be credited with a share of
any interest earned on
federal grant funds held by Pennsylvania.
Pennsylvania is currently appealing DAB No. 1234 in the federal courts.
Here in its notice of appeal Pennsylvania reiterated the arguments it
made
in its prior appeal. The Board therefore proposed that a
summary
decision be issued. Neither party had any objection to the
issuance of
a summary decision based on the earlier Pennsylvania
decision.
Conclusion
Accordingly, based on the analysis in DAB No. 1234, which we
incorporate
by reference, we sustain the disallowance here in the amount
of
$3,183,700.
___________________________
Judith
A.
Ballard
___________________________
Cecilia
Sparks
Ford
___________________________
Norval
D. (John)
Settle
Presiding
Board