DEPARTMENT OF HEALTH & HUMAN SERVICES
Office of the Secretary
Departmental Appeals Board
Room 637-D, HHH Building
200 Independence Avenue, SW
Washington, D.C. 20201
SUBSEQUENT HISTORY FOR
New York State Dept. of Social Services, DAB No. 1579 (1996)
After issuance of DAB No. 1579, the parties entered into a settlement agreement relating to the disallowance the appeal of which was docketed as Docket No.
A-94-170 and reviewed by the Board in DAB No. 1579. To the extent that DAB No. 1579 relates to that disallowance, the decision should not be viewed as having precedential value.
New York State Department of Social Services, DAB No. 1579 (1996)
Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: New York State Department DATE: June 12, 1996
of Social Services
Docket Nos. A-94-170, A-95-157,
A-95-173, A-95-204, A-96-41,
A-96-79, and A-96-107
Decision No. 1579
DECISION
The New York State Department of Social Services (New
York) appealed seven determinations by the Administration
for Children and Families (ACF) disallowing federal
financial participation (FFP) claimed by New York under
title IV-E of the Social Security Act (Act). The claims
were for foster care maintenance payments for residential
foster care provided by New York City (NYC) voluntary
agencies between July 1991 and June 1995. 1/ The claims
fall into two categories, both of which involve
discrepancies between the amounts shown as paid to
voluntary agencies for foster care maintenance on payment
vouchers and in New York's statewide automated foster
care information system, the Child Care Review System
(CCRS). In the quarters where the amount shown as paid
in the CCRS was larger, the parties referred to the
difference as "unpaid amounts." In the quarters where
the amount shown on the vouchers was larger, the parties
referred to the difference as "outstanding amounts."
New York claimed FFP in a portion of the unpaid amounts
and the outstanding amounts which it attributed to foster
care maintenance for IV-E eligibles. New York computed
the FFP in the unpaid amounts by applying a percentage of
IV-E-eligible payments derived from the CCRS to amounts
which the CCRS showed were payable for foster care
maintenance but for which there were no vouchers
establishing that payments were actually made to the
agencies. ACF determined that the unpaid amounts were
unallowable because they did not represent actual
expenditures for foster care maintenance.
New York computed the FFP in the outstanding amounts by
applying a percentage of IV-E-eligible payments derived
from the CCRS to amounts established by vouchers as
having been paid to the voluntary agencies even though
the CCRS did not show that these amounts were in fact
payable for IV-E eligibles. ACF determined that the
outstanding amounts were unallowable because New York
failed to meet its burden to document the allowability of
its claim. All of the appeals except Docket No. A-94-170
involve disallowances of outstanding amounts.
As discussed below, we uphold the disallowances in all of
the appeals, except the appeal in Docket No. A-95-173,
which we remand to ACF to consider New York's arguments
that the disallowance of the current quarter claim was
improperly calculated. Specifically, we conclude that
the unpaid amounts were properly disallowed since New
York did not establish that it actually paid the
voluntary agencies for the foster care maintenance which
they provided, and the Act authorizes federal funding
only for expenditures made by a state. We further
conclude that the outstanding amounts were properly
disallowed because New York failed to document that the
outstanding amounts represented allowable costs under the
IV-E program that were properly allocated to that
program.
This decision is based on the parties' written
submissions, including New York's exhibits in the record
for New York State Dept. of Social Services, DAB
No. 1481 (1994) (which are incorporated by reference at
New York's request). Separate submissions were initially
made in Docket No. A-94-170 and in the remaining docket
numbers (which were consolidated). The parties' later
submissions addressed all of these cases. We are issuing
one decision for all seven cases since all of these cases
raise questions concerning how New York computed foster
care maintenance payments eligible for title IV-E
funding.
Relevant Authority
Section 472 of title IV-E of the Act authorizes FFP in
the costs of state foster care maintenance payments.
Federal matching of these payments is available for
children in foster care who meet certain eligibility
criteria. Section 474(a)(1) of the Act provides that a
state is entitled to a percentage "of the total amount
expended during such quarter as foster care maintenance
payments for children in foster family homes or child
care institutions . . . ." The Act provides that, prior
to the beginning of each quarter, the Secretary shall
estimate the amount to which a state will be entitled for
that quarter based in part on the state's "estimate of
the total sum to be expended in such quarter . . . ."
Section 474(d)(1). 2/ Section 474(d)(2) provides for
payment by the Secretary of these estimated amounts,
reduced or increased to the extent of any overpayment or
underpayment which the Secretary determines was made to
the state for a prior quarter. One way an overpayment or
underpayment may be determined is by comparing the
state's estimated quarterly expenditures for a particular
quarter (for which it received advance federal funding)
with its actual expenditures for that quarter. Actual
expenditures are identified on a state's quarterly report
of expenditures submitted following the close of the
quarter. A quarterly statement of expenditures is--
an accounting statement of the disposition of the
Federal funds granted for past periods and provides
the basis for making the adjustments necessary when
the State's estimate for any prior quarter was
greater or less than the amount the State actually
expended in that quarter.
45 C.F.R. 201.5(a)(3) (made applicable to title IV-E by
45 C.F.R. 1355.30(d)).
Claims for FFP must be submitted "within the two-year
period which begins on the first day of the calendar
quarter immediately following" the calendar quarter in
which the expenditures for which FFP is claimed were
made. Section 1132 of the Act.
A claim for reimbursement for expenditures reported on
the Quarterly Statement of Expenditures may be deferred
when the Regional Administrator believes the claim (or a
specific portion of the claim) is of questionable
allowability. A state must provide documentation in
support of a deferred claim within 60 to 120 days of
receipt of the notice of deferral action. 45 C.F.R.
201.15(c)(1) and (3) (made applicable to title IV-E by 45
C.F.R. 1355.30(d)).
New York's Foster Care Payment Systems
Since the beginning of the relevant time period, New York
has had two systems which it uses to compute foster care
maintenance payments to NYC voluntary agencies as well as
claims for federal funding in these payments.
The Child Welfare Administration (CWA) payment system is
based on monthly reports filed by the voluntary agencies
with CWA, a part of the NYC Human Resources
Administration (HRA). The report identifies the number
of care days for each foster care program operated by a
voluntary agency (e.g., group homes) and the per diem
rate of payment for the services provided for each
program. The report does not identify the number of IV-E
eligibles served since complete and accurate eligibility
data is unavailable at the time the agency files the
report. CWA makes monthly payments to the voluntary
agencies based on the information reported for a month
two months prior to the payment month.
The second system for computing foster care maintenance
payments and claims for those payments is the Child Care
Review System (CCRS), a statewide automated information
system administered by the Department of Social Services.
The CCRS contains comprehensive data on children in
foster care and documents foster care maintenance
expenditures for each child in the system. CWA enters
updated information in the CCRS based on changes reported
by the voluntary agencies after their review of monthly
CCRS reports. The CCRS contains an automatic edit that
prevents any updates from being entered more than 18
months after the original monthly claim is filed. This
edit is intended to encourage the filing of claims for
all expenditures for IV-E eligibles within the federal
two-year filing limit.
HRA's Office of Financial Management (OFM) uses monthly
reports generated by the CCRS as the basis for developing
claims for state and federal reimbursement for payments
made to voluntary agencies. Like CWA, OFM uses a three-
month claiming cycle, so that the monthly claims are
based on information in the CCRS two months prior to the
month for which FFP is claimed. OFM submits claiming
information on a monthly "Schedule K" to the Department
of Social Services, which uses it to prepare its
quarterly expenditure reports. OFM may also submit
supplemental Schedule K's to reflect changes in
information upon which prior Schedule K's were based
(such as a determination that a child for whom payments
were made is eligible for title IV-E).
Since both payments and claims for FFP are based on
information which is later updated, CWA and HRA each
conduct interim and final reconciliations to identify any
discrepancies. The "final CCRS reconciliation" is
conducted by OFM between 18 months and two years after
the close of each fiscal year. OFM reviews outstanding
CCRS updated monthly fiscal bills and CWA payment
information during this reconciliation. OFM may submit
increasing or decreasing adjustments as a result of its
interim or final reconciliations. However, OFM does not
claim FFP for payments identified as IV-E eligible after
the two-year federal filing deadline.
CWA conducts a "final fiscal year reconciliation," which
is begun, but not necessarily completed, between 18
months and two years after the close of the fiscal year
in question. This reconciliation entails a detailed
review and comparison of fiscal year data on actual care
days rendered and actual payments made by CWA, and also
includes an analysis of child-specific data to confirm
the amounts of IV-E expenditures previously claimed based
on the CCRS. The interim or final CWA reconciliations
may result in adjustments of the payments made by CWA to
voluntary agencies. However, this process is not
designed to be completed so as to assure the filing of
timely claims for expenditures it identifies. Although
CWA initiates the final fiscal year reconciliation, OFM
also participates at the end of the reconciliation
process by reconciling the results of CWA's review to the
previously filed title IV-E and non-title IV-E fiscal
year claims associated with each voluntary agency.
Unpaid Amounts
The disputed claims in Docket No. A-94-170 were the
result of final CCRS reconciliations for the quarters
ended September 30, 1990, December 31, 1990, and June 30,
1991. These reconciliations disclosed that, for each
quarter, the amount shown by updated CCRS fiscal data as
paid for foster care maintenance exceeded the payments to
voluntary agencies for foster care maintenance shown on
CWA vouchers. New York determined that part of the
"unpaid amounts" for each quarter was attributable to
care provided by the agencies to IV-E-eligible children.
New York submitted increasing adjustments for these
amounts based on the application to the unpaid amounts of
the percentage of expenditures for IV-E eligibles. 3/ 4/
For the first two quarters, New York claimed FFP in 80%
of the unpaid amounts. This was below the monthly
percentage of expenditures for IV-E eligibles during the
quarters in question shown by the CCRS, which ranged from
83.3% to 83.8%. For the third quarter, New York claimed
FFP in 84.93% of the unpaid amounts, which was the actual
percentage of expenditures for IV-E eligibles for the
quarter shown by the CCRS. New York Ex. 5 (Affidavit of
Michael J. O'Connor), Schedule A.
ACF took the position that the unpaid amounts were
unallowable because states may not seek reimbursement for
payment amounts due but not issued to third parties. In
support of its position, ACF cited ACYF-PI-92-11. This
program instruction includes a claiming form which states
that all amounts reported as "current quarter
expenditures" and "prior quarter adjustments" "must be
actual expenditures made under the State's plan . . . ."
ACF letter dated 10/10/95, attachment, 1st page (emphasis
in original). 5/
New York asserted that the unpaid amounts were for care
which had been provided by the voluntary agencies. New
York further asserted that the voluntary agencies had
already been paid for that care, and that New York was
merely seeking to claim the appropriate amount of federal
funding for these payments based on updated CCRS
information. New York letter dated 7/8/94, at 2. New
York conceded that the "updated CCRS fiscal bills
documented claims in amounts that slightly exceeded the
actual CWA voluntary agency payments for those periods."
New York letter dated 7/5/95, at 6. See also, New York
Ex. 5, at 8. However, according to New York, the
discrepancy was explained by the fact that the CCRS
reconciliation was not designed to take into account
supplemental payments made by CWA to voluntary agencies
after the service periods in question. New York Br.
dated 1/31/96, at 44.
New York took the position that, under these
circumstances, the unpaid amounts were allowable since
"[t]here is no statutory nor regulatory provision that
expressly or impliedly prohibits the filing of reasonable
estimated claims reflecting actual expenditures incurred
under Title IV-E of the Act." New York letter dated
7/5/95, at 6. New York contended that ACYF-PI-92-11
"offers no new clarification or interpretation of the
claiming provisions of Title IV-E that would bar Title
IV-E claims that are reasonably calculated and that
reflect actual Title IV-E expenditures." Id. at 6.
According to New York, the final CCRS reconciliation
provided a reasonably accurate means of ascertaining the
amount of IV-E funding to which New York was lawfully
entitled. Specifically, New York asserted that it
allocated the unpaid amounts to title IV-E based on
"historically accurate CCRS data on the percentage of
Title IV-E eligible foster care maintenance payments" and
that the result represented "what a review of case-
specific eligibility documentation would otherwise
reveal." New York letters dated 4/17/96, at 4 and
7/5/95, at 7. New York asserted, moreover, that the
claims in question were allowable estimates under the
criteria set out in DAB No. 1481 and prior Board
decisions because the claims resulted from a systematic
analysis of expenditures which was supported by detailed
payment records, documentation contained in the CCRS, and
individual case files maintained by HRA. New York letter
dated 7/5/95, at 7.
New York also asserted that the final fiscal year
reconciliation which was conducted subsequent to the
final CCRS reconciliation would resolve any remaining
discrepancies between the amount shown on CCRS as payable
to IV-E and the amount paid to the voluntary agencies.
New York argued, however, that, given the number of
voluntary agencies, the size of the foster care
population served by these agencies, and New York's
limited administrative resources, it was not reasonable
to expect New York to conduct this final fiscal year
reconciliation prior to the expiration of the two-year
deadline for filing claims. New York letter dated
7/5/95, at 6-7.
We conclude that the statute precludes payment of New
York's claim for any of the unpaid amounts. Section
474(a)(1) of the Act authorizes FFP in "the total amount
expended during [a] quarter as foster care maintenance
payments." (Emphasis added.) New York did not establish
that the amounts in question here represented
expenditures for foster care maintenance payments.
Although New York indicated that the discrepancy between
the foster care maintenance payments shown in the CCRS
and the payments shown on the CWA vouchers was due to the
fact that New York made supplemental payments which were
not entered into the CCRS, New York offered no evidence
whatsoever to establish that it in fact made such
supplemental payments. Thus, ACF was compelled by the
express terms of the statute to disallow New York's
claim. Although ACF cited as authority the instructions
on the claiming form to report as current quarter
expenditures or increasing adjustments only actual
expenditures, these instructions repeat what is already
clear from the statute. 6/
New York misapprehended the issue here in asserting that
it reasonably estimated the portion of the unpaid amounts
attributable to the IV-E program. New York is correct
that a state need not make "an exact computation of every
eligible expenditure, correct to the penny" when it
reports actual expenditures on its quarterly report of
expenditures. New York State Dept. of Social Services,
DAB No. 537, at 15 (1984). A claim calculation is
reasonable if it is "determined by a systematic analysis
of expenditures designed to identify those appropriately
claimed for FFP," and is not simply "a figure drawn out
of a hat, with no plausible explanation of where it came
from, and made up solely to avoid the timely filing
limitation." Id. at 15-16; see also, DAB No. 1481 at 6-
7. However, a claim must also reflect actual
expenditures already made rather than possible
expenditures that might be made at some future time. As
noted above, New York did not establish that its claim
here identified amounts actually paid the voluntary
agencies in question. The decisions on which New York
relied do not provide authority for federal funding based
on New York's calculation of amounts which are as yet
unpaid, even if it is a reasonable calculation of amounts
which are properly payable to voluntary agencies based on
services already provided. 7/
Moreover, we do not agree with New York that the effect
of denying payment in this situation is to force New York
either to conduct the final fiscal year reconciliation
earlier or to forfeit title IV-E funding for care
provided by the voluntary agencies. Under section
1132(a) of the Act, a state may claim federal funds for
an expenditure up to two years after the end of the
calendar quarter in which the state made the expenditure.
Expenditures for assistance payments such as foster care
maintenance payments are considered made when the
recipient (in this case, a voluntary agency) receives the
payment. 45 C.F.R. 95.13; see also, Pennsylvania Dept.
of Public Welfare, DAB No. 1551 (1995). 8/ Thus, the
two-year period for making claims for the care provided
by the voluntary agencies will not begin to run until New
York pays the agencies for that care, regardless of when
the final fiscal year reconciliation is conducted. 9/
Accordingly, we conclude that ACF properly disallowed the
unpaid amounts since they did not represent actual
expenditures for foster care maintenance.
Outstanding Amounts
The amounts disallowed in the remaining appeals were
claimed based on interim or final CCRS reconciliations
which disclosed that the quarterly payments to voluntary
agencies for foster care maintenance shown on CWA payment
vouchers exceeded the amounts shown on the updated CCRS
monthly fiscal bills for the same quarters as paid for
foster care maintenance. 10/ 11/ New York determined
that part of these "outstanding amounts" was attributable
to care provided by the agencies to IV-E-eligible
children. New York submitted increasing adjustments, as
well as a current quarter claim for one quarter, based on
the application to the outstanding amount of the
percentage of expenditures for IV-E eligibles shown in
the CCRS (or a lower rounded off percentage). The
percentage applied for all but two of the quarters in
question was 80% (less than the actual percentage of
expenditures for IV-E eligibles). For the quarter ended
March 1992, the percentage applied was 84.80%. For the
quarter ended September 1991, different percentages,
ranging from 84.10% to 84.40%, were applied to the
outstanding amounts for each month. New York Ex. 5
(Affidavit of Michael J. O'Connor), Schedule A. The
current quarter claim of $150,394 was submitted for
supplemental payments made during the quarter ended
December 31, 1993 for care provided from July 1992
through September 1993. See New York Br. dated 1/31/96,
at 8, 56; New York letter dated 7/17/95 (notice of appeal
in Docket No. A-95-173) at 4.
ACF disallowed New York's claims for the outstanding
amounts on the ground that New York failed to document
the allowability of these claims. ACF questioned whether
the amounts at issue represented foster care actually
provided since a very substantial amount of time had
elapsed (in some instances almost five years after the
month in which the care was allegedly provided), and the
amounts were still not documented in CCRS or in any
manual claiming system as properly paid to IV-E
eligibles. Moreover, ACF found no basis for New York's
assumption that the alleged care was provided to IV-E
eligibles in the same proportion as the care which was
documented in CCRS. 12/ See, e.g., disallowance letter
in Docket No. A-95-157, dated 5/23/95, at 2.
New York took the position that there is no statutory or
regulatory prohibition on the filing of reasonable
estimated claims under title IV-E. According to New
York, the claims in question were reasonable estimated
claims because they were based on a systematic analysis
of expenditures which was supported by detailed payment
records and CCRS data, including historical information
on the percentage of expenditures for IV-E eligibles.
New York asserted that the claims were also supported by
the underlying case records, which it acknowledged ACF
had a right to audit. However, New York argued that it
was not required to specifically identify the individuals
to whom the claims related in order for the claims to be
valid. New York argued further that the claims were as
definite as reasonably possible in view of the size of
NYC's foster care population (over 30,000 children in
voluntary agencies), and the time constraints imposed by
the two-year filing requirement. See New York letter
dated 6/29/95, at 6-8; New York letter dated 4/17/96, at
6-7; New York Br. dated 1/31/96, at 50-52.
New York's arguments have no merit. As explained below,
New York's methodology for computing the amount of FFP in
the outstanding amounts was not reliable and did not
relieve New York of its burden to document the
allowability of the claims. It is well-established in
Board precedent that the federal recordkeeping
requirements and cost principles place the burden on
grantees to document their costs, and that it is
therefore reasonable to disallow costs which may in fact
have been incurred when a grantee is unable to document
that the costs are properly charged to its federal grant.
See e.g., Michigan Dept. of Mental Health, DAB No. 1291,
at 6 (1992). Moreover, under title IV-E, a state is
obliged to maintain documentation for its foster care
cases adequate to show that federal requirements were
met. See e.g., New York State Dept. of Social Services,
DAB No. 1358, at 25 (1992). 13/
Here, the system for reliably identifying IV-E
expenditures and isolating them from the total
expenditures for foster care maintenance is the CCRS.
New York argued, nevertheless, that the CWA payment
system has identified additional expenditures for foster
care maintenance that were not identified in the CCRS.
However, the CWA system alone, even with IV-E percentages
derived from the CCRS superimposed on the outstanding
amounts, is an insufficient basis to document the
allowability of those amounts.
First and foremost, New York did not establish that the
outstanding amounts represent expenditures which are
allowable under the IV-E program. ACF asserted that
there is a clear possibility that these amounts may not
represent allowable payments for foster care maintenance.
As an example, ACF alluded to audits of the CWA system
occurring five or more years after New York incurred
particular expenditures which identified payments made to
voluntary agencies "in excess of appropriate levels."
ACF letter dated 11/8/95, at 2. ACF asserted that New
York "is effectively asking the Title IV-E program to
reimburse an estimated share of amounts it cannot certify
as representing care delivered at the appropriate rate
through its fiscal tracking system." Id. New York
responded that ACF's "insinuation" that the outstanding
amounts "reflect payment for something other than foster
care is absolutely unsupported by any evidence and is
pure conjecture." New York Br. dated 1/31/96, at 53.
However, New York's argument stands matters on their
head. As previously noted, the burden is on a state to
document the allowability of costs for which it claims
FFP, not on the federal agency to show that the costs are
unallowable. New York simply has failed to provide the
documentation necessary to demonstrate that these amounts
represent previously unclaimed costs of IV-E foster care
maintenance payments.
As also noted earlier, New York took the position that
the outstanding amounts were adequately documented by the
payment records, the CCRS data and the underlying case
records. However, the payment records, or vouchers,
establish only that payments were in fact made to the
voluntary agencies, not what the payments were for. As
ACF argued, the vouchered payments are based on a bill
from the voluntary agency which is itself an estimate of
care to be provided in the coming month. Moreover, the
CCRS documents only payments which are in the CCRS, which
the outstanding payments are not. Finally, the mere
existence of the underlying case records does not
establish that the amounts at issue represent foster care
maintenance payments for the children identified in the
case records.
Furthermore, we have no verifiable explanation as to why
the outstanding amounts were not identified in the CCRS.
New York asserted that this was due primarily to
movements of NYC foster children into new or different
placements and to per diem rate changes or rate
adjustments that could not be entered into the CCRS in
the month in which they occurred. New York Br. dated
1/31/96, at 48-49; see also, New York letter dated
4/17/96, at 4. Thus, in New York's view, "[i]t is
reasonable to conclude that the variances between the
updated CCRS data and the CWA payment data reflect
incomplete fiscal data entered in the CCRS regarding a
certain number of children already included in the
population of foster children identified on the CCRS
system." New York Br. dated 1/31/96, at 50 (emphasis
added). These explanations might cover discrepancies for
a period of a few months. However, New York here failed
to provide verifiable or even credible explanations as to
how discrepancies of such large sums could have persisted
in some cases for years beyond the point when the final
CCRS reconciliation was conducted (between 18 months and
two years after the close of the fiscal year).
Moreover, even if we were able to assume that all of the
outstanding amounts identified by the CWA system were
potentially allowable IV-E costs (which we are not), New
York still has not adequately documented what portion of
these amounts is allocable to the IV-E program. Title
IV-E makes federal funding available only for foster care
maintenance payments made on behalf of children who meet
certain eligibility requirements. The general cost
principles for the administration of grants to states
provide that "a cost is allocable to a particular cost
objective only to the extent of benefits received by such
objective." Office of Management and Budget (OMB)
Circular A-87, Attachment (Att.) A, C.2.a. 14/
Moreover, only costs which are allocable to a grant are
allowable charges to a grant. OMB Circular A-87, Att. A,
C.1.a. New York has not met its burden to demonstrate
that these costs are allocable to the IV-E program
because it has not demonstrated why superimposing ratios
derived from the CCRS on amounts which were derived from
the CWA system would produce a reliable allocation of IV-
E program costs for the periods in question.
As explained above, to arrive at the claims in question,
New York multiplied the outstanding amounts (i.e., the
actual payments to voluntary agencies which exceeded the
payments documented in the CCRS) for each quarter by the
percentage of expenditures for IV-E eligibles documented
in the CCRS. However, New York's methodology is
problematic. The methodology assumes that the
outstanding amounts were IV-E-eligible in the same
proportion as the expenditures documented in the CCRS.
However, it is not clear that these two populations were
sufficiently similar to justify this assumption. For
example, to the extent that the outstanding payments were
due to the failure of the CCRS to capture children
entering the foster care system (i.e., children moving
into new placements), the population was clearly not the
same. Thus, our basic objection to use of the
percentages is that we simply have no way of determining
whether the outstanding amounts are just as likely to
have been made for IV-E cases as the CCRS-documented
payments. What was really needed to establish that New
York's claims for FFP in the outstanding amounts were
both allowable and allocable was information on the
number of children eligible for IV-E, the number of care
days for those children, and the per diem rates for their
care. 15/
Moreover, contrary to what New York argued, ACF's
acceptance of the use of the same percentage in other
situations does not show that its use here was
statistically valid. New York pointed out that ACF
accepted a decreasing adjustment of New York's claim for
August 1991 which New York calculated using the
percentage of expenditures for IV-E eligibles. 16/ In
addition, New York pointed out that ACF itself used the
same type of percentage in calculating the disallowance
in DAB No. 1481. In both of the situations cited by New
York, however, the percentage was applied to expenditures
documented in the CCRS. Thus, unlike the situation here,
the percentage was not applied to a population which
arguably had different characteristics from the
population from which the percentage was derived.
New York also argued that ACF was prematurely applying
the requirements for collection and reporting of foster
care data at 45 C.F.R. 1355.40 (1995), which provide
for a penalty-free period of operation through September
30, 1997. New York letter dated 6/29/95, at 5. 17/ We
disagree, since New York could clearly document that the
claims were for services provided to IV-E eligibles
without providing the detailed information required by
these regulations.
Accordingly, we conclude that ACF properly disallowed the
claims for the outstanding amounts on the ground that
they were inadequately documented.
New York argued, however, that its current quarter claim
for the supplemental payments was distinguishable from
the other outstanding claims. According to New York, ACF
improperly used CCRS data on initial payments to
calculate the amount by which the supplemental payments
exceeded the amount documented in the CCRS. In addition,
New York asserted that ACF failed to take into account
one month (April 1993) for which the amount documented in
CCRS as paid for foster care maintenance exceeded initial
payments to the voluntary agencies. New York contended
that this did "not represent an equitable method for
determining a portion of this . . . claim to be
ineligible for reimbursement under Title IV-E." New York
letter dated 6/17/95 (notice of appeal for Docket No. A-
95-173) at 5; see also, New York Br. dated 1/31/96, at
57. However, New York did not propose another method for
calculating the amount of outstanding payments in the
current quarter claim, nor did ACF respond to New York's
argument. We therefore remand this matter to ACF to
consider whether the amount of outstanding payments in
the current quarter claim should be calculated
differently. If New York is dissatisfied with ACF's
determination, it may seek Board review pursuant to 45
C.F.R. Part 16 within 30 days of receipt of ACF's written
determination.
Conclusion
For the foregoing reasons, we uphold the disallowance of
the unpaid amounts in full and uphold the disallowance of
the outstanding amounts except with respect to the
current quarter claim of $150,394, which we remand to ACF
to consider New York's arguments that it was improperly
calculated. This decision does not preclude New York
from resubmitting its claims for the unpaid amounts
should payments be made to the voluntary agencies.
____________________________
Judith A. Ballard
____________________________
Norval D. (John) Settle
____________________________
Donald F. Garrett
Presiding Board Member
1. With the exception of one current quarter claim,
the claims were for services provided in earlier
quarters. The amounts originally disallowed and the
service periods covered are as follows:
Docket No. A-94-170 -- $17,112,365 (October -
December 1987, July 1989 - March 1990, July -
December 1990, and April - June 1991);
Docket No. A-95-157 -- $839,798 (July - September
1991);
Docket No. A-95-173 -- $2,607,387 (July 1991 -
December 1993) (includes current quarter claim of
$150,394);
Docket No. A-95-204 -- $36,584,901 (April 1993 -
September 1994 and November 1994);
Docket No. A-96-41 -- $3,309,728 (January - March
1993);
Docket No. A-96-79 -- $19,008,777 (December 1994 -
April 1995); and
Docket No. A-96-107 -- $1,781,757 (October -
December 1993).
After the appeals were filed, New York withdrew a total
of $7,567,362 of its appeal in Docket No. A-94-170,
leaving $9,545,003 in dispute. New York letters dated
7/5/95, at 1-2, and 5/2/96. In addition, New York
withdrew $907,706 of its appeal in Docket No. A-95-204,
and stated that it would withdraw an additional
$1,249,482 upon ACF's confirmation of its intention to
issue a grant award in that amount less 14.315%. New
York letter dated 5/8/96, at 1. This leaves $34,427,713
in dispute. New York also acknowledged that $1,249,482
of the amount in question in Docket No. A-96-107
duplicated the claim in Docket No. A-95-204. Id. Thus,
the amount remaining in dispute in Docket No. A-96-107 is
$532,275.
2. Public Law No. 103-432, section 207(b)(2),
redesignated subsection (d) as subsection (b), applicable
to payments for calendar quarters beginning on or after
October 1, 1993.
3. New York in some submissions described the
percentage applied as a percentage of IV-E-eligible
children rather than a percentage of expenditures for
foster care maintenance payments for such children. See,
e.g., New York letter dated 5/21/95, attached Affidavit
of John M. Sweeney at 2-3, stating that "HRA uses a ratio
of Title IV-E eligible NYC foster children cared for by
voluntary agencies to all similarly cared for NYC foster
care children . . . ." Similarly, ACF described the
percentage applied as a "caseload penetration rate." ACF
letter dated 5/23/95, at 3. However, it appears from the
worksheet accompanying ACF's letter (as Enclosure II)
that the percentage used was in fact a percentage of
expenditures (payments) rather than a caseload
percentage. (A caseload percentage could be quite
different from the percentage of expenditures since the
same amount of foster care maintenance payments was not
necessarily made for each child.)
For brevity, we refer throughout the decision to the
percentage of expenditures for IV-E eligibles, meaning
the percentage of total expenditures for foster children
cared for by NYC voluntary agencies which was expended
for IV-E eligibles.
4. The IV-E-eligible portion of the unpaid amounts,
when added to the IV-E-eligible portion of the payments
shown on the vouchers (for which FFP was previously
claimed), should equal the amount of IV-E-eligible foster
care maintenance expenditures shown in the CCRS.
5. ACYF-PI-92-11, dated 8/21/92, superseded ACYF-PI-
90-07, dated 4/4/90. According to New York, the claiming
form and instructions transmitted by these two program
instructions were essentially the same. New York Br.
dated 1/31/96, at 36-37.
6. Additional authorities cited by ACF do not
specifically require the reporting of actual
expenditures. See 45 C.F.R. 74.61(a) and 74.171
(1993), and 45 C.F.R. 201.15(c).
7. The statute also provides for advance funding on
the basis of a state's estimate of its expenditures for
the coming quarter. The Secretary may adjust the payment
for the subsequent quarter to account for any difference
between this estimate and a state's actual expenditures.
See sections 472(d)(1) and 472(d)(2) of the Act.
However, New York did not contend that the claims in
question here were for advance funding for care which had
not yet been provided. Instead, New York was calculating
what amounts were properly payable to the voluntary
agencies for care previously provided. Thus, these
statutory provisions do not authorize federal funding for
the claims in question here.
8. The Board held in DAB No. 1551 that a state
agency's expenditures for foster care maintenance were
assistance payments rather than payments for services for
purposes of the timely claims statute. The Board found
that a "foster care maintenance payment is a money
payment to cover basic needs made on behalf of an
eligible recipient . . . ." DAB No. 1551 at 8. In the
case now before us, neither party specifically argued
that payments to voluntary agencies for foster care
maintenance would not be assistance payments, although
New York referred to "services" rendered by the voluntary
agencies. In any event, the result would be the same
even if New York's expenditures for foster care
maintenance were considered expenditures for services.
(In DAB No. 1551, the distinction between payments and
services was critical because the foster care providers
had already been paid by the county.)
9. As of January 30, 1996, the final fiscal year
reconciliation for FY 1991 had not yet been completed.
New York Ex. 5 (Affidavit of Michael J. O'Connor) at 9-
10.
10. According to New York, some claims were based on
interim rather than final reconciliations due to State
appropriations legislation for the 1992-1993 through
1994-1995 fiscal years which set a cash cap on foster
care expenditures. New York wished to assure that NYC
claimed up to its cash cap so that the cap for the
succeeding year would be as high as possible. See New
York Br. dated 1/31/96, at 55.
11. This situation is thus unlike that in DAB No.
1481, where all of the payments were documented in the
CCRS.
12. ACF also noted that, even if this was a valid
assumption, the percentages applied by New York to the
outstanding payments in Docket No. A-95-157 did not
exactly match the percentages derived from total
documented CCRS claims. In response, New York stated
that the discrepancy in the percentages was explained by
the fact that, for each of the three months at issue, New
York used the data in the initial CCRS monthly fiscal
bill rather than the updated CCRS monthly fiscal bill.
New York letter dated 7/21/95, at 2-3. ACF did not
comment on this explanation. We need not resolve this
issue, however, since there are other grounds for
upholding the disallowance.
13. Contrary to what New York argued, the Board has
never held that a state is necessarily entitled to
federal funding based solely on an estimate of its actual
expenditures. In DAB No. 537, the Health Care Financing
Administration (HCFA) disallowed New York's title XIX
claim as an estimated claim which lacked supporting
documentation. The Board held that it could not
"conclude that the claim itself is deficient where the
amount is determined by a systematic analysis of
expenditures designed to identify those appropriately
claimed for FFP." DAB No. 537, at 16. However, the
Board remanded the case to HCFA to review documentation
which New York had submitted in support of its claim
after the claim was filed. Thus, while the claim
sufficed to meet the two-year filing deadline, it did not
conclusively establish the allowability of the costs
claimed. Similarly, in DAB No. 1481, the Board merely
stated that ACF cannot properly disallow a claim which
results from a systematic analysis of expenditures simply
because complete supporting documentation was not
supplied when the claim was filed.
We need not reach here the issue of whether New York's
claims for the outstanding amounts constituted valid
claims for purposes of meeting the two-year filing
deadline, however. Even if they were valid claims, they
would not be allowable since, as we discuss in the text
below, New York has never provided documentation
establishing that the payments were made for IV-E
eligibles.
14. OMB Circular A-87 was made applicable to DHHS
grants by 45 C.F.R. 74.171 (redesignated as 74.27
effective August 25, 1994), which in turn was
specifically made applicable to title IV-E by 45 C.F.R.
1355.30(b).
15. ACF noted that New York failed to supply the
average monthly number of children for which each
quarterly claim was made, as required by the claiming
form. ACF letter dated 4/2/96, at 3. ACF suggested that
provision of this information would assure that each
claim was "an accurate accounting . . . rather than an
estimate." ACF letter dated 4/2/96, at 3. New York took
the position that the request on the claiming form for
the average number of children merely serves a statistics
gathering function and is irrelevant to the question of
the allowability of the claims. New York letter dated
4/17/96, at 6. We agree with New York that the
identification of the average number of children covered
by a quarterly claim would not assure that New York
claimed only for payments made for IV-E eligibles. We
need not resolve here the question of whether ACF could
nevertheless require this information.
We also note that while New York understood ACF to say
that New York should have supplied a list of the
individuals covered by the claim, ACF denied that this
was its position. ACF letter dated 4/2/96, at 3rd-4th
page.
16. This decreasing adjustment was netted against
increasing adjustments for July and September 1991 which
were disallowed in Docket No. A-95-157. Disallowance
letter dated 5/23/95, Enclosure II.
17. New York made the same argument with respect to
the disallowance of the unpaid amounts in Docket No. A-
94-170. See New York letter dated 7/5/95, at 6. That
argument clearly has no bearing on whether New York may
properly claim FFP where no expenditures have been made.