SUBJECT: New York State Office of Children and Family Services

DATE: February 23, 1998

Docket No. A-98-39

Decision No. 1649

DECISION

The New York State Office of Children and Family Services (New York) appealed a determination by the Administration for Children and Families (ACF) disallowing $76,766,042 in federal financial participation claimed for the period April 1, 1996 through March 31, 1997, under title IV-E of the Social Security Act (Act). The disallowance represented costs incurred for administrative activities of caseworkers who provided pre-placement protective services to children and their families. New York claimed the costs as administrative costs of the IV-E foster care program in accordance with an allocation methodology (known as the IV-E option) that was part of a proposed amendment to New York's cost allocation plan (CAP) submitted in March 1992 to the Division of Cost Allocation (DCA) of the Department of Health and Human Services (DHHS). In December 1994, DCA disapproved the IV-E option provision of the CAP amendment, and in April 1996 the DHHS Regional Director affirmed the DCA disapproval of the IV-E option for cost allocation as related to protective administrative activities.

In its notice of appeal, New York acknowledged that the disallowances of similar claims were sustained by the Board in New York State Dept. of Social Services, DAB No. 1428 (1993) and New York State Dept. of Social Services, DAB. No. 1630 (1997). New York incorporated here all the arguments it presented in challenging the disallowances sustained by those decisions. New York stated that it has appealed DAB No. 1428 and is considering an appeal of DAB No. 1630. New York further stated that it would have no objection to the Board's issuance of a summary decision here consistent with DAB No. 1630. ACF also agreed to the issuance of a summary decision.

In DAB No. 1630, the Board sustained both the disapproval of the CAP amendment and the disallowance of claims made under the provisions of the CAP amendment. The Board stated that the primary purpose of the IV-E program is to provide funding for foster care maintenance payments for children who have been placed in foster care and otherwise would be eligible for Aid to Families with Dependent Children (AFDC) payments under title IV-A of the Act. The Board found that the Act and implementing regulations contemplate only very limited funding under the IV-E program for administrative activities on behalf of children who have not yet been placed in foster care. In order for the costs of an activity involving pre-placement protective or preventive services to be properly charged to the IV-E program, that activity must be listed in the regulations as an allowable IV-E activity or must be of a type which is closely related to one of the listed activities. The Board found that ACF properly disallowed the costs of those activities identified in New York's proposed CAP amendment that were neither listed in the regulations nor closely related to a listed activity, and that ACF properly determined that the proposed CAP amendment incorrectly allocated the costs of such activities to the IV-E program.

The Board further found that, even where pre-placement protective or preventive services qualify as IV-E activities of the type authorized by the regulations, the Act and the regulations only authorize funding for activities provided on behalf of children who will be placed in foster care if preventive services are not effective and who have the requisite degree of prior eligibility under the AFDC program. The Board found that ACF properly determined that New York's proposed CAP amendment incorrectly allocated costs incurred for other children to the IV-E program.

Conclusion

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M. Terry Johnson
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Norval D. (John) Settle
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Donald F. Garrett
Presiding Board Member