SUBJECT: New York State Office of Children and Family Services

DECISION

The New York State Office of Children and Family Services (New York) appealed a series of three determinations by the Administration for Children and Families (ACF) disallowing a total of $506,027 in federal financial participation (FFP) claimed under title IV-E of the Social Security Act (Act) for foster care maintenance ($505,140) and adoption assistance ($887) payments made during the quarters from January 1, 1999 through March 31, 2000. ACF disallowed the payments because they were made on behalf of children placed with foster or adoptive parents on whom New York had not completed criminal record background checks (CRBCs) as required by applicable provisions of title IV-E, as well as by New York's IV-E state plan and its implementing state statute and regulations.

New York argued that the completion of CRBCs was not a funding requirement for foster care maintenance and adoption assistance payments and that it should be entitled to FFP in payments on behalf of the children regardless of whether it had completed the CRBCs.

Title IV-E requires that any state that elects to perform CRBCs under its IV-E state plan complete those checks before qualifying for funding for maintenance payments, just as the state must complete other approval requirements for a new foster home before qualifying for funding for a child placed in that home. Several provisions of title IV-E support this conclusion. Section 471(a)(20) requires states electing to provide CRBCs as part of the "approval" process to complete the checks before approving the child for placement and beginning maintenance payments. Moreover, sections 474(a)(1) and 472(c) explicitly make federal funding for maintenance payments contingent on the completion of the state's approval process for foster homes. These statutory provisions provide a firm basis for ACF's disallowances here, and we therefore sustain the disallowances in full except for a portion of one of the disallowances as noted below.⁽¹⁾

In Docket No. A-01-13, the parties with the Board's consent agreed to stay proceedings regarding an unidentified portion of that disallowance covering what New York described as a five-day period after the March 27, 2000 effective date of regulations implementing the provisions of the law requiring CRBCs, pending the Board's decision on the remainder of the disallowance and the prior two disallowances. 65 Fed. Reg. 4020 (January 25, 2000). The ground for the stay was that the Board's decision might resolve the dispute without the need for additional proceedings to address the effect of the regulations. In accordance with the stay, we are providing New York with 30 days after receiving this decision to show cause why any portion of this disallowance covering the period after the effective date of the regulations should not be sustained on the basis of this decision. If New York fails to make any showing, any such portion of the disallowance is sustained based on the analysis in this decision.

Applicable Law

Title IV-E of the Act, enacted as part of the Adoption Assistance and Child Welfare Act of 1980 (Public Law No. 96-272, 94 Stat. 500 (1980), 42 U.S.C. �� 670-79b), provides for maintenance payments for children in foster care and adoption assistance for children with special needs. Section 470 of the Act. Title IV-E funds are available for states with approved state IV-E plans meeting federal requirements. Section 471 of the Act. FFP is available, under an approved state plan, for foster care maintenance payments or adoption assistance for children who meet specified eligibility requirements. Sections 471-474 of the Act.

Section 472 of the Act requires states with approved IV-E plans to make foster care maintenance payments with respect to children who: have been removed from the home of a specified relative pursuant to a placement agreement or a court determination; meet state income guidelines; and are placed in foster family homes licensed or approved by the state. Under title IV-E, "the term 'foster family home' means a foster family home for children which is licensed by the State in which it is situated or has been approved, by the agency of such State having responsibility for licensing homes of this type, as meeting the standards established for such licensing . . . ." Section 472(c) of the Act. States with approved IV-E plans are entitled to payments in an amount equal to the federal medical assistance percentage (as defined in section 1905(b) of the Act) of the total amount expended as foster care maintenance payments under section 472 for children in foster family homes or child-care institutions. Section 474(a)(1) of the Act.

The disputed requirement for CRBCs was enacted on November 19, 1997, as part of the Adoption and Safe Families Act of 1997 (ASFA), Public Law No. 105-89, 111 Stat. 2115. Section 106 of ASFA added the CRBC requirement in section 471(a)(20)(A) of the Act:

In order for a State to be eligible for payments under this part, it shall have a plan approved by the Secretary which . . .

unless an election provided for in subparagraph (B) is made with respect to the State, provides procedures for criminal records checks for any prospective foster or adoptive parent before the foster or adoptive parent may be finally approved for placement of a child on whose behalf foster care maintenance payments or adoption assistance payments are to be made under the State plan under this part . . . .

Section 471(a)(20) goes on to require that states not approve the placement of foster children with individuals convicted of specified criminal offenses.

Subparagraph B referenced above permits a state to "opt out" of the CRBC requirement:

[S]ubparagraph (A) shall not apply to a State plan if the Governor of the State has notified the Secretary in writing that the State has elected to make subparagraph (A) inapplicable to the State, or if the State legislature, by law, has elected to make subparagraph (A) inapplicable to the State.

Section 471(a)(20)(B) of the Act. For the sake of convenience, we do not qualify each reference to the requirements in section 471(a)(20)(A) by noting that it does not apply to states that have opted out. We also use the terms foster parent and foster care maintenance payments to include adoptive parents and adoption assistance payments respectively, since foster care maintenance payments compose the bulk of the disallowances.

ASFA was generally effective the date of its enactment. However, states that required legislation to comply with ASFA were given additional time to comply, until "the first day of the first calendar quarter beginning after the close of the first regular session of the State legislature that begins after the date of enactment of this Act." Pub. L. No. 105-89, � 501. Neither party disputed that legislative changes were required to conduct CRBCs in New York, and that the effective date in New York was January 1, 1999.

Factual Background

Prior to ASFA, New York required prospective foster parents to certify their own criminal histories (a process that continues to date), but it had no state-wide law authorizing CRBCs, although several counties conducted CRBCs under local law. New York Exhibit (Ex.) 7. ASFA does not specify how CRBCs are to be conducted. Under New York's implementation of the CRBC requirement, New York fingerprints prospective foster parents (and adults over 18 living in their homes), and compares their fingerprints to those in a computer database. New York then evaluates the results to see if any prospective foster parent was convicted of a disqualifying criminal offense.

New York certified that state legislation was necessary to comply with the CRBC requirement and initially requested an effective date for the CRBC requirement of October 1, 1998, in correspondence to ACF dated February 12, 1998. New York Ex. 7, Attachment (Att.) 2a. New York subsequently requested an effective date of January 1, 1999, in a letter dated September 29, 1998. Id., Att. 2b. In a letter to ACF dated October 20, 1998, New York reported that the state legislature would be meeting prior to the January 1, 1999 effective date needed for implementation of the state legislation. Id., Att. 2c.

New York ultimately amended its Social Services Law effective February 11, 1999, to authorize CRBCs for prospective foster parents, as well as anyone over the age of 18 residing in their homes. N.Y. Soc. Serv. Law � 378-a, 1999 N.Y. Laws Ch. 7, New York Ex. 28. New York's law (and its social services regulations) requires that a criminal history record check with the New York Division of Criminal Justice Services be conducted regarding any prospective foster parent (and any person over the age of eighteen residing in the home of such prospective foster parent) before the foster parent is finally certified or approved for the placement of a child. Id.; N.Y. Comp. Codes R. & Regs. tit. 18, � 443.8, New York Ex. 30.

In an April 26, 1999 letter to the Secretary of HHS, the Governor of New York stated that "this letter serves to notify you of New York's election to make section 471(a)(20)(A) of the Social Security Act applicable to the State as of February 11, 1999." New York Ex. 4. ACF denied the request for the later effective date in a letter dated September 7, 1999. New York Ex. 5. ACF stated that New York had had until its ASFA effective date of December 31, 1998 to opt out of the CRBC requirement of section 471(a)(20)(A). The letter advised that since New York had not elected to opt out of the CRBC requirement prior to the effective date, as of January 1, 1999 New York was required to conduct CRBCs, and federal reimbursement was not available for children placed in foster family homes approved after that date if the prospective foster parents had not undergone CRBCs.

Prior to the time that ACF responded to the Governor's letter, the parties corresponded regarding difficulties experienced by New York's local districts in implementing the CRBC requirement. New York reported that it had instructed local districts to segregate from other foster care claims those cases where CRBCs had not been completed, in order to identify the claims that were later the subject of the disallowances. New York Exs. 1, 2, 3; New York Brief (Br.) at 3-4. A New York Local Commissioners Memorandum dated March 19, 1999 stated that social services districts could not claim FFP in foster care payments to or on behalf of foster homes certified after January 1, 1999, until CRBCs were successfully completed on the foster parents. Transmittal No. 99 OCFS LCM-8, New York Ex. 2. The memorandum noted that under extraordinary circumstances it might be necessary to certify a foster home on an emergency basis without the successful completion of a CRBC when there were no existing approved or certified foster homes available. In such cases, the memorandum instructed, FFP could not be claimed until the CRBC was successfully completed, after which FFP could be claimed back to the first day of the month in which the CRBC was completed. Id. at 3.

ACF issued final regulations implementing ASFA (and other statutes) on January 25, 2000, which were effective March 27, 2000. 65 Fed. Reg. 4020 (January 25, 2000). When ACF proposed those regulations on September 18, 1998 (63 Fed. Reg. 50,058) New York submitted comments noting that the preamble to the proposed regulations indicated that states could not claim title IV-E funding until prospective foster parents had passed CRBCs. In its comments, New York recommended that FFP be available for foster care provided from the time that a placement is provisionally approved, or, alternatively, that states should be able to apply for retroactive FFP once the foster parents pass CRBCs. New York Ex. 15, at 34.

New York reported that it proposed four state plan revisions establishing CRBC procedures necessary to comply with ASFA. New York Ex. 7, � 7. Excerpts from two state plan revisions submitted in February and September 1998 that New York included in its appeal file show only that New York certified that state legislation was necessary to implement CRBCs for prospective foster parents under section 471(a)(20) of the Act, and requested effective dates for the CRBC requirement of first October 1, 1998, and then January 1, 1999. New York Ex. 7, Atts. 2a, 2b. Excerpts from the two plan revisions submitted in October 1998 and March 1999 contain language that, like New York's social services law, parallels section 471(a)(20). Both provide that:

The State Agency shall implement procedures for criminal records checks for any prospective foster or adoptive parent before the foster or adoptive parent may be finally approved for placement of a child on whose behalf foster care maintenance or adoption assistance payments are to be made . . . .

New York State Plan Submittals Nos. 98-49, 99-2, New York Ex. 7, Atts. 2c, 2d. (New York did not state why it submitted the last two revisions, the quoted excerpts of which are identical, or indicate whether the revisions effected changes to parts of its IV-E plan other than the CRBC requirement.)

ACF issued the first of the disallowances in a letter dated March 2, 2000. ACF's disallowance letters describe the disallowed amounts as payments to prospective foster parents for periods beginning January 1, 1999 or later and prior to a month in which the required CRBC may have been completed.

Effective July 1, 2000, the New York legislature elected to make the provisions relating to CRBCs in section 471(a)(20)(A) inapplicable to it. 2000 N.Y. Laws Ch. 145, � 20; New York Ex. 32. The election did not modify the requirement in New York's Social Services Law that CRBCs be conducted before a foster parent is finally certified or approved for the placement of a child. However, by the same legislation, New York also amended its law to provide that criminal convictions would not disqualify a prospective foster or adoptive parent who could demonstrate that denial of approval would create an unreasonable risk of harm to the physical or mental health of the child, and that approval would not place the child's safety in jeopardy and would be in the best interests of the child. Id., � 1.

The record contains little information about the specific foster care maintenance payments that make up the disallowances. New York offered detailed descriptions of its efforts to implement the CRBC requirement and the procedures for conducting CRBCs, but did not state when the CRBC process became fully operational in the state and how long it remained fully operational. New York Br. at 6-15; New York Ex. 7. Nor did New York specify whether it ever actually conducted and completed CRBCs for the disallowed cases, or whether the foster parents in those cases passed CRBCs within the time frame provided by New York's emergency placement procedures. Statements in New York's submissions suggest that the disallowances involve foster children placed in the homes of relatives under a New York procedure that permits placing children with relatives (and in some cases with non-relatives) on an emergency basis for up to 60 days pending completion of New York's process for approval of the home. See, New York Br. at 26; New York Ex. 10, � 3. New York estimated that cases involving emergency placements in non-relative homes accounted for less than one percent of the claims at issue. New York Br. at 16.

Analysis

ACF based the disallowances on section 471(a)(20) of the Act as added by ASFA, as well as on sections 474(a)(1) and 472(c). Below we discuss why we agree with ACF that these sections of title IV-E require the completion of CRBCs for prospective foster parents as a condition of federal funding and why New York's statutory arguments are unavailing. We then address New York's other wide-ranging arguments in opposition to the disallowances.

• Title IV-E requires the completion of CRBCs as a condition for the federal funding of foster care maintenance payments.
  

Section 471(a)(20) requires that title IV-E state plans provide for CRBCs for any "prospective" foster parents before the parent may be "finally approved" for placement of a child on whose behalf maintenance payments "are to be made" under the plan. Each of the quoted parts of section 471(a)(20) supports the conclusion that the CRBC must be completed before the federally-funded payments may begin. The parents are referred to as "prospective," the check must be completed before the parent is "finally approved," and foster care maintenance payments are to be made in the future after the final approval. We therefore conclude, as did ACF, that this provision means that a state must perform a CRBC on a prospective foster parent before placing a child with that parent, and that qualifying maintenance payments can only begin after successful completion of the check.

Moreover, we see no basis to differentiate between the completion of CRBCs and the completion of any other evaluation that a state must perform before determining whether a home may be approved and thus qualify for federal funding. Sections 474(a)(1) and 472(c) of the Act make federal funding for maintenance payments contingent on the completion of the state's approval process for foster family homes. Section 474(a)(1) authorizes funding for foster care maintenance payments under section 472 only for children "in foster family homes," and section 472(c) defines "foster family home" as one "which is licensed by the State in which it is situated or has been approved, by the agency of such State having responsibility for licensing homes of this type, as meeting the standards established for such licensing . . . ."

Under the Act and New York's statute and regulations, the CRBCs are by their very nature part of New York's approval and licensing process. New York indeed previously required a form of criminal background check in its approval process for foster homes under its IV-E program by requiring prospective foster parents to certify their own criminal histories. While title IV-E generally leaves the specifics of foster home licensing to the states, section 471(a)(20) superimposes upon New York's process the additional requirement that a prospective foster parent pass a CRBC before New York completes its licensing or approval of that individual's home as a foster home qualified for the placement of a child on whose behalf the state makes foster care maintenance payments. The CRBCs, moreover, are not performed by New York merely by virtue of New York's election to perform the checks under its IV-E plan; New York has latitude in how it performs the checks under section 471(a)(20) and New York's statute and regulations independently require the completion of checks as part of New York's approval process for foster care homes and parents. Thus, New York enacted a statute effective February 11, 1999 and regulations that require CRBCs for the "prospective" foster parent and other adults residing in the home before the foster parent "is finally certified or approved for the placement of the child." N.Y. Soc. Serv. Law � 378-a, 1999 N.Y. Laws Ch. 7, New York Ex. 28; N.Y. Comp. Codes R. & Regs. tit. 18, � 443.8, New York Ex. 30. To the extent that New York violated its own statute in not performing CRBCs prior to placing children with foster parents, there is a separate, independent basis for the disallowances under Office of Management and Budget Circular A-87, made applicable to title IV-E by 45 C.F.R. �� 74.27(a) and 1355.30(c). That circular provides as a basic guideline on the allowability of costs that a cost must be "authorized or not prohibited under State or local laws or regulations." Att. A, � C.1.c.

Accordingly, sections 471(a)(20), 474(a)(1) and 472(c) jointly provide that New York must complete the CRBC, just as it must complete every other aspect of its approval process, before a home and a prospective parent may be approved for placement of a child and before federal funding for maintenance payments may begin.

Finally, it is undisputed that New York was aware of ACF's position that federal funding was not available until prospective foster parents passed CRBCs. The New York Local Commissioners Memorandum dated March 19, 1999 stated that--

Effective January 1, 1999, federal funding may not be claimed for prospective foster care and prospective adoptive parents unless a criminal background check is successfully completed prior to final certification or final approval.

NY Ex. 2, at 1.

In that same memorandum, New York stated that with respect to the certification of new foster care homes:

For homes certified on or after January 1, 1999, social services districts may not claim any foster care payment made to or on behalf of such homes as federally participating (FP) until the criminal background checks are successfully completed on the foster parents.

Id. at 2.

We therefore conclude that applicable provisions of title IV-E require the completion of the CRBCs as a condition for the federal funding of foster care maintenance payments.

• New York's arguments do not provide a basis for reversing the disallowances.

New York raised several issues of statutory interpretation in its appeal of the disallowances. New York also stated that it reserved the right to raise issues concerning the constitutionality of section 471(a)(20). Because the Board is bound by all applicable laws, we are without jurisdiction to consider New York's constitutional claim. 45 C.F.R. � 16.14.

We address New York's other arguments individually below.

a. The location of the CRBC requirement does not diminish its effect.

New York argued that CRBCs are not a prerequisite for foster care maintenance payments because Congress placed the CRBC requirement in section 471 of the Act, which specifies the contents of state plans, instead of amid the eligibility requirements for foster care maintenance payments in section 472. Section 472 authorizes foster care maintenance payments on behalf of children who: have been removed from the home of a specified relative pursuant to a placement agreement or a court determination; meet state income guidelines; and are placed in foster family homes licensed or approved by the state. Section 471(a)(20), in contrast, requires that a state have an approved plan that "provides procedures" for CRBCs. The placement of the CRBC provision in section 471, New York argued, is evidence that Congress did not intend to create a new eligibility requirement for foster care maintenance payments, or circumscribe what New York characterized as the state's traditional authority for licensing foster homes. New York cited the Supreme Court's decision in Suter v. Artist M., 503 U.S. 347 (1992), which rejected an attempt to enforce a private right of action under 42 U.S.C. � 1983 for an alleged violation of section 471(a)(15) (the requirement that a state make "reasonable efforts" to prevent a child from being removed from his home). In rejecting the child petitioners' claim of a private right of action, the court stated that the disputed section "only goes so far as to ensure that the State have a plan approved by the Secretary which contains the . . . listed features," and observed that regulations implementing the foster care program "are not specific, and do not provide notice to the States that failure to do anything other than submit a plan with the requisite features, to be approved by the Secretary, is a further condition on the receipt of funds from the Federal Government." 503 U.S. at 358, 362.

We conclude that the location of the CRBC requirement in section 471 instead of section 472 in no way undercuts ACF's position on the completion of CRBCs as a condition for federal funding. Although title IV-E generally leaves the specifics of foster home licensing to the states, section 471(a)(20) effectively created a new approval requirement for states that elect to provide CRBCs. In New York this requirement was superimposed on existing requirements for criminal background checks during the approval process and was implemented by New York by its own statute in addition to New York's commitment under its IV-E state plan. ACF therefore applied this requirement in the same way as any other requirement for approval of the home under section 472(c) that had to be met before a child could be placed in the home. Since "foster family home" as used in section 472(c)(1) refers to the home of an individual (as opposed to a child care institution described at section 472(c)(2)), the only logical reading of the relevant requirements of title IV-E is that whatever process the state may use to approve or license a foster family home for placement may not be considered complete ("finally approved") until a CRBC has been completed for the prospective foster parent in whose home the child is to be placed.

Moreover, this interpretation is consistent with Board decisions addressing disallowances of foster care maintenance payments during time periods prior to the effective date of the ASFA CRBC requirement. The Board has previously noted that there are conditions for federal funding of foster care maintenance payments beyond those listed in section 472:

Because Congress wanted to encourage states to prevent improper foster care placements and to ensure that children remained in substitute care only when necessary, it imposed conditions on the receipt of title IV-E funding for foster care maintenance payments. First, the state must make reasonable efforts prior to the placement of a child in foster care to prevent or eliminate the need for removal of the child from home. Section 471(a)(15)(A) of the Act. Second, the removal must be pursuant to a judicial determination with specific findings concerning the child's welfare and reasonable efforts, or pursuant to a voluntary agreement. Section 472(a)(1). Third, each child in foster care must have a case plan. Section 471(a)(16).

New York State Dept. of Social Services, DAB No. 1630, at 4-5 (1997); see also, New York State Office of Children and Family Services, DAB No. 1701, at 3 (1999); Illinois Dept of Children and Family Services, DAB No. 1530, at 6 (1995).

To this list of conditions Congress added the requirement that a CRBC be completed for a foster parent with whom children on whose behalf foster care maintenance payments are to be made are to be placed. Section 471(a)(20) is akin to the two provisions of section 471 that the Board cited as imposing conditions on the receipt of title IV-E funding for foster care maintenance payments -- sections 471(a)(15)(A) and 471(a)(16) -- because each provision contains specific requirements applicable to individual foster children. In this respect, these provisions are distinguishable from other state plan requirements in section 471 that do not contain standards applicable to individual children but instead address the overall, statewide operation of the plan. These include the requirements that the state plan be in effect in all political subdivisions of the state, that the state offer fair hearings to individuals whose claims are denied, that the state arrange for periodic, program-wide audits, and that the plan provide for the establishment or designation of a state authority responsible for establishing and maintaining standards for foster family homes and child care institutions. Act �� 471(a)(3), (10), (12), (13). The requirement of program-wide audits, for example, cannot be applied on a case-by-case basis to determine if maintenance payments should be made on behalf of an individual child.

In an earlier appeal by New York, the Board rejected New York's reliance on Suter v. Artist M. for the position that the state plan requirements in section 471 of the Act are not enforceable conditions for a state's receipt of FFP. New York State Dept. of Social Services, DAB No. 1358 (1992). In that case we found that nothing in Suter implies that merely having a complying plan is sufficient to entitle the state to any foster care payments it claims. As we noted in the earlier decision, the Supreme Court, while rejecting a private right of action, did not directly address the issue of whether ACF had the authority to disallow payments not made in accordance with section 472. Similarly, Suter did not directly address whether the Secretary may disallow FFP where a state fails to implement the state plan provisions required by section 471.

Subsidiary to its Suter argument, New York noted that the Act provides a separate enforcement mechanism for a state's failure to comply with its approved state plan that ACF has not attempted to apply here. New York Br. at 23, n.7, citing 45 C.F.R. � 201.6 (authorizing ACF to withhold payments to a state for failure to comply substantially with its state plan). New York also argued that there has been no allegation that New York was out of compliance with its state plan. To the extent that New York argued by these references that the existence of a separate remedy for a state's failure to comply with its plan implies that ACF may not disallow FFP in maintenance payments made out of compliance with its plan or contrary to the federal requirements for state plan contents, we reject that argument. The Board has held that recovery of unallowable costs through a disallowance (rather than a state plan noncompliance action) is appropriate where those payments have been made contrary to state plan provisions. New York State Department of Social Services, DAB No. 1358 (1992); Colorado Dept. of Social Services, DAB No. 1277 (1991), aff'd, Colorado Dept. of Social Services v. Dept. of Health and Human Services, Civil No. 92-F-653 (D. Colo. July 17, 1992) (order). That logic is equally applicable where the payments are made in violation of the Act's clear requirements for the content of state plans. The Board held in Colorado that state plan compliance actions are prospective only, and that there is no alternative other than a disallowance available to recover improper amounts claimed during prior periods. Here, New York's state IV-E plan and its social services law mirror the language of section 471(a)(20)(A) by requiring CRBCs prior to completion of the process of approval or licensing of foster parents and their homes. To the extent that New York has failed to comply with the requirements of that section, it was claiming FFP contrary to both its state plan and section 472, and a disallowance is thus an appropriate remedy.

As part of its argument that completion of CRBCs cannot be an eligibility requirement in the absence of an amendment to section 472, New York cited the Supreme Court's decision in Pennhurst State School and Hospital v. Halderman, 451 U.S. 1 (1981), that conditions on the grant of federal moneys must be imposed unambiguously. Pennhurst does not support New York's arguments. In Pennhurst, the Supreme Court addressed whether a state's acceptance of funds under the Developmentally Disabled Assistance and Bill of Rights Act, Public Law No. 94-103, 89 Stat. 486 (1975), obligated it to provide a level of services consistent with the "bill of rights" provision of the statute, at former 42 U.S.C. � 6010 (1976 ed., Supp. III). 451 U.S. at 13. That section presented Congress's findings that persons with developmental disabilities have a right to treatment in the least restrictive setting, and that states and the federal government are obligated to assure that no public funds are provided to any program that did not provide treatment appropriate to such persons' needs. In rejecting the claim that section 6010 contained judicially enforceable rights, the Court characterized section 6010 as simply a general statement of findings which did no more than express a congressional preference for certain kinds of treatment. The Court described legislation imposing conditions on a state's receipt of federal grant funds as "much in the nature of a contract" and stated that "if Congress intends to impose a condition on the grant of federal moneys, it must do so unambiguously." 451 U.S. at 17.

However, the Court distinguished section 6010 from other provisions of Public Law No. 94-103 that provided clear conditions on a state's receipt of federal funds and that are analogous to the state plan requirements in section 471(a). "When Congress intended to impose conditions on the grant of federal funds, as in �� 6005, 6009, 6011, 6012, 6063, and 6067, it proved capable of doing so in clear terms." 451 U.S. at 23. Some of these provisions paralleled section 471 in that they specified the contents of state plans for providing services to persons with developmental disabilities and required states to provide assurances that specified services were being provided. For example, 42 U.S.C. � 6011(a) required states, as a condition of receiving assistance, to provide satisfactory assurances that each program receiving federal funds from the state had a habilitation plan in effect for each developmentally disabled person receiving services under the program. As we stated above, the applicable provisions of title IV-E including sections 471(a)(20) and 472(c) do condition receipt of federal funding on the state's performance of CRBCs. Unlike "the absence of conditional language in � 6010" remarked by the Court, these sections of title IV-E require the state to perform CRBCs as a condition of receiving federal funding. 451 U.S. at 23. Thus, the disallowances here do not conflict with the Court's decision in Pennhurst.

b. The "finally approved" language in section 471(a)(20)(A) and policy considerations cited by New York do not provide a basis for overturning the disallowances.

New York argued that the reference in section 471(a)(20) to a foster parent being "finally approved" implies a period of temporary or interim approval, prior to the receipt of the results of the CRBC, during which the state should be eligible to receive FFP in foster care maintenance payments on behalf of children placed with foster parents who ultimately pass CRBCs. New York described its process for placing children with relatives (kinship placements) on an emergency basis pending completion of its process for approval of the home. New York's social services regulations and an administrative directive issued to social services commissioners outline a procedure whereby a relative home found suitable in an emergency assessment conducted within 24 hours is considered fully approved for 60 days, during which time New York must complete its usual process for approving foster homes. New York must revoke the relative foster parent's emergency approval if those requirements are not met. N.Y. Comp. Codes R. & Regs. tit. 18, � 443.7, New York Ex. 30.; New York Transmittal No. 86 ADM-33 (October 6, 1986) at 6, New York Ex. 10, �� 10,11.

New York also presented evidence of the considerable time needed to complete CRBCs and described delays resulting when criminal history records lack disposition information, are otherwise incomplete, or where cases are still pending in criminal court. New York Ex. 7. New York argued that requiring completion of CRBCs prior to placement of children would hinder New York's ability to place children in the homes of relatives, who might not have previously undergone CRBCs. New York argued that it would be forced to make potentially disruptive temporary placements while awaiting CRBCs on the relatives, a result contrary to Congress's preference for kinship placements as expressed in section 471(a)(19) of the Act, which requires states to give placement preference to relatives over non-relatives. New York also argued that having to make temporary placements pending completion of CRBCs on kinship homes will adversely affect ACF's performance reviews of its foster care system, which consider the number of times that a foster child has been moved among placements.

The time required to complete CRBCs, which clearly can vary from state to state and indeed from case to case, and the potential impact that time delays have on kinship placements do not excuse states from compliance with the statute's plain requirements on the performance of CRBCs. While section 471(a)(19), as New York noted, expresses a preference for placement of foster children with relatives over non-relatives, that section goes on to qualify that preference with the proviso that relative care givers must meet "all relevant State child protection standards," which, subsequent to the passage of ASFA, includes completion of CRBCs. Nothing in the statute supports distinguishing between kinship and non-kinship placements in administering the CRBC requirement. Moreover, states have wide latitude in developing their CRBC procedures to minimize the impact of the time for CRBCs on relative placements.

Further, what little legislative history there is on the CRBC requirement is consistent with ACF's position that FFP is available only for periods after completion of CRBCs. As New York observed, there is a dearth of legislative history on the CRBC requirement, which was added after publication of the House Report on the legislation that became ASFA, H.R. 867. H. Rep. No. 77, 105^th Cong., 1^st Sess. 1997 (April 28, 1997). However, the Congressional Record contains the following comments that Rep. Sheila Jackson-Lee made upon offering the CRBC provision as an amendment to H.R. 867, called at that time the Adoption Promotion Act of 1997:

According to the American Public Welfare Association, 450,000 [children] live in foster care at any given moment, and as many as 600,000 children live in foster care during the course of any given year. Certainly this major legislation today will help diminish that number. However, we want to make sure that these caretakers have the kinds of background checks that will ensure the safety of our children . . . This amendment, which is by State option and therefore does not incur any additional cost to this legislation, will allow States to have the option to check the backgrounds of the individuals who will be the caretakers for our most precious resources in the United States.

143 Cong. Rec. H2032 (daily ed. April 30, 1997) (emphasis added).

We recognize that "[s]tatements by individual legislators should not be given controlling effect, but when they are consistent with the statutory language and other legislative history, they provide evidence of Congress' intent." Brock v. Pierce County, 476 U.S. 253, 263 (1986). While we do not find Representative Jackson-Lee's remarks by themselves controlling, they are nonetheless relevant here because they are fully consistent with the plain meaning of the disputed provision and ACF's action in taking these disallowances. The Representative's remarks, by referring to background checks as being conducted on individuals who have not yet become caretakers, clearly reflect an understanding that completion of CRBCs would be a prerequisite for placement of children in foster care. The remarks support the denial of federal funding for periods prior to successful completion of CRBCs. Moreover, New York's policy considerations in favor of making kinship placements pending completion of CRBCs provide no basis for overruling ACF's position that FFP is not available for periods prior to successful completion of CRBCs. The straightforward reading advanced by ACF is consistent with the plain terms of the CRBC provision.

In addition to arguing that it was hindered in making emergency kinship placements, New York insisted that the disallowances should be reversed because of the difficulties and delays NY faced in implementing the CRBC requirement. However, the relevant IV-E statutory provisions do not permit an exception to the CRBC requirement for that reason. To begin with, as noted above, the CRBC requirement was solely at a state's election and the provision allowed states substantial lead time to get their procedures up and running.

New York, moreover, is clearly wrong in arguing that no child was placed at risk by its failure to perform timely CRBCs during its approval process, since absent completion of CRBCs New York would have no way of knowing whether prospective foster parents had criminal histories and thus posed the risks that Congress sought to avoid in enacting the CRBC requirement. Indeed, New York did not indicate whether it ever actually conducted and completed CRBCs for the disallowed cases, or whether the foster parents in those cases passed CRBCs within the time frame provided by New York's emergency placement procedures.

c. ACF was not required to implement the CRBC requirement through notice and comment rulemaking prior to taking the disallowances.

Because we find that the disallowances are amply supported by the language of applicable provisions of title IV-E including section 471(a)(20), we reject New York's argument that ACF, in taking the disallowances, was advancing a substantive interpretation or a legislative rule that it was required to promulgate through notice and comment rulemaking in accordance with the Administrative Procedure Act (APA). Courts agree that when an agency acts to create new law, rights, or duties in what amounts to a legislative act, it is engaged in legislative rulemaking. New York State Office of Children and Family Services, DAB No. 1701 (1999); Tennessee Dept. of Human Services, DAB No. 1619 (1997), citing White v. Shalala, 7 F.3d 296, 303 (2^d Cir. 1993). Similarly, substantive or legislative rules "grant rights, impose obligations, or produce other significant effects on private interests." Batterton v. Marshall, 648 F.2d 694, 701-02 (D.C. Cir. 1980).

Here, where ACF is enforcing the plain meaning of a statute, it has not engaged in any action that would trigger the requirements of the APA. We also find unavailing New York's argument that in the absence of regulations ACF should permit New York to apply its interpretation -- that retroactive FFP should be available from the time of placement after a foster parent has passed the CRBC -- because of ACF's policy permitting states to apply their own statutory interpretations in implementing the Temporary Assistance to Needy Families (TANF) program. ACF previously announced that, in determining whether states were subject to TANF penalties (for failure to achieve stated goals and work participation rates), it would not apply its own regulatory standards retroactively and states could apply their interpretations of the statute prior to the issuance of final regulations. 62 Fed. Reg. 62,127 (1997). New York maintained that a similar policy should apply here.

This comparison is inapposite. TANF was a new program that completely replaced the AFDC program that had been the cornerstone of federal welfare funding for many years. That ACF permitted states to apply their own interpretations of this new program pending the development of regulations in no way binds it to grant similar latitude here, where the statutory provision under consideration merely added to an ongoing program one further standard that states must meet prior to claiming funding. Requiring CRBCs for foster parents as a condition for receipt of FFP in maintenance payments on behalf of children placed with those foster parents is fully consistent with the plain meaning of the applicable provisions of title IV-E. Consequently, no notice and comment rulemaking procedures under the APA were required.

d. New York did not opt out of the CRBC requirement for the period prior to the enactment of its CRBC law.

New York also argued that the disallowance of claims covering the period of January 1, 1999 through February 11, 1999 should be reversed because New York had "opted out" of the CRBC requirement for that period, via the Governor's April 26, 1999 letter notifying ACF of "New York's election to make section 471(a)(20)(A) of the Social Security Act applicable to the State as of February 11, 1999." New York Ex. 4. As noted above, section 471(a)(20)(B) exempts from the CRBC requirement those states that elect not to have it apply to them, either through executive or legislative action. New York argued that ACF was bound to honor its election because section 471(a)(20) contains no deadline for opting out.

New York's argument ignores the deadline for implementation of the CRBC provision, contained in section 501 of ASFA. For those states that required legislation to comply with ASFA, Congress provided an effective date of "the first day of the first calendar quarter beginning after the close of the first regular session of the State legislature that begins after the date of enactment of this Act." Pub. L. No. 105-89, � 501. Although it initially selected an effective date of October 1, 1998, New York subsequently certified to ACF, and before the Board did not dispute, that its effective date for compliance with the CRBC requirement was January 1, 1999. Since New York had not opted out as of that date, it was required to conduct CRBCs until such time as it did opt out. (The New York legislature eventually did opt out, pursuant to state law effective July 1, 2000.)

The letter from the Governor did not opt out of the CRBC requirement. It did not state that New York had elected to make subparagraph (A) of section 471(a)(20) inapplicable to it. Instead, the letter attempted to choose an effective date for the CRBC requirement later than the date specified in ASFA. The attempt to select a later effective date appears to have resulted from New York's inability to enact the required legislation until February 11, 1999, after the effective date specified by ASFA and the time by which New York certified it would enact the legislation.

The effective date for the CRBC requirement that Congress provided for states requiring legislation was based solely on the timing of a state's legislative sessions. New York here would substitute that clear deadline with one based on the date that a state actually enacts the required legislation. That result is contrary to the deadline specified in the statute. Because the effective date of the CRBC provision was so patently clear from the statute, we reject New York's further argument that ACF is advancing an interpretation of the statute that required promulgation through the APA. Moreover, New York's further argument that it had no notice of ACF's "interpretation" that the state was required to either opt out of the CRBC requirement or begin conducting CRBCs by the time specified in section 501 of ASFA is inconsistent with its having requested effective dates of October 1, 1998 and then January 1, 1999.

We also are not persuaded by New York's argument that ACF acted inconsistently by holding New York to the ASFA effective date as applied to it (January 1, 1999) while promulgating regulations under ASFA that were not effective until March 27, 2000. The regulations implemented two other statutes besides ASFA and effected many changes to the foster care program besides the CRBC requirement. That ACF provided an effective date for the new regulations subsequent to their publication does not excuse compliance with a clear deadline specified in the statute.

Accordingly, we conclude that the letter from the Governor does not prevent ACF from disallowing payments made between January 1 and February 11, 1999, prior to the time that prospective foster parents with whom the children were placed passed CRBCs.

Conclusion

Based on the above discussion, we conclude that New York was not entitled to FFP in foster care and adoption assistance payments made on behalf of children in foster and adoptive homes prior to the time that New York successfully completed CRBCs on the foster and adoptive parents with whom those children were placed, and we sustain the disallowances in full except for a portion of the disallowance under Docket No. A-01-13. Within 30 days after receiving this decision, New York may show cause why any portion of that disallowance covering the period after the effective date of the regulations implementing ASFA should not be sustained on the basis of this decision. If New York fails to make any showing, any such portion of the disallowance is sustained based on the analysis in this decision.

Cecilia Sparks Ford

M. Terry Johnson

Donald F. Garrett
Presiding Board Member

1. The determinations appealed in Docket Nos. A-2000-62 and A-2000-94 also disallowed additional claims of $3,941 and $90,752, respectively, made for the quarter ended June 30, 1997 or earlier on the ground that the claims were submitted beyond the applicable two-year filing limitation. Proceedings regarding these portions of the disallowances were stayed, and this decision does not address them.