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 decision of the Division of Cost Allocation (DCA), Department of Health and Human Services, dated July 12, 2001 concerning costs claimed under title IV-E of the Social Security Act (Act). In that decision, DCA disapproved a section of a proposed cost allocation plan (CAP) for the New York City Administration for Children's Services (NYCACS). In addition, DCA instructed New York to revise its approved CAP for Social Service Districts (SSDs) outside New York City effective July 1, 2001. At issue is the Reserved Accommodations (RA) provision of the CAPs which authorizes the allocation to title IV-E of part of the cost of monthly payments to approved or certified foster care home providers to be available and properly equipped to receive children placed in their homes under emergency conditions.

DCA disapproved the proposed RA provision and directed the deletion of the approved RA provision on the grounds that RA was not necessary for the proper and efficient administration of the title IV-E state plan. Specifically, DCA asserted that RA was not an allowable administrative activity listed or closely related to an activity listed in 45 C.F.R. � 1356.60(c)(2). New York argued that the payments were costs of recruitment of foster homes under section 1356.60(c)(2)(vii) or costs of placement of the child under section 1356.60(c)(2)(iii) or an appropriate component of foster care maintenance.

As explained below, we conclude that, in the absence of any ACF definition of the regulatory term "recruitment of foster homes" or any legal authority or evidence that New York's definition in its approved CAP was outside the parameters of a reasonable definition of the regulatory term, there is no basis for us to conclude that New York's CAP contains a material defect. Therefore, DCA may not reasonably deny approval of the proposed CAP provision for NYCACS or instruct New York to amend its existing CAP for SSDs outside New York City. This decision does not preclude ACF from properly issuing a reasonable interpretation of the regulatory term that differs from New York's definition of the term as approved in its CAP. In the event that ACF does issue a definition, DCA could at that time require New York to conform its CAP prospectively to the definition and provide New York with an opportunity to appeal its decision pursuant to 45 C.F.R. Part 16.

I. Relevant Statutory and Regulatory Provisions and Board Decisions

A. The Cost Allocation Process

A state participating in the various public assistance programs under the Act, including the title IV-E program, is required to determine the amount of commonly incurred expenditures that are allocable to each program the state administers. A state is required to submit a plan for cost allocation to DCA for its approval. 45 C.F.R. � 95.507(a). This plan, or CAP, is defined as "a narrative description of the procedures that the State agency will use in identifying, measuring, and allocating all State agency costs incurred in support of all programs administered by the State agency." 45 C.F.R. � 95.505. Once approved by DCA, a CAP would generally continue in effect indefinitely if the state submits an annual statement to DCA certifying that the CAP is not outdated. 45 C.F.R. � 95.509(b).

An approved CAP is not an unalterable "contract" binding the parties, and approval of a CAP cannot make a cost allowable (or allocable) contrary to statute or regulation. Oklahoma Dept. of Human Services, DAB No. 963 (1988); see also California Dept. of Social Services, DAB No. 855 (1987); Oregon Dept. of Human Resources, DAB No. 729 (1986); and Massachusetts Dept. of Public Welfare, DAB No. 335 (1982). "Costs claimed in accordance with the plan still must be allowable under the applicable cost principles, regulations, and law and are still subject to any administrative or statutory limitations." New York State Dept. of Social Services, DAB No. 788, at 7-8 (1986).

A state may propose an amendment to a CAP at any time for DCA's approval. DCA may require a state to amend its CAP if "a material defect is discovered in the cost allocation plan by the Director, DCA or the State."⁽¹⁾ 45 C.F.R. � 95.509(a)(2). In reviewing a CAP, DCA is directed to consult with the "affected Operating Divisions." 45 C.F.R. � 95.511(a). For the title IV-E program, the Operating Division is the Administration for Children and Families (ACF).⁽²⁾

The Board has jurisdiction to review DCA's final written decision in disputes involving CAP approvals, including any determination by DCA that a previously approved CAP must be amended. 45 C.F.R. Part 16, Appendix A, Paragraph D.

B. Title IV-E

Title IV-E was originally enacted as part of the Adoption Assistance and Child Welfare Act of 1980, Public Law No. 96-272. Title IV-E presently authorizes appropriations for foster care maintenance payments to assist states in providing, "in appropriate cases, foster care . . . for children who otherwise would have been eligible for assistance" under the AFDC program.⁽³⁾ Section 470 of the Act.

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

Section 474 of the Act establishes three categories of title IV-E expenditures: foster care maintenance payments (474(a)(1)); adoption assistance payments (474(a)(2)); and "amounts . . . found necessary by the Secretary for the provision of child placement services and for the proper and efficient administration of the State plan" (474(a)(3)).

The regulations implementing title IV-E are codified at 45 C.F.R. Part 1356. Section 1356.60(c) concerns allowable administrative costs. Subparagraph (1) specifies certain costs, such as determination and redetermination of eligibility, which are "directly related only to the administration of the foster care program under this part" and which "may not be claimed under any other section or Federal program." Subparagraph (2) lists "examples of allowable administrative costs necessary for the administration of the foster care program" such as placement of the child; development of the case plan; recruitment and licensing of foster homes and institutions; and rate setting.⁽⁴⁾ Subparagraph (3) provides that "[a]llowable administrative costs do not include the costs of social services... which provide counseling or treatment to ameliorate or remedy personal problems, behaviors or home conditions." The Board has held that administrative activities are allowable to the extent that they are listed in 45 C.F.R. � 1356.60(c) or closely related to a listed activity and not prohibited by section 1356.60(c)(3) and are allocated to title IV-E pursuant to an approved CAP. Illinois Dept. of Children and Family Services, DAB No. 1530, at 27 (1995); New York State Dept. of Social Services, DAB No. 1428, at 10 (1993), aff'd at New York v. Shalala, 1998 WL 150955 (S.D. N.Y. Apr. 1, 1998).

II. Factual Background

On March 27, 1997, New York submitted a proposed CAP for NYCACS. New York Ex. 2. The plan was submitted pursuant to 45 C.F.R. � 95.509(a)(1) due to a reorganization of the New York City Human Resources Administration that separated NYCACS into an independent agency. The reorganization required the submission of a separate plan for NYCACS. DCA Ex. B, at 1-2.

The RA provision was included in the proposed CAP. It was described as follows:

These expenditures are made to assure that adequate Foster Care accommodations will be available for the immediate reception and proper care of children for whom the Commissioner has responsibility to provide Foster Care. These costs are usually direct charged on the Schedule D-2 to Title IV-E Foster Care and Non-Title IV-E Foster Care proportionately based on the distribution Percentage for these two categories from the Random Moment Study.

New York Ex. 2, at 24.

While this was a new provision for the CAP for NYCACS, it was copied from former Department of Social Services Bulletin 143-b, the approved CAP for SSDs outside New York City. New York Ex. 3, � 5. The RA provision was "an approved cost and included in Bulletin 143-b at least since October 1982 when New York first implemented the Title IV-E foster care and adoption program as the successor to the foster care program under the former Title IV-A of the Social Security Act." New York Ex. 3, � 5. DCA conceded that RA provisions were approved under prior CAPs. DCA Br. at 34-35. New York asserted, and DCA did not deny, that DCA and ACF were aware that New York claimed title IV-E reimbursement under the RA provision. See New York Ex. 5.

New York's RA payments are governed by state regulations. Title 18 NYCRR 609.5(d) provides:

Reserved Accommodations. Reimbursement is available for payments made to certified foster boarding homes for assuring that adequate accommodations will be available for immediate reception and proper care of children for whom the Commissioner has responsibility to provide foster care only when:

(1) payments for reserved accommodations are based upon a rate that does not exceed 50 percent of the rate of payment when a child is in the home;

(2) the total number of reserved accommodations does not exceed five percent of the total number of certified boarding home beds in use on the last day of the previous month or other period reported in accordance with department requirements; and

(3) the home is not reimbursed solely for reserved accommodations without being utilized for the care of a foster child for a period in excess of three consecutive months.

Presently, only six of New York's 56 SSDs use RA. They are Monroe, Onondaga, Dutchess, Sullivan, Nassau and Suffolk. As with foster care maintenance payments, the SSDs establish their own RA payment rates so that the amounts paid for RA vary among the SSDs. See 18 NYCRR �� 427.6; 609.5(d).

An official from each county filed an affidavit as to his or her opinion as to the impact and operation of RA in his or her county. New York Exs. 8, 10-12, and 14-15. For example, an administrator from Suffolk County gave the following testimony as to the operation of RA in Suffolk County:

It is the experience of the Suffolk County Department of Social Services that the payment of the modest sum to the emergency home has had a profound and positive effect on the recruitment of foster care homes willing to serve as Reserve Accommodations available for the placement of children at any time and without significant advance notice in a timely manner and in a safe and suitable environment.

Before the recent implementation of the Reserve Accommodation procedures, we often found that we did not have a sufficient number of beds to meet the needs of children who had to be removed from their homes under emergency circumstances. Such circumstances arise from a report of child abuse or neglect and where the investigation determines that the child or children must be immediately removed from their homes in advance of a court order, and regardless of the time of day or night. Prior to the use of the Reserve Accommodations procedure, when such emergency removal of children occurred, we would canvas our list of approved regular foster care homes in search of a home that would accept the child or children on short notice and generally on a temporary basis. It is very difficult for a foster care family to be prepared because of the wide range of ages, and needs presented by the children. Appropriate space in the home must be available to accommodate children of either or both genders. Prior to the implementation of the Reserve Accommodations policy, there were many occasions where we found it necessary to complete a large number of emergency calls to homes before a suitable and willing placement could be located. Often the foster care parent could not be located or available due to their own work or employment obligations. Generally, the foster care home would be willing to accept the child or children only a day or two, thus requiring the child to experience the trauma of a second placement. While the efforts to locate an emergency placement were occurring the child or children were required to wait in our office building. Our building is not equipped with sleeping, bathing or play area accommodations. We simply had no other place for the child or children who were required for their own safety to be taken from their home to wait while we located a placement home.

The institution of Reserve Accommodations procedures has greatly improved conditions for children who are the subject of emergency removal. The waiting time in our office has been eliminated. The foster care home that serves as a Reserve Accommodation is required to be available twenty-four hours a day, seven days a week. At least one adult foster parent must be available in the home, thus eliminating employment for that individual. The Reserve Accommodation foster care parent must have either cell telephone or beeper service so that they can be contacted at any time. The Reserve Accommodations foster care home is required to accept any child that we need to place immediately. There are a limited number of reasons that excuse this immediate placement such as illness.

The Reserve Accommodation foster care home must be prepared in advance to meet the needs of a child or children of any age. Suitable space must be available as well as consumable supplies such as diapers, food, bedding, linens, towels, extra clothing and underwear. The payment that we make to the Reserve Accommodation home is used to permit the home to be properly prepared in advance of the placement of the child.

In my opinion the Reserve Accommodation procedure and the modest payment is essential to the placement of children who must be removed from their home under emergency circumstances into a safe and suitable home.

New York Ex. 11, �� 5-9.

After conferring with ACF, DCA disapproved that portion of the proposed CAP that allocated RA to the title IV-E program. DCA letter dated July 12, 2001, DCA Ex. B, at 1-2. DCA determined that RA payments did not constitute an allowable title IV-E administrative expense under 45 C.F.R. � 1356.60(c). DCA wrote:

It is not an expenditure necessary for the proper and efficient administration of the Title IV-E State plan. The examples of allowable administrative costs cited in 45 C.F.R. � 1356.60(c)(2) do not cover payments for Reserved Accommodations for Foster Care or any closely related items of cost.

Id. DCA also noted that the costs were not eligible for reimbursement as title IV-E maintenance assistance payments. Id.

DCA directed New York to revise both the proposed NYCACS CAP and the existing CAP for other SSDs set forth in Volume 3, Chapter 9 of the New York State Fiscal Manual (which had replaced Bulletin 143-b) to no longer allocate the costs of RA for foster care to title IV-E effective July 1, 2001. Id. All other sections of the proposed NYCACS CAP were approved. Id.

New York appealed DCA's determination to the Board.

Based on the record before us, we conclude that DCA cannot reasonably direct New York to amend its present CAP on the grounds that DCA does not consider RA payments to be allowable title IV-E administrative costs. Similarly, it is unreasonable for DCA to refuse to allow New York to adopt for New York City a RA CAP provision which conforms to its present CAP for SSDs outside New York City.

DCA took the position that RA was not an allowable IV-E expenditure because it was not closely related to a listed activity under 1356.60(c)(2) and was not a proper component of a title IV-E maintenance payment. DCA asserted that New York had the burden of demonstrating that DCA's determination was unreasonable and that New York's interpretation of allowable administrative costs was proper.

New York argued that RA payments were costs of recruitment of foster care homes under section 1356.60(c)(2)(vii) or costs of placement of the child under section 1356.60(c)(2)(iii) or an appropriate component of maintenance.⁽⁵⁾ New York explained that RA homes fulfilled needs not met by regular foster homes by enabling SSDs to more successfully place children in foster care on an emergency basis. As described by New York, the differences between RA homes and regular foster care homes included:

Regular homes may request a limited type of child or limited number, limited needs, age or range of ages. RA homes must be prepared to receive and care for one or more children presenting a wide and disparate range of circumstances, characteristics, needs or ages of children in crisis.

RA homes, because they are equipped to take a range of ages and number of children, allow SSDs to more easily keep siblings together.

RA homes must be available and properly equipped in advance to take children any hour of the day or night while regular homes do not have to respond to the SSDs emergency needs.

Children removed under emergency conditions often are more needy than other children. Emergency removal can exacerbate medical problems, emotional problems. These children are often more challenging and require more intensive and experienced care and RA homes are better equipped to provide this care.

Placement in RA homes allows SSDs time for planning and prevents unnecessary placements of children in a number of different homes.

See New York Ex. 7.

County personnel from each of the six counties which rely on RA attested that they had a difficult time securing homes to take children on an emergency basis and RA payments enabled them to recruit and maintain appropriate placements for such children. State Exs. 8, 10-12, and 14-15.

New York relied on New Jersey Dept. of Human Services, DAB No. 1801 (2001), which dealt with the allowability, under an approved CAP, of "Advocacy/Brokerage" services as administrative costs under title IV-E. DCA instructed New Jersey to amend its CAP to eliminate claiming title IV-E for Advocacy/Brokerage. New Jersey argued that such costs were allowable as "case management and supervision" under section 1356.60(c)(2)(vi). In New Jersey, we concluded that, under 45 C.F.R. � 95.509(a)(2), when a cost is clearly set forth in an approved CAP, there must be a basis for concluding that the allowance of the cost under the plan constitutes a material defect in the plan in order to require the plan to be amended. In New Jersey, we determined that in the absence of any definition of the regulatory terms "case management and supervision" or any evidence or legal authority that New Jersey's definition of the terms as including Advocacy/Brokerage was a wholly unreasonable definition of the regulatory terms, there was no basis for us to conclude there was a material defect in the plan. New York argued that this case was similar to New Jersey in that New York was relying on an approved CAP and DCA had produced no evidence or legal authority to support a finding that its CAP contained a material defect.

For the following reasons, we conclude that New York reasonably concluded that RA costs were allowable as recruitment costs and that the record does not support a finding that the provision for RA payments in the New York CAP constitutes a material defect.

First, even though this case involves a cost allocation plan, the issue presented is one concerning allowability, not allocability. ACF, rather than DCA, has the primary responsibility for determining whether a cost is allowable as a title IV-E administrative expense. Therefore, we necessarily first look to ACF's construction of title IV-E and section 1356.60(c)(2)(vii).⁽⁶⁾

In considering ACF's construction of title IV-E, we conclude that ACF has determined that title IV-E maintenance payments may be used to fund the higher costs associated with securing emergency care for foster children. Specifically, New York's title IV-E state plan allows for the payment of enhanced maintenance payments to homes which are certified under its regulations as "emergency foster family boarding homes."⁽⁷⁾ New York Ex. 18, at � 5, p. 2; 18 NYCRR Part 446. This enhanced maintenance payment rate serves as an inducement to foster parents to become certified as emergency homes and address the additional problems presented by emergency placements. If title IV-E can fund financial incentives for emergency placements in the context of maintenance payments, it is not unreasonable to view administrative costs serving the same function as "necessary for the proper and efficient administration of the State plan."

Second, as in New Jersey where we found that there was no basis to conclude that New Jersey's activities were outside the parameters of a reasonable interpretation of the terms "case management and supervision," in this case we conclude that there is no basis to conclude that New York's construction of "recruitment . . . of foster homes" is outside the parameters of a reasonable interpretation of that term. We base this conclusion on the following factors.

While we have no reason to conclude that ACF could not adopt DCA's construction of the term "recruitment," it has not done so.

Nor is there anything in the record which would indicate that DCA's assertion that recruitment only includes activities such as advertising is the considered judgment of the agency. The only policy guidance DCA submitted in support of its position as to the scope of recruitment was a discussion contained in a joint publication by ACF and the Office of Civil Rights (OCR) concerning compliance with the United States Constitution and Civil Rights Act in recruiting adoptive and foster homes under the Multiethnic Placement Act (MEPA). DCA asserted that that guidance demonstrated that recruitment in the context of foster care was "commonly understood to mean activities intended to draw new foster families into the program such as advertising and community outreach and education." DCA Br. at 23. However, while the guidance did not include a reserved accommodations mechanism, the discussion did indicate that ACF regarded recruitment as a wide-ranging endeavor which could employ diverse strategies.⁽⁸⁾ Further, in MEPA, Congress was primarily concerned with the recruiting of suitable adoptive homes (see 60 Fed. Reg. at 20273) for which a reserved accommodations mechanism would not have been appropriate.

We reject this argument. Recruitment may certainly occur within an established group for members for a different group. For example, the Army may recruit among its general units for membership in its special forces units. Moreover, the SSDs' recruitment of experienced foster parents is constructive in that experienced foster parents are better able to address the increased needs of children under emergency circumstances.

Absent some authority from ACF limiting recruitment to advertising or community outreach, the fact that these are "fees" which are paid to foster care providers is not dispositive. The NYCACS approved CAP also provides for the allocation to title IV-E of payments of "finders fees" to foster parents who recruit other homes which are eventually certified.⁽⁹⁾ Thus, it does not appear that recruitment costs are necessarily limited to money paid for what is typically regarded as advertising and community outreach.

We therefore conclude that the scope of what could constitute "recruitment" is not self-evident nor has it been described by ACF. In the context of an approved nineteen-year-old CAP which expressly provides for reserved accommodations, it is unreasonable for DCA to assert that RA could not constitute "recruitment" without clarification from ACF as to the scope of that term.

Third, as in New Jersey, New York documented a longstanding practice of claiming RA as IV-E administrative costs under its approved CAP for SSDs outside New York City. New York Ex. 3. Also, as in New Jersey, DCA never alleged that its prior approval of the CAP provision was a result of mistake or oversight. While there are circumstances in which DCA or an Operating Division could be reasonably unaware of the full effect of a plan provision (see Oregon, DAB No. 729), this does not appear to be one of those circumstances.

Fourth, as in New Jersey, New York's activities are consistent with a title IV-E programmatic goal. In New Jersey, the state's activity was part of its effort to prevent placement in foster care. Here, RA payments are designed to secure safe and appropriate homes for children who must be placed in foster care on an emergency basis.

For the preceding reasons, we find that New York's interpretation of section 1356.60(c)(2)(vii) is not outside the parameters of a reasonable definition of the term "recruitment of foster homes." While DCA's interpretation of recruitment may also be reasonable, in the absence of a prior policy statement setting forth this interpretation and in the absence of any showing that this interpretation is the considered judgment of ACF, there is no basis for the Board to determine that there is a material defect in the CAP and consequently no basis to deny approval of the proposed CAP provision for NYCACS or instruct New York to amend its existing CAP for SSDs outside New York City.

DCA also argued that New York's "payment of money to foster parents to perform a specific service in the absence of a child in the home raises troubling public policy concerns." DCA Br. at 27. DCA cited the congressional concern that foster care "not serve as a mechanism for individuals to earn money in exchange for caring for a child. H.R. Conf. Rep. 96-900 at 49, 1980 U.S.C.C.A.N. at 1570; Child Welfare Policy Program Manual, Section 8.3B.1, 'Title IV-E Foster Care Maintenance Payments Program, Payments, Allowable Costs,' at 2." Id. at 28. DCA asserted that the RA provision "exposes children in foster care to the risk of being placed with individuals who are primarily motivated by their own monetary concerns" and subverts title IV-E's "primary purpose, namely to serve children." Id. While we understand that it would be theoretically possible for foster care compensation to be so lucrative as to attract people who are more interested in the compensation than the care, there is nothing in the record to indicate that the RA mechanism poses a danger dissimilar from any other remunerative mechanism. The tension faced by any SSD is to offer sufficient compensation to enable caring and interested people to participate in the care of foster children while not attracting people who simply want the RA payments. The six administrators of the SSDs in question stated in their professional judgment that the RA payments enabled them to attract and maintain appropriate homes that will take often difficult children in difficult circumstances. The record does not contain any evidence disputing the opinions of these six administrators or any evaluations done by ACF or opinions from ACF administrators as to detrimental considerations presented by RA-like payments.⁽¹⁰⁾

DCA also relied on our decision in New York State Dept. of Social Services, DAB No. 1588 (1996). In that case, the Board upheld ACF's disallowance of title IV-E claims for the costs of nurses assigned to five field offices of the New York City Child Welfare Administration (CWA) and four CWA congregate care facilities. DCA primarily cited this case as relevant to the consideration of whether RA payments were allowable as expenses of "placement of the child" pursuant to section 1356.60(c)(ii) which we do not address. However, as to that case, DCA also pointed out that the Board found that the fact New York City was the only New York SSD to use nurses in this manner indicated that they were not a necessary component in placing children or in developing case plans. DCA argued that the fact only six of 56 SSDs make RA payments similarly indicates that RA payments are also not necessary expenditures. We agree with DCA that limited use of an activity may indicate that the activity is not necessary for the administration of the program. However, in this case, New York asserted that the limited use reflected the unique circumstances and needs of individual SSDs. This is substantially different from the situation presented in DAB No. 1588. There New York City was incurring the nurses' costs pursuant to a court-approved settlement of a suit brought to address deficiencies in the foster care placement system and the Board concluded that the presence of the nurses was attributable to New York City's failure to provide suitable placements for children. In contrast, RA payments are one mechanism by which an SSD, based on the circumstances of that SSD, can recruit and retain homes in which to make suitable placements.

Also in relation to its placement arguments, DCA asserted New York had failed to demonstrate that these costs are incurred for children who are either in foster care and eligible for title IV-E or candidates for title IV-E. However, administrative costs under title IV-E do not necessarily have to be linked to a specific child as long as they are properly allocated. Recruitment of foster care homes is specifically identified as a cost that would not be associated with a specific child and should be allocated. ACF Policy Manual, � 8.1C, New York Ex. 19. New York identified the portion of its CAP which allocates these expenses between title IV-E and other programs. New York Ex. 3, � 4, New York Ex. 6.

Conclusion

For the preceding reasons, we conclude that DCA may not reasonably deny approval of the RA provision in the proposed NYCACS CAP or direct New York to delete the RA provision in its existing CAP for other SSDs.

Donald F. Garrett

Marc R. Hillson

M. Terry Johnson
Presiding Board Member

1. Under section 95.509(a), DCA may also require a State to amend under the following circumstances, none of which were alleged here:

(1) The procedures shown in the existing cost allocation plan become outdated because of organizational changes, changes in Federal law or regulations, or significant changes in program levels, affecting the validity of the approved cost allocation procedures.

* * *
(3) The State plan for public assistance programs is amended so as to affect the allocation of costs.
(4) Other changes occur which make the allocation basis or procedures in the approved cost allocation plan invalid.

2. Since the Secretary has delegated to ACF the responsibility for making the initial determination of "amounts . . . found necessary by the Secretary for the provision of child placement services and for the proper and efficient administration of the State plan" (Section 474(a)(3) of the Act), determinations of allowability must be made first by ACF.

3. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996, Public Law No. 104-193, repealed the title IV-A program and amended title IV-E so that it refers to certain provisions of former title IV-A as they were in effect on June 1, 1995.

4. Section (2) sets forth the following activities as "examples of allowable administrative costs necessary for the administration of the foster care program":

(i) Referral to services;
(ii) Preparation for and participation in judicial determinations;
(iii) Placement of the child;
(iv) Development of the case plan;
(v) Case reviews;
(vi) Case management and supervision;
(vii) Recruitment and licensing of foster homes and institutions;
(viii) Rate setting; and
(ix) A proportionate share of related agency overhead.
(x) Costs related to data collection and reporting.

5. New York also argued that the claims were allowable under the general provision of 45 C.F.R. � 1356.60(c) as an expenditure necessary for the administration of the state plan. However, in prior decisions, the Board has held that to be allowable an activity must be listed in section 1356.60(c) or closely related to a listed item. Dept. of Social Services, DAB No. 1428 (1993), at 10; and Illinois Dept. of Children and Family Services, DAB No. 1530 (1995), at 26.

Finally, New York argued that RA constituted a title IV-E expense under 45 C.F.R. � 1356.60(c)(1). That section provides reimbursement for administrative costs, such as the costs of determination and redetermination of eligibility, "directly related only to the administration of the foster care program under this part." However, RA payments secured placements for title IV-E recipients and for children who do not qualify for title IV-E maintenance payments. Therefore, RA payments are related both to "the administration of the foster care program under this part," i.e., the title IV-E, and New York's state-only foster care program and do not qualify under section 1356.60(c)(1) as title IV-E administrative expenses.

6. New York asserted that these expenses could be considered placement activities under section 1356.60(c)(2)(iii). Since we conclude that these expenses could reasonably be encompassed under section 1356.60(c)(2)(vii) as recruitment, we do not address New York's position that RA payments could also be considered costs of placement. Similarly, we do not address the question of whether RA payments could reasonably be considered maintenance payments.

7. For example, in Suffolk County, the foster care monthly basic rate for a child under 5 is $440 while the monthly emergency rate is $876.

Because DCA took the position that RA payments were not an administrative cost, it did not appear to consider the relationship between emergency homes and RA homes or whether the use of two mechanisms to secure emergency accommodations might be duplicative and unnecessary. Nothing in this decision precludes such an inquiry.

8. ACF and OCR wrote:

To meet MEPA's diligent efforts requirements, an agency should have a comprehensive recruitment plan that includes:
- A description of the characteristics of waiting children;
- Specific strategies to reach all parts of the community;
- Diverse methods of disseminating both general and child specific information;
- Strategies for assuring that all prospective parents have access to the home study process, including location and hours of services that facilitate access by all members of the community;
- Strategies for training staff to work with diverse cultural, racial, and economic communities;
- Strategies for dealing with linguistic barriers;
- Non-discriminatory fee structures; and
- Procedures for a timely search for prospective parents for a waiting child, including the use of exchanges and other interagency efforts, provided that such procedures must insure that placement of a child in an appropriate household is not delayed by the search for a same race or ethnic placement.

60 Fed. Reg. 20,272, 20,274-20,275 (1995).

9. The NYCACS Cost Allocation Plan provides:

ACS may pay finders fees to foster parents who recruit other homes which are eventually certified. The fee is up to $200 for each new certified home. These costs would also be direct charged on Schedule D-2 in the same manner as the reserved accommodations are charged.

New York Ex. 2, at 24.

10. The fact that such fees are authorized by the CAP does not preclude federal review as to the reasonable use of the fees. For example, upon further investigation and review, DCA and ACF may conclude that the payment ceiling is too high or the number of beds allowed is too great or the actual use by SSDs is excessive. Presumably, both New York and the individual SSDs have an interest in not paying for more RA than is needed since they must fund 50 percent of the cost.