Department of Health and Human Services DEPARTMENTAL APPEALS BOARD Appellate Division |
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IN THE CASE OF | |
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DATE: October 26, 2005 |
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Docket No. A-04-56
Decision No. 2001 |
DECISION | |
DECISION The Indiana Family and Social Services Administration (Indiana) appeals a determination by the Administration for Children and Families (ACF), dated November 14, 2003. ACF determined that Indiana is subject to a penalty for failure to demonstrate that, for fiscal years (FYs) 2001 and 2002, its child support enforcement program under title IV-D of the Social Security Act (Act) met performance standards relating to the establishment of paternity of children who were born out of wedlock. The penalty is $1,447,594, one percent of the amount of federal funding that Indiana received for FY 2001 under the Temporary Assistance for Needy Families program (TANF) established by title IV-A of the Act, and was imposed by reducing the TANF funding that Indiana received during FY 2004. For the reasons discussed below, we sustain ACF's determination that Indiana is subject to a penalty. The Board previously addressed many of the issues presented in this appeal in Alabama Dept. of Human Resources, et al., DAB No. 1989 (2005). The Board there upheld ACF's determinations, also announced in letters dated November 14, 2003, that nine States were subject to penalties for failure to demonstrate that their child support enforcement programs met performance standards during FYs 2001 and 2002. Based on the analysis in DAB No. 1989, the Board also upheld ACF's determinations that two other states were subject to penalties for FYs 2001 and 2002, in Puerto Rico Dept. of the Family, DAB No. 1993 (2005) and Nevada Dept. of Human Resources, DAB No. 1995 (2005). Our decision summarizes and adopts our analysis in DAB No. 1989, and explains why additional issues Indiana raises do not provide a basis for overturning the penalty. Indiana is properly subject [Page 2] to a penalty because it failed to submit reliable data needed to calculate its performance for FYs 2001 and 2002. A state's obligation to submit reliable data needed to calculate performance is an important aspect of the IV-D system, which imposes penalties for unreliable data without regard to whether the state met the required level of performance. Thus, Indiana's arguments (which Indiana did not substantiate in any event) that the unreliability of its data was due to data entry errors that did not evidence any failure to provide IV-D services provide no basis to reverse the penalty, and do not entitle Indiana to have the unreliability excused, pursuant to ACF's authority in certain circumstances to disregard data unreliability that is technical in nature. Moreover, contrary to what Indiana argues, ACF complied with applicable notice requirements. Proposed statutory changes that would have changed the notice requirements were never enacted, so we and ACF must apply the provisions as in effect. We must also apply regulations prescribing the methods for determining performance and data reliability and initiating the penalty process. Indiana has failed to demonstrate that these provisions are not applicable and do not support the penalty here. Summary of the applicable law Title IV-A of the Act (sections 401-419; 42 U.S.C. �� 601-619), "Block Grants to States for Temporary Assistance for Needy Families" (the TANF program), provides grants to eligible states that have approved programs for providing assistance to needy families with children, and for providing their parents with job preparation, work and support services to enable them to leave the program and become self-sufficient. Sections 401, 402 of the Act. To receive TANF funds, a state must operate a child support enforcement program consistent with title IV-D of the Act. Section 402(a)(2) of the Act. Title IV-D (sections 451-469B; 42 U.S.C. �� 651-669b) is a cooperative federal-state program that aims at increasing the effectiveness of child support collection by such measures as locating absent parents, establishing paternity, obtaining child and spousal support, and assuring that assistance in obtaining support is available to all children for whom such assistance is requested. Maryland Dept. of Human Resources, DAB No. 1875 (2003), citing section 451 of the Act. States operate their child support enforcement programs subject to oversight by ACF's Office of Child Support Enforcement (OCSE). We refer in this decision to ACF as the respondent federal agency; the IV-D regulations refer to OCSE. Titles IV-A and IV-D and regulations at 45 C.F.R. Part 305 create a system of incentives and penalties under which federal TANF [Page 3] funds are awarded to or withheld from states based on scores they achieve on several IV-D performance measures. The performance measure at issue here is called the "paternity establishment percentage" (PEP). It measures a state's performance at establishing the paternity of children born out of wedlock. (There are five performance measures used to award incentives, of which three are also used to impose penalties.) ACF determines a state's level of performance based on data that the state submits, using a form prescribed by ACF. States are assessed on their performances for each federal fiscal year (FY or FFY), which runs from October 1 through September 30. 45 C.F.R. � 305.32. States must submit complete and reliable performance data for each fiscal year by December 31 following the end of the fiscal year, and only data submitted by that date will be used to determine the state's performance for that fiscal year. 45 C.F.R. � 305.32(f). ACF conducts data reliability audits, or DRAs, to determine if the data that the state submits for a fiscal year are complete and reliable; the data must meet a 95% standard of reliability. 45 C.F.R. � 305.1(i). (For convenience, in this decision we refer to the complete and reliable data that states must submit simply as reliable data.) ACF may disregard the unreliability of data and treat the data as adequate if it determines that the unreliability is of a technical nature that does not affect calculation of the state's IV-D performance measures. Section 409(a)(8)(C) of the Act; 45 C.F.R. � 305.62. In December 2001, ACF used that authority to accept all unreliable FY 2000 data, which was submitted by 23 states, including Indiana. Indiana Appeal (App.) File at 20-22. As we concluded in DAB No. 1989, the Act and regulations provide for imposing a penalty on a state that, for two consecutive years, fails to demonstrate with reliable data that it achieved the required PEP. Thus, a state is subject to a penalty if, for two consecutive years, it fails either to achieve the required PEP, or to submit reliable data needed to calculate its PEP. (A third basis for a penalty, in addition to failing a IV-D penalty performance measure such as the PEP or submitting unreliable data, is failure to substantially comply with the requirements of the IV-D program. That basis is not at issue here, where the penalty is based on the unreliability of Indiana's PEP data.) ACF imposed the penalty against Indiana pursuant to section 409 of the Act, titled "Penalties." Section 409(a) provides for TANF penalties against states, for some 14 categories of noncompliance with various requirements imposed by title IV, mostly relating to [Page 4] a state's TANF program under title IV-A. (1) At issue here is section 409(a)(8) of the Act, which imposes the IV-D performance penalties. Section 409(a)(8) provides in relevant part as follows:
[Page 5] For some other violations listed at section 409(a), the Secretary may not impose a penalty if he finds that there was reasonable cause for the violation, and must afford a state the opportunity to enter into a corrective compliance plan prior to imposing a penalty. Notably, section 409 withholds those ameliorative measures from the title IV-D penalties at issue here. Sections 409(b),(c) of the Act. The regulation implementing the IV-D penalty provisions refers to failure to achieve the paternity establishment percentage as well as two other penalty performance measures created by the regulations. These measures, not at issue here, assess a state's performance at establishing orders of support and at collecting support in IV-D cases. The regulation provides in relevant part as follows:
45 C.F.R. � 305.61. In the preamble to the Part 305 regulations, which was forwarded to the states as part of Action Transmittal OCSE-AT-01-01, ACF referred to the first of the two consecutive years of failure as the performance year. 65 Fed. Reg. 82,178, 82,186, 82,187, 87,189 (Dec. 27, 2000). In this appeal the performance year was FY 2001, and the corrective action year was FY 2002. The penalties consist of reductions in the annual TANF funding that a state receives under title IV-A of the Act, called the [Page 6] State Family Assistance Grant (SFAG). (The SFAG is the amount of the basic block grant allocated to each eligible state under the formula at section 403(a)(1) of the Act. 45 C.F.R. � 260.30.) The penalties range from one to two percent of a state's SFAG for the first finding of two consecutive years of failure, from two to three percent for the second consecutive finding, and from three to five percent for each subsequent consecutive finding. Section 409(a)(8)(B) of the Act; 45 C.F.R. � 305.61(c). A state must expend additional state funds to replace any reduction in the SFAG resulting from penalties. Section 409(a)(12) of the Act; 45 C.F.R. � 262.1(e). A state may appeal a decision imposing penalties to the Board. 45 C.F.R. �� 262.7, 305.66(b)(2). The performance measure at issue here, the paternity establishment percentage, is essentially the percentage of children born out of wedlock for whom paternity has been established or acknowledged; it is "commonly known as the PEP." 45 C.F.R. � 305.2(a)(1). The Act and the regulations at Part 305 establish two versions of the PEP, one based on children in a state's IV-D caseload, the other based on all children in the state. States may select either measure and may change their selection from year to year. Id.; section 452(g)(1) of the Act. Indiana selected the "IV-D PEP," which is based on the caseload of a state's IV-D program and is defined as follows:
Section 452(g)(2)(A) of the Act. The regulation expresses the IV-D PEP with the following ratio:
45 C.F.R. � 305.2(a)(1). A state must maintain a PEP of at least 90% to avoid a penalty. A state with a PEP lower than 90% may still avoid a penalty if its PEP increased over the PEP for the previous year by the percentages specified in the following table from the regulation: ----------------------------------------------------------------------------
PEP Increase required Penalty FOR FIRST FAILURE if ----------------------------------------------------------------------------
90% or more ........... None ................ No Penalty. 45 C.F.R. � 305.40(a)(1), Table 4. Basis for the penalty ACF notified Indiana that it is subject to a penalty in a letter from the Assistant Secretary for Children and Families dated November 14, 2003. The letter stated that the PEP data that Indiana submitted for FYs 2001 and 2002 failed to meet the data reliability standard, and that Indiana was thus subject to a reduction in TANF funding of $1,447,594, one percent of its [Page 8] adjusted SFAG for the TANF program for FY 2001. (2) Indiana App. File at 53-55. The DRA reports of ACF's audits of Indiana's data submissions for FYs 2001 and 2002 show that ACF had found Indiana's data to be unreliable because data on the number of children in Indiana's IV-D caseload who were born out of wedlock or whose paternities had been established were missing some children who should have been included, and included others who were born in wedlock or whose paternities had not been established. Indiana App. File at 23-34, 42-52. ACF subsequently informed Indiana that the funding reductions would begin during 2004, because states had not been notified of their penalties until after the start of FY 2004. Indiana App. File at 57-58. |
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ANALYSIS | |
Arguments and analysis Indiana does not dispute ACF's determination that it submitted unreliable data for the PEP performance measure for FYs 2001 and 2002, the basis for the determination that it is subject to a penalty. Instead, Indiana argues that ACF failed to notify Indiana of its unreliable data as required by the regulations, depriving Indiana of the full corrective action year to which it was entitled before being subject to a penalty. Indiana also argues that ACF should have accepted Indiana's data pursuant to its authority to accept unreliable data if it finds that the unreliability is of a technical nature that does not affect calculation of a state's performance measures, and that it is unfair to subject Indiana to a penalty solely because its data failed to satisfy the 95% standard for data reliability. Indiana asserts that its data errors did not evidence any failure to deliver IV-D services or errors in case records supporting its computerized data, and that its efforts to correct and improve its IV-D data have increased the overall reliability of its IV-D data from FY 2000 to FY 2002.
Indiana argues that the penalty should be reversed because ACF failed to afford Indiana the automatic one-year corrective action [Page 9] period that the regulations provide for states to correct unreliable data or deficient performance before being subject to a penalty. Indiana argues that ACF's November 14, 2003 letter informing Indiana of the penalty was deficient because it did not permit Indiana the opportunity to enter into a corrective action plan, or to receive direction on corrective processes from ACF, before the imposition of a penalty. Indiana also notes that ACF did not issue its final DRA report on the reliability of Indiana's data for FY 2001 until July 30, 2002, and that Indiana did not have a full year to take corrective action before having to submit data for FY 2002. Indiana argues that it is fundamentally unfair and a deprivation of due process to impose a penalty on Indiana when these statutory and regulatory conditions precedent to the imposition of a penalty have not been satisfied. Indiana notes that the applicable regulations are silent on the matter of timeliness of notice letters, and points out that for other TANF penalties at section 409(a)(8), there are a series of steps prior to a penalty, including the submission of a corrective compliance plan. Indiana Brief (Br.) at 9. Indiana argues that it should have been provided a similar opportunity here. The regulation outlining when a state is subject to a penalty, and the notice ACF must furnish, provides as follows:
45 C.F.R. � 305.66 (emphasis added). In its brief, Indiana cited 45 C.F.R. � 305.42, which phased in the IV-D performance penalties and also refers to an automatic corrective action year:
Indiana's arguments about the notice regulation are similar to those that the States made in DAB No. 1989. There, we held that the law and regulations do not require notice of a state's IV-D data or performance failures prior to the beginning of the corrective action year, and that the penalty process is self-implementing in that the corrective action year automatically follows the performance year without notice from ACF. We further held that the structure of the system established by section 409 of the Act and the Part 305 regulations necessarily does not permit states a full year following notice of their performance-year failures before the imposition of penalties upon the end of the corrective action year. We concluded that these provisions place on a state the ultimate responsibility for monitoring its own performance, and that the States were aware of their own performances and moreover had been informed of their [Page 11] data reliability problems during FY 2002, the corrective action year. Our reasons for so holding and for determining that Indiana's arguments lack merit as well are as follows:
See DAB No. 1989, at 11-26. For the above reasons, we conclude that ACF complied with the applicable notice requirements in determining that Indiana is subject to a penalty.
Indiana next argues that it should not suffer a penalty solely because its PEP data failed to meet the 95% standard of reliability. Indiana does not dispute ACF's findings that Indiana's PEP data for FYs 2001 and 2002 failed to meet that standard and were thus not reliable. Instead, Indiana argues that ACF should disregard the unreliability of its data because it resulted from errors in its computerized data that were not indicative of errors in the underlying case records or of any failure to deliver needed IV-D services. Indiana also argues that the penalty is unfair in light of these aspects of the data errors, the extent and success of Indiana's efforts to improve its data, and the budgetary impact of a penalty. These arguments do not provide a basis to reverse ACF's determination that Indiana is subject to a penalty.
Indiana selected the IV-D PEP measure, which measures a state's performance at establishing the paternity of children in its IV-D caseload. States using the IV-D PEP report data yearly at lines 5 and 6 of form OCSE-157, the Child Support Enforcement Annual Data Report, pursuant to the requirement that they submit data following instructions and formats as required by HHS. 45 C.F.R. � 305.32(f). At line 5, states report the number of children in IV-D cases open at the end of the fiscal year who were born out of wedlock. At line 6, they report the number of children born out of wedlock in IV-D cases open during or at the end of the fiscal year with paternity established or acknowledged. Data are produced by the single statewide automated IV-D data processing and information retrieval system that each state must operate with ACF's approval. Section 454A of the Act; 45 C.F.R. Part 307. Indiana's computerized IV-D system is called ISETS, the Indiana Support Enforcement Tracking System. Indiana Br. at 5; Indiana App. File at 5. To audit Indiana's line 5 data for FY 2001 (children in IV-D cases open at the end of FY 2001 who were born out of wedlock), ACF auditors reviewed records for a sample of 91 children and identified 14 errors, for a data efficiency rate of 85% with a 95% confidence interval of 76% to 91%. ACF determined that Indiana wrongly omitted from line 5 seven children who were born out of wedlock because of inaccurate or incomplete information in their computer records. The DRA report indicates that Indiana should have included children at line 5 "if the Born-Out-of-[Page 18] Wedlock (BOW) indicator has a Paternity Contested (P) or Born-Out-of-Wedlock (W) code." Indiana App. File at 30. The BOW indicator was blank for six children and in error for one child. ACF also determined that Indiana wrongly included seven children in its line 5 data, five from non-IV-D cases, and two others who were born in wedlock but whose records contained codes indicating that they were born out of wedlock. Indiana App. File at 29-31; see also 83-84 (Indiana directions for completing paternity information reports). To audit Indiana's line 6 data for FY 2001 (the number of children born out of wedlock in IV-D cases open during or at the end of FY 2001 with paternity established or acknowledged), ACF auditors reviewed records for a sample of 44 children and identified nine errors, for a data efficiency rate of 80%, with a 95% confidence interval of 65% to 90%. ACF determined that Indiana wrongly omitted five children whose paternities had been established, because the BOW indicator or the paternity disposition codes were blank or erroneous. Indiana also wrongly included four children, three who had not had their paternities established, and one child who was not part of a IV-D case. For FY 2002, to audit Indiana's line 5 data, ACF reviewed records for 115 children and identified 22 errors, for an efficiency rate of 81% with a 95% confidence interval of 72% to 88%. ACF determined that Indiana wrongly omitted 15 children who were born out of wedlock because the BOW indicator was blank for two children and erroneous for 13 children, and that Indiana wrongly included seven children who were wrongly coded as having been born out of wedlock. For line 6, the auditors reviewed records for 89 children and identified 15 errors, for a data efficiency rate of 83%, with a 95% confidence interval of 74% to 90%. They determined that Indiana wrongly omitted 12 children whose paternities had been established, because paternity disposition codes were not completed for six children, erroneous BOW indicators were entered for four children, and paternities were not reported for two children due to a programming error. Indiana also wrongly included three children who were born in wedlock. Indiana App. File at 45-46. Indiana does not dispute these DRA findings.
Indiana argues that ACF should disregard the unreliability of its PEP data as being of a technical nature because the data errors are not indicative of inaccuracies in the underlying IV-D case records, or of any failure by Indiana to deliver needed IV-D services including paternity establishment and child support [Page 19] enforcement services. (5) Indiana asserts that no parent or child was harmed by discrepancies between written court documents and the information recorded in ISETS. Indiana also states that there is no suggestion that it manipulated PEP data or ever falsely claimed that it established paternities or that paternity was not at issue in a given case. Indiana also asserts that the errors in its FY 2002 data did not evidence any failure to deliver IV-D services because they tended to understate Indiana's performance at establishing paternities. Indiana Br. at 17-18. Indiana argues that ACF abused its discretion by disregarding data unreliability for FY 2000 but not for FYs 2001 or 2002, where the unreliability for all three years resulted from the same types of data errors. Indiana reports that some of the data errors that the ACF auditors discovered were caused by clerical staff in the offices of Indiana county prosecutors, who incorrectly entered information into ISETS, based on their review of documents from legal proceedings including paternity establishments, marriage dissolutions and child support enforcement actions. Indiana reports that staff sometimes incorrectly completed, or failed to complete, the BOW indicators and paternity disposition codes in the computerized records. Some instances of missing or incomplete BOW indicators from older records, Indiana believes, are attributable to lack of a requirement prior to 1999 that IV-D records indicate whether a child was born out of wedlock. Indiana notes that prior to implementation of the new incentive and penalty system, there was no requirement to provide data on children who were born out of wedlock, and thus no need to record that information in Indiana's computerized records. Indiana asserts that still other errors resulted from incomplete or inaccurate information that Indiana received from applicants for IV-D services who did not understand "the subtle legal distinctions among the various factors that enter into the paternity status determination." Indiana Br. at 15. Indiana reports that under its law, a child's paternity is always subject [Page 20] to challenge, even when the child was born in wedlock, and there is no substantive difference in how paternity is established for children born in and out of wedlock. Thus, Indiana asserts, it might potentially have to determine the paternity of every child in its IV-D database, and erroneously reporting a child as having been born out of wedlock does not mean that Indiana will not be required to establish that child's paternity. Indiana also notes that it undertook extensive, successful efforts to improve the reliability of its data. Indiana reports that after failing the DRA for FY 2000, it formed a task force of six regional teams that included representatives from its child support bureau, local prosecutors' offices, and the staff that administer its programs under titles IV-A and IV-D. The task force analyzed IV-D cases that had failed the audit and identified some 180,000 problematic IV-D cases comprising three broad categories: cases resulting from conversion to the computer system, inappropriate Medicaid referrals, and cases with missing or illogical paternity information. They then took measures to correct the data, including completing a form for each case, correcting BOW information discrepancies, and making computer programming changes to close cases that had been incorrectly converted as IV-D cases in ISETS during the automated process of converting county records into the state system. Indiana states that by the time it submitted its data for FY 2002, it had physically reviewed approximately 144,000 original court case files at a cost of $254,000. Indiana Br. at 6-7. Indiana reports that these efforts improved its data for all four of the performance measures for which its data were found to be unreliable for FY 2000, to the point where, for FY 2002, only the PEP data remained unreliable. (6) Indiana points out that the efficiency rate of its PEP data increased from 52% for FY 2000 to 82% for FY 2002 (these figures are apparently averages of the efficiency rates for lines 5 and 6), and argues that requiring a 43% increase in data accuracy over that time is unrealistic and [Page 21] fails to consider the improvement Indiana has achieved. Indiana Br. at 17. Indiana argues that it is unfair to reduce Indiana's total TANF funding and require that Indiana make up for the reduction with its own funds solely because Indiana's PEP data failed to meet a 95% standard of data reliability. Indiana reports that it faces overwhelming financial burdens and did not have sufficient notice to plan for the impact of the penalty, because it operates on a two-year budget. Indiana also requests that instead of paying the penalty funds to the federal government, it be permitted to pay the penalty funds to its Child Support Bureau to be used to enhance the reliability of data in its ISETS system. None of these arguments justifies reversing the penalty or requiring ACF to overlook the unreliability of Indiana's data. The Board addressed similar circumstances and arguments in DAB No. 1989, where we held that a state's inability to submit reliable data was not rendered technical in nature simply because it resulted from computer programming errors that might not have been symptomatic of a failure to deliver IV-D services. DAB No. 1989, at 78-79. We reach the same holding here, for the reasons discussed below. The Secretary is authorized to find a state's unreliable data adequate, if he determines that the extent of the unreliability "is of a technical nature which does not adversely affect the determination of the level of the State's paternity establishment percentages . . . or other performance measures that may be established by the Secretary." Section 409(a)(8)(C)(ii) of the Act. The implementing regulation, titled "[d]isregard of a failure which is of a technical nature," provides in relevant part:
45 C.F.R. � 305.62. Indiana failed to demonstrate that it qualified for the "technical nature" provision. Indiana does not dispute the DRA [Page 22] findings that Indiana wrongly omitted from its data some children who were born out of wedlock or whose paternities had been established, and wrongly included others who were born in wedlock or whose paternities had not been established, or who were not from IV-D cases. Indiana does not allege that data unreliability resulting from its inaccurate information would not have adversely affected the calculation of its PEP, as required for ACF to accept the unreliable data. Indiana also has not shown that the errors were so de minimis that they resulted in misstating its PEP by a only few hundredths or thousandths of a percent. Indiana does not allege that the unreliable data, even if accepted by ACF, would have shown that Indiana achieved the required PEP performance level for either FY 2001 or 2002. Instead, the data that Indiana submitted yields failing PEP scores for FY 2001 and FY 2002 of approximately 62% and 52%, respectively. (7) 45 C.F.R. � 305.40(a)(1), Table 4. Disregard of the unreliability would have thus likely subjected Indiana to a penalty for deficient PEP performance. Additionally, Indiana's assertion that the erroneous data did not evidence any failure to provide services appears to conflict with its explanation for some of the data errors. Indiana explains that some data errors were caused by applicants for IV-D services who provided incorrect paternity information because they did not understand Indiana's paternity laws. Indiana Br. at 15. Inaccurate information in applications for services and other documents could affect whether applicants receive appropriate IV-D services and compromise the reliability of Indiana's PEP data. Also, it is Indiana's responsibility to devise clear applications for IV-D services that elicit accurate information. Indiana's arguments are also unavailing because the Act makes failure to submit reliable data a distinct basis for a penalty, apart from any consideration of whether the state might actually have passed the applicable performance measure. Prior to enactment of the current penalty provisions at section 409(a)(8), states were subject to penalties for failure to comply [Page 23] substantially with requirements of title IV-D, but the Act did not separately impose penalties for failure to submit reliable data needed to calculate the performance levels. Former section 403(h) of the Act. By enacting the current IV-D penalty statute, Congress signaled the importance of a state's responsibility for providing reliable data. DAB No. 1989, at 30. As we observed in DAB No. 1989, section 409(a)(8) regards a state's failure to submit reliable data as equivalent to failing to achieve the required performance levels. A state's obligation is not merely to submit reliable data each year, but to demonstrate with reliable data that it achieved the required level of performance on the measures established by the statute and regulations. Id., at 41-43. That obligation is apparent from the Part 305 preamble, which provides that "[t]wo consecutive years of failure (either poor data or poor performance) in the same performance measure criterion will trigger a penalty imposition." 65 Fed. Reg. 82,192. In the absence of reliable data, ACF was unable to determine whether Indiana achieved a PEP level sufficient to earn incentives or avoid penalties. In this regard, Indiana does not allege that reliable, accurate data would have shown that Indiana achieved the required PEP performance level for FY 2001 or FY 2002. Thus, Indiana's allegation that it provided required IV-D services has no bearing on whether it is subject to a penalty for failing to submit reliable data that ACF needed to determine the level of Indiana's performance, and is moreover not readily subject to verification in the absence of reliable data. The importance of maintaining accurate data on computerized systems as well as in individual case records is apparent from the Act's requirement that each state operate a single automated data processing and information retrieval system capable of providing data needed to calculate the IV-D performance measures. Sections 454(15)(B), 454(16), 454A, 458(b)(5)(B) of the Act. The regulations echo the importance of such systems by requiring states to maintain computerized systems that can control, account for, and monitor all the factors in the support collection and paternity determination processes, and by having provided federal funding at enhanced rates of 80% and 90% in the costs of developing and installing such systems. 45 C.F.R. �� 307.5, 307.10, 307.30, 307.31. ACF's audits look not only at a state's data, but also at a state's compliance with the requirements to maintain automated systems. 45 C.F.R. � 305.60(c)(1). These provisions informed states of the importance of maintaining computerized systems capable of generating reliable data, so that ACF may make incentive and penalty determinations based on data submitted by a state without having to conduct physical reviews of the underlying case records. DAB No. 1989, at 78-79. [Page 24] Indiana's assertions that some data errors resulted from faulty data entry and conversion of case records in ISETS, or may have understated Indiana's performance at establishing paternities for FY 2002, are also not grounds to disregard the unreliability of Indiana's data. In DAB No. 1989, we held that the statute and regulations do not distinguish among unreliable data based on whether data errors improperly increase or decrease a state's score on the penalty and incentive performance measures, and that clerical and conversion errors that evidence serious discrepancies between written documentation and computer records call into question the reliability of the data for calculating the state's performance. This is in part because the 95% reliability standard reflects the requirement that errors not be of a magnitude that would cause a reasonable person to doubt a finding or conclusion made based on the data. 45 C.F.R. � 305.1(i). The emphasis of this requirement is on the magnitude of the errors, as opposed to the type of errors. Data containing enough errors to render them unreliable are not convincing for the purpose of assuring that the performance calculation may be relied upon as a reasonably accurate measure of a state's performance, regardless of whether the errors might overstate or understate performance. A high incidence of data errors of any type increases the likelihood that there may be other errors that go undetected and calls into question the reliability of the entire body of state data. Excusing "understating" errors would also result in states being able to pass the PEP performance measure in succeeding years based on reported increases in performance greater than the improvement that the state actually achieved. DAB No. 1989, at 26-32. Additionally, Indiana did not explain why provision of incorrect paternity information by applicants for IV-D services would not have resulted in errors in their individual case records. ACF's use of the "technical nature" authority to accept all unreliable FY 2000 data does not require it to accept Indiana's unreliable PEP data for FY 2001 or FY 2002. ACF applied this authority to accept unreliable FY 2000 data submitted by all of the states with unreliable data for that year, including Indiana. ACF announced this determination in substantively identical letters to all states from the OCSE Commissioner dated December 19 or 27, 2001. See, e.g., Indiana App. File at 20-22; DAB No. 1989, at 29. The basis for that determination was that the new incentive system was being phased in during FY 2000, and that penalties based on state performance would not apply prior to state performance in FY 2001. In DAB No. 1989, we found that this determination was based on particular circumstances that did not apply in subsequent years. Since penalties for IV-D performance were not being imposed for years prior to FY 2001, [Page 25] ACF had determined that the identified data reliability problems for FY 2000 did not affect performance measures, for purposes of any penalty that would have been based on unreliable data in FY 2000. That basis is not applicable here, where Indiana seeks to excuse the unreliability of its data for FY 2001 and FY 2002. DAB No. 1989, at 68. Finally, Indiana's arguments that the penalty is inordinately burdensome and that it is unfair to reduce Indiana's TANF funding solely because its data failed to meet the 95% reliability standard do not provide any basis to reverse the penalty. The penalty amounts are specified in the statute and the 95% standard of data reliability is imposed by a regulation, both of which are applicable here. The Board is bound by all applicable laws and regulations and does not have the power to grant the equitable relief that Indiana seeks. 45 C.F.R. � 16.14, made applicable to appeals of section 409 penalties by 45 C.F.R. � 262.7(e). ACF was entitled to select a clear criterion for assessing data reliability, and the requirement that data meet the 95 percent reliability standard is unambiguous. For these reasons, it is not relevant that Indiana improved the reliability of its data, as its PEP data still failed to meet the 95% standard for two consecutive years. In contrast to the performance standards that permit a state with a failing PEP score to avoid a penalty by achieving specified improvements, the statute and regulations do not provide graduated standards for data reliability and do not permit a state to avoid a penalty based on improvements in otherwise unreliable data. The financial hardship imposed by the penalty is similarly not relevant to our consideration of this appeal, or to any appeal of a penalty or disallowance where it is not included as a factor for consideration in the applicable statute or regulations. See, e.g., Latino Resource Organization, DAB No. 1974, at 6-7 (2005). As we noted in DAB No. 1989, the requirement that states spend their own funds to compensate for funding reductions due to penalties under section 409(a) is imposed by the statute and regulation, by which we are bound. Section 409(a)(12) of the Act; 45 C.F.R. � 262.1(e). Indiana provided no basis to ignore this requirement, and does not challenge ACF's determination of the amount of penalty, which is the minimum one percent provided in the statute. For these reasons, we are also unable to grant Indiana's request to pay the penalty funds not to ACF but to its Child Support Bureau to be used to enhance the reliability of data in its ISETS system. That request also conflicts with the statutory requirement that states pay penalties and use their own funds to prevent the payment of the penalty (through a reduction in TANF funding) from causing any decrease in TANF services. [Page 26] Thus, for the reasons discussed above, Indiana's arguments about the causes of the errors in its PEP data and whether those errors reflect any failure to deliver IV-D services do not provide a basis to disregard the resulting unreliability of Indiana's data, or to reverse ACF's determination that Indiana is subject to a penalty for submitting unreliable PEP data for FYs 2001 and 2002. Conclusion For the reasons explained in our decision, we sustain the penalty in full. |
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JUDGE | |
Judith A. Ballard Cecilia Sparks Ford Donald
F. Garrett
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FOOTNOTES | |
1. Those other penalties may be combined with IV-D penalties to increase the total amount of the reduction in a state's TANF funding. Those other penalties are not at issue here. 2. The November 14, 2003 letter also indicates that Indiana submitted unreliable FY 2001 data related to the Support Order Establishment and the Arrearage Collections performance measures. However, because Indiana submitted reliable FY 2002 data on those two performance measures, its submission of unreliable FY 2001 data on those measures is not at issue here. Indiana App. File at 42-52 (FY 2002 DRA report). 3. States formerly had the opportunity to submit a corrective action plan with respect to IV-D penalties under former section 403(h)(1) of the Act. As amended by the Child Support Enforcement Amendments of 1984, Public Law No. 98-378, that section mandated reductions in federal funding for a state's AFDC program if the state was found not to have complied substantially with IV-D requirements. Rather than directing the immediate imposition of a penalty on a state that failed an audit for the first time, the statute provided that the penalty could be suspended while the state was given an opportunity to achieve compliance through a corrective action plan approved by ACF. Former section 403(h)(2)(A)-(C) of the Act. 4. In February 2000, ACF provided states with a draft version of its "Guide for Auditing Data Reliability." ACF Ex. 2. ACF sent the final version of the guide to states with "Dear Colleague" letter DC-02-07, dated April 1, 2002. ACF reports that it provided states with the audit guide so that they could perform their own audits at any time to identify and correct deficiencies. ACF Br. at 24, n.20. Indiana reports that it received the audit guide, but that it never received what it calls the Data Reliability Audit Working Guide. Indiana App. File at 98. Since we base our finding that states were provided notice of the workings of the IV-D penalty system on the statute, the Part 305 regulations, and the preamble to Part 305, and not on the audit guide, Indiana's assertion does not change our analysis. 5. Indiana asserts that "[a]t the time the local county prosecutor determined the paternity status of every child considered in the sample on which the audit was based, Indiana's paternity establishment data was reliable." Indiana Br. at 13. Given that Indiana does not dispute ACF's DRA findings, this statement presumably means that records maintained by county prosecutors accurately reflected the paternities of the children in IV-D cases on which the prosecutors worked, and that data errors were thus due to the entry of inaccurate information into ISETS. 6. While Indiana reports that it submitted unreliable data for four performance measures for FY 2000, the FY 2000 DRA report indicates that data for one of those measures, the Support Order Establishment performance measure, was not unreliable. Although the efficiency rates ACF calculated for the relevant data lines were below the 90% reliability standard used for FY 2000, the data were not considered unreliable because ACF could not conclude with at least 95% confidence that the actual efficiency rates were below 90%. Indiana App. File at 2-19; Indiana Br. at 5-6. 7. Indiana's PEP for FY 2001 is the ratio of the number it reported at line 6 of its OCSE-157 for FY 2001 (116,619) to the number it reported at line 5 of the OCSE-157 for FY 2000 (187,704), expressed as a percentage. Its PEP for FY 2002 is similarly the ratio of the number it reported at line 6 of its OCSE-157 for FY 2002 (124,605) to the number it reported at line 5 of the OCSE-157 for FY 2001 (239,550). While the actual OCSE-157s are not in the record, the data that Indiana reported on those forms are included as attachments to the DRA reports for each year. Indiana App. File at 15, 35, 48. | |